Search Engine Optimization News Blog

Amazon Associates who reside in North Carolina are having a bad week. Their accounts were officially closed yesterday pending the passage of a state budget that is expected to include a provision requiring companies with affiliate programs to pay an internet sales tax. Under this proposed proviso, affiliates are considered representatives of the organization whose products they sell, making said company have a physical presence in the state and thus liable for sales tax.

In anticipation of this possibility,  Amazon sent a warning to NC affiliates last week, stating that the accounts would be closed if the bill was passed. This follows teh pattern seen in new york when that state passed it’s ow internet sales law – over 200 retailers isimply stopped serving New York. Of course, the state ends up losing anyway – the retailers would have been subject to income tax on their earnings, but no such earniong wiol be coming from Amazon in North Carolina.

There have been major local efforts to stop the NC affiliate tax. individuals of all political persuasions have petitioned the General Assembly to stop the tax provision, and a signed petition was circulated online to present to NC’s governor.

It is to be expected that many companies will follow Amazon’s lead and simply stop their affiliate programs. The ramifications are dire – thousands of North Carolinians could lose their incomes and the state will in turn have less income tax revenues.

A separate tax provision for downloaded music, books, and software is also on the table, which would affect many other online businesses. State politicians North Carolina has until July 1 to pass a state budget, and it seems that at least the affiliate tax is a done deal.