Amazon Battles Tax Laws

I recently wrote about Amazon pulling a large distribution center from the Dallas area.  Amazon is leaving Texas because of the attempt to collect sales tax from Amazon on all purchases.  The battle over sales tax and internet purchases continues.  Amazon is shutting down all of their affiliate partners in Illinois and several other states to avoid the same fate.  Roger Ebert is one of those losing their accounts.  This is a game-changing type of move from Amazon.

Here’s a very nice explanation of the events and speculation about the future.

On Tax Day (ironically, or maybe intentionally), Amazon will severe all ties with affiliates in the great state of Illinois, including (also ironically) film critic Roger Ebert.

Back in January, Ebert took some flack from Twitter followers who didn’t think it was right that he Tweet Amazon links. The critic explained in an interview with ClickZ that the small amount of income he made from the links went to keeping his website free for all to read and I agreed. A few ads and a few clicks is a small price to pay in order to keep reading articles such as his half-star review of Battle: Los Angeles. Now, we find the fight was for naught, thanks to a new law signed by Illinois Governor Pat Quinn.

The new law requires Amazon to pay sales tax on items shipped to Illinois as long as they have affiliates operating in that state. You see, according to a 1992 Supreme Court decision, online sellers only have to pay local sales tax if they have a physical presence in the town where the product is going. Generally, this is seen as a brick and mortar store, but the new Illinois law says an affiliate who lives in the state qualifies as a “physical presence” and so taxes must be collected.

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