Will new tax law kill affiliate marketing in North Carolina?

June 19, 2009 by John Dilbeck · 10 Comments
Filed under: Affiliate Marketing, Amazon, Twitter 

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

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