Will new tax law kill affiliate marketing in North Carolina?
June 19th, 2009 by John Dilbeck
I don’t even know how to start writing about this. Sigh.
I’ve been a busy boy this week working on developing a new website (fortunately not related to affiliate marketing) and have been slow to read my emails.
This morning, I opened one from Amazon.com with a subject of: Important Notice from the Amazon Associates Program
Normally, I read these when I’ve finished more pressing matters, but I didn’t realize that this really was an important notice until I read the following paragraphs…
We regret to inform you that the North Carolina state legislature (the General Assembly) appears ready to enact an unconstitutional tax collection scheme that would leave Amazon.com little choice but to end its relationships with North Carolina-based Associates. You are receiving this e-mail because our records indicate that you are an Amazon Associate and resident of North Carolina.
Please note that this is not an immediate termination notice and you are still a valued participant in the Associates Program. All referral fees earned on qualified traffic will continue to be paid as planned.
But because the new law is drafted to go into effect once enacted – which could happen in the next two weeks – we will have to terminate the participation of all North Carolina residents in the Amazon Associates program on or before that same day. After the termination day, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com nor will we accept new applications for the Associates program from North Carolina residents.
That’s just the first three paragraphs and I won’t bother quoting the rest, because this basically tells the story from Amazon.com’s point of view.
I didn’t even know anything like this was in the works and now I find that it is scheduled to be passed into law and take effect in less than two weeks, on July 1, 2009.
(It doesn’t make it any more pleasant that July 1 happens to be my birthday! What a nice birthday surprise.)
So, this morning, I’ve been scrambling and found someone who is leading the fight in NC on Twitter: Rich Owings.
They’re tracking the issue with the #ncaffiliatetax hash tag on Twitter. (You’ll need to go to Twitter.com and search for that hash tag. I’ve tried to link to it in several different ways, but - for some reason - none of them are working properly today.)
I found a couple of newspaper articles on Rich’s Twitter stream…
From the Asheville Citizen-Times: Proposed Web tax rankles local businessman.
From the Greensboro News & Record: Amazon warns N.C. affiliates about tax issue.
Now, I know that North Carolina is facing budgetary problems, but I think this is a misguided move by our politicians. Of course, I’m biased.
For the last six years (or more), I’ve earned 100% of my income from affiliate marketing. This new law will decimate my remaining business revenue, most likely.
I used to earn more with Amazon.com than I have in the last couple of years, but this step by Amazon may be the first bad news I’ll hear from other affiliate programs.
I’ve been an Amazon.com affiliate since shortly after they started it over 10 years ago and I’ve depended upon commissions I received from affiliate marketing as my sole source of income for over six years as I was my mother’s full-time caretaker and could not leave the house.
Unfortunately, she died last November, and I’ve been planning ways to diversify my income. Some of those plans are starting to produce results, fortunately.
My friend, Mitch Mitchell, who lives in New York, went through this months ago when the NY legislature passed a similar law and Amazon.com canceled all affiliates in his state.
As of today, it appears that Amazon.com is no longer accepting new affiliates in North Carolina.
Last September, my business took a real hit with the sudden downturn in the world economy. I lost between two-thirds and three-fourths of my income at that time, and it has only now showed any signs of recovering from that drastic slump.
If other affiliate programs, in addition to Amazon.com, cancel my participation, there goes my affiliate marketing business.
As much as I would like to sit here and whine, I’m not going to do it. If this happens, I’ll face it and make new plans that don’t involve affiliate marketing - even though it will mean a huge shift in my business plans.
I hate to think about the thousands of pages I have on my various blogs and websites that will need to be updated to remove links to Amazon.com.
I don’t know what other surprises my birthday will bring this year. This will probably be the biggest one.
It appears that this new law is on the fast track to passage and many of the legislators that Rich Owings has contacted don’t even understand how it will affect very small businesses like mine across the entire state.
I won’t have to wait too long to see what happens.
Act on your dream!
JD
This entry was posted on Friday, June 19th, 2009 at 8:54 am and is filed under Affiliate Marketing, Amazon, Twitter. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
June 19th, 2009 at 10:09 am
John, Since I became disabled I have earned extra income from internet affiliate programs. You have a proper attitude as you have well realized that it was a matter of time before internet affiliates would need to pay tax. We have slid by for many years. Amazon is again using scare tactics to enrage people to action, because they know their legal council can’t stop this action. It’s just a matter of time before every state enacts the tax. So, like a proper business person you absorb, adjust and move forward. Or you can let Amazon push you belly up and cry. They are making a fortune from our efforts like every other Madoff in the world. Small business is the backbone and has the backbone to survive. Businesses like Amazon will use you and cast you aside when you have nothing to give. Don’t fall prey to their intimidation, let your internal survivor kick in and move ahead. Good luck and best wishes for a great future!
June 19th, 2009 at 12:13 pm
thanks for sharing this John…
June 20th, 2009 at 6:07 am
Sorry to hear that, I hope that you guys get your point across to the legislators.
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June 20th, 2009 at 10:37 am
oh my! this is very distressing news……leaves me totally speechless…….
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June 20th, 2009 at 10:45 am
That’s tough man. I’m sure you’ll be able to get through anything that might happen
Solomon Huey
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June 22nd, 2009 at 3:25 am
I guess that will affect a lot of lensmasters, too.
June 22nd, 2009 at 7:26 am
Good morning, Bruce.
I’m happy to hear that you have found a way to earn extra income at a time when I’m sure you need it.
I’m not sure I agree with you about paying the tax. All affiliates, if they live in a state with an income tax, have to pay taxes on our affiliate income. As far as I know, we all have to pay federal tax on our income.
But, this is different.
What gives a state the right to impose a tax on a transaction made in another state if that business does not have a nexus in the state?
I’m no expert and I’m not a lawyer, but it seems that they’re trying to redefine nexus in a way that just isn’t right.
I don’t think Amazon is using scare tactics at all. I think it was just a proper notification that I’m going to be dropped if this law is passed.
I don’t think it is just a matter of time before every state passes this legislation and tries to collect the tax. New York did pass it, but several states have rejected it.
I do agree, however, that part of business is adjusting and moving forward.
Good luck and best wishes to you, too.
Act on your dream!
JD
June 22nd, 2009 at 7:34 am
Good morning, A.M., Daniel, Joan, and Solomon.
Yes, it’s not good news, but there’s little I can do about it.
At least, some people in the state are in a position to try to fight it and are meeting with their representatives this week.
At this point, however, the legislation looks like it’s on the fast track to passage.
We’ll see.
Thanks for your support.
Act on your dream!
JD
June 22nd, 2009 at 7:40 am
Good morning, Pat.
You bring up a good point about lensmasters.
I’ve been thinking about this and I think there are two possibilities.
If we’re using the Amazon modules on Squidoo, then we’re not acting as Amazon affiliates. In that case, Squidoo is the affiliate and would not be affected by this. They can share their commissions if they want with lensmasters who use the modules on their lenses.
On the other hand, if lensmasters living in North Carolina are using other tools to market through Amazon using their own affiliate links, then they will be affected, if this law is passed.
At one time, a few years ago, this would have been a devastating blow for me. Now, I’m a bit more diversified than I was then. It will still be a serious blow, if it happens, but one that I can get through.
The real problem arises, however, if other affiliate programs cancel my accounts. That could be a real problem.
Act on your dream!
JD
June 23rd, 2009 at 11:49 pm
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that I have really enjoyed browsing your blog posts. Any way
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