A Shot In the Wallet: How the Vermont “Amazon Tax” just cost me 248 orders

by Dan on January 7, 2015

Why would the Vermont legislation endanger the livelihood of their independent business constituents?

Yesterday, at 3:34 PM, I received the following email from Amazon:

Hello,

We are writing from the Amazon Associates Program to notify you that your Associates account will be closed and your Amazon Services LLC Associates Program Operating Agreement will be terminated effective January 6, 2015. This is a direct result of Vermont’s state tax collection legislation (32 V.S.A. § 9701(9)(I)). As a result, we will no longer pay any advertising fees for customers referred to an Amazon Site after January 5, nor will we accept new applications for the Associates Program from Vermont residents.

Please be assured that all qualifying advertising fees earned prior to January 6, 2015, will be processed and paid in full in accordance with your regular advertising fee schedule. Based on your account closure date of January 6, 2015, any final payments will be paid by March 31, 2015.

Amazon strongly supports federal legislation creating a simplified framework to uniformly resolve interstate sales tax issues. We are working with states, retailers, and bipartisan supporters in Congress to get legislation passed that would allow us to reopen our Associates program in Vermont.

We thank you for being part of the Amazon Associates Program, and hope to be able to re-open our program to Vermont residents in the future.

Sincerely,
The Amazon Associates Team

This email announced immediate termination of all Vermonters’ Amazon Affiliate accounts.

What is the Amazon Affiliates program?

The Amazon Affiliate program allows me to earn commission on referrals that originate from links on my websites and YouTube channel.  When I published this Nissan Pathfinder Knock Sensor repair video  on YouTube in 2010, I added Amazon Affiliate tagged links to tools and parts I used in the video.  When someone clicked the link and made a purchase on Amazon, I received a commission between 5 and 10%.  Since 2010 this has generated passive income for me of a few thousand dollars.  This will have a large impact on Vermont creatives that blog and depend on this revenue stream for a large portion of their income.   The Amazon affiliate link can be seen in the screenshot of my video below.  This one link has generated 2,115 clicks and 248 orders since January 2012.

Amazon Affiliate Link Vermont Amazon Tax

OK, So what changed?

In 2011, the Vermont legislation amended the Sales and Use tax law definition of a ‘vendor’ to include internet affiliate programs such as Amazon (source).  This was dubbed the ‘Amazon tax’.  It’s not clear when this law change took effect, but it may have been the first of this year.  An excerpt of this Vermont statute 32 VSA 9701 (9)(I), can be found below:

(I) For purposes of subdivision (C) of this subdivision (9), a person making sales that are taxable under this chapter shall be presumed to be soliciting business through an independent contractor, agent, or other representative if the person enters into an agreement with a resident of this State under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, to the person if the cumulative gross receipts from sales by the person to customers in the State who are referred to the person by all residents with this type of an agreement with the person are in excess of $10,000.00 during the preceding tax year. For purposes of subdivision (C) of this subdivision (9), the presumption may be rebutted by proof that the resident with whom the person has an agreement did not engage in any solicitation in the State on behalf of the person that would satisfy the nexus requirements of the United States Constitution during the tax year in question.

The vagueness of this line is of particular concern:

directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise

This has the potential to impact other much more significant revenue streams that Vermont bloggers depend on such as Google’s AdSense.  (Google AdSense is a program that pays you to put ads on your website.)  It’s unclear at this point the extent to which this law change will impact the income of Vermont’s bloggers and content creators.

For me personally, it means I will be shutting down a website that relied heavily on revenue from Amazon affiliate links.  It also makes me question whether it’s worth posting ‘how to’ videos such as the one above that take a significant amount of time to produce.

Questions or concerns?  Please leave a comment below.

 

Special thanks to Cairn Cross (@vtcairncross) for providing me information regarding the ‘Amazon tax’ passed by the Vermont legislature.

You can also follow this story on VPR online at “Amazon shutters Vermont program over tax issue.

 

  • jessamyn

    Wow, thanks for summing all this up so usefully. I have been a “remote worker” for internet companies in Vermont for the past decade or so and working with the Department of Revenue has always been super unpleasant and I say that as someone who is just fine paying taxes. One of the many small things keeping Vermont from being the more progressive and friendly-to-business state that it so desperately wants to be.

  • Alec Newcomb

    Come join me in NH :)

  • Beau Cameron

    I received my notice as well! It’s a real bummer…

  • Tom Harkman

    This is a story that has been repeated in many states now, and eventually some states get back in.
    When I lived in MN and got the boot. They have since gotten back in because Amazon now has a physical business presence of some sort, and that may be VT’ers only hope. http://www.startribune.com/business/277787351.html

    Before you shut that other website down, maybe check out other affiliate programs? There is Commision junction, viglink, shareasale to name a few.

    • Andy Bryant

      Yep, it blows. I got shut down when they did this in Missouri, short time later I moved to Vermont and
      built a new site then on Jan. 6 I got the dreaded email, on the very day that it was all over, no notice. As a matter of fact just days prior I was getting amazon associate emails but never a mention of what was to come.

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