Amazon Calls NC Lawmakers Bluff, Cancels Affiliate Program Early

Friday, June 26th, 2009 by Andy Beal

Amazon Calls NC Lawmakers Bluff, Cancels Affiliate Program Early

It appears as though Amazon’s email to affiliates regarding North Carolina’s pending taxes was not a bluff. I just received a follow-up email from the company saying it has decided to shut down its affiliate program in the state, as of today.

We are writing from the Amazon Associates Program to notify you that your Associates account has been closed as of June 26, 2009. This is a direct result of the unconstitutional tax collection scheme expected to be passed any day now by the North Carolina state legislature (the General Assembly) and signed by the governor. As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 26. We were forced to take this unfortunate action in anticipation of actual enactment because of uncertainties surrounding the legislation’s effective date.

Please be assured that all qualifying referral fees earned prior to June 26, 2009 will be processed and paid in full in accordance with our regular referral fee schedule. Based on your account closure date of June 26, 2009, any final payments will be paid by September 1, 2009.

In the event that North Carolina repeals this tax collection scheme, we would certainly be happy to re-open our Associates program to North Carolina residents.

The North Carolina General Assembly’s website is http://www.ncleg.net/, and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/.

We have enjoyed working with you and other North Carolina-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,

The Amazon Associates Team

It’s interesting that Amazon has shut the program down before the legislation passes. Could it be that the NC lawmakers thought Amazon was bluffing too? Did Amazon close the program early so that affiliates would still have time to ramp up their complaints to the General Assembly.

Of course, there are plenty of other companies that will keep their affiliate programs running in NC–though Commission Junction doesn’t appear to be one of them–but will there be enough actual affiliate revenue to tax after this?

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35 comments on “Amazon Calls NC Lawmakers Bluff, Cancels Affiliate Program Early”

James Evans Says:

June 26th, 2009 at 10:03 am

This affiliate program was a fantastic source of income for our nonprofit. Do you know if it is only closed in NC or is it closed everywhere?
Andy Beal Says:

June 26th, 2009 at 10:04 am

@James – this announcement only applies to NC.
Brian Chappell Says:

June 26th, 2009 at 10:07 am

Shows the complete disconnect b/t lawmakers and reality in NC. This isn’t going to do anything except stifle the emerging online affiliate world and keep people from running businesses in NC. Its really as simple as that.
North Carolina proves the Laffer curve | Natural, Personal Finance Says:

June 26th, 2009 at 10:54 am

[...] Carolina has taken steps to demonstrate this economic theory to the world. From my reading of various articles, North Carolina wants to pretend that people who use Amazon’s affiliate program are [...]
Brennan Says:

June 26th, 2009 at 11:29 am

The bad part of this is that in the end it will only hurt the state of North Carolina and its residents. I would say many affiliates will just decided to move if they rely on affiliate income. New York tried this same thing and all that happened was they lost tax revenue due to everyone involved who would pay more taxes just simply moving to neighboring states.

Brennan’s last blog post..The Sayre Group featured on KillerStartups
Helen Hunt Says:

June 26th, 2009 at 12:38 pm

It seems from your post here that the new development affects NC area only, so the rest of us can carry on as normal.

Helen Hunt’s last blog post..Using Newsletter Software
Internet Strategist @GrowMap Says:

June 26th, 2009 at 1:09 pm

IMHO, Amazon made a wise decision. Their threats to stop operating in states passing these laws were not being taken seriously and most felt that pending state sales tax laws were inevitable. Even if it doesn’t work it will at least raise attention and slow things down.

I suspect few really think about all the time, money and effort affiliates put into promoting programs – work that goes out the window whenever a program is cancelled or substantially changed.

We are going to see these types of issues play out over and over both online and off. The more government agencies try to make up for reduced incomes due to the economy the more they will raise taxes and generate yet more declines.

An example that makes this easy to understand is the toll road situation in Dallas. As drivers use toll roads less to save money, toll road income declines so they raise the tolls which will result in more drivers using them even less. This will cause a downward spiral.

We created this economic situation because of the “Wal-Mart” cheap philosophy. The more we drive prices down the less everyone makes and the more the economy contracts. We could choose to have an abundance philosophy instead. By being willing to pay for the true value of what we buy incomes will rise and the economy expands.

Internet Strategist @GrowMap’s last blog post..Change to GrowMap Policy on Replying to Comments
Amazon Ends Affiliates Program for North Carolina Says:

June 26th, 2009 at 2:32 pm

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Linda Buquet Says:

June 26th, 2009 at 3:25 pm

Amazon announced the closing of the program to Hawaii affiliates this morning too. I just blogged about both states and the ramifications and also what merchants should do.

Amazon also announced in a letter to the Governor of CA that they will also terminate all California affiliates if the law is passed there. Several other states have pending legislation. It’s getting scary out there!

What this will mean is other affiliate programs will follow suit. The states WON’T get the sales tax revenue they were hoping for, but thousands of small businesses will be hurt and will lose revenue resulting in states collecting LESS income tax revenue. It’s a LOSE LOSE proposition!

Linda Buquet’s last blog post..Amazon Drops North Carolina and Hawaii Affiliates
Amazon Ends Affiliates Program for North Carolina | Wizpress.com Says:

June 26th, 2009 at 4:49 pm

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Amazon Ends Relationship with North Carolina Affiliates | www.ProfitWorx.com Says:

June 26th, 2009 at 5:01 pm

[...] that they are indeed severing ties. Andy Beal at Marketing Pilgrim received one of the emails and shares it on his blog. It reads: We are writing from the Amazon Associates Program to notify you that your Associates [...]
Amazon Ends Affiliates Program for North Carolina | SocialMarketingReport.com Says:

June 26th, 2009 at 7:01 pm

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Amazon Ends Affiliates Program for North Carolina | feed hat blog Says:

June 26th, 2009 at 9:02 pm

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Christy Says:

June 26th, 2009 at 11:38 pm

NC lawmakers do not understand the internet. If you asked 100 legislators to explain what affiliate marketing is, I bet 80 percent of them wouldn’t have a clue. Before Amazon closed all NC affiliate accounts, the state of NC was receiving state income tax revenue from AMZN affiliates. Now that AMZN has closed all NC based accounts, the state has lost that revenue stream. Worse, it has angered affiliates and presented itself as a state that’s unfriendly to technology and small business.

Other states (including MD, MN, and TN) have considered nearly identical tax schemes, but rejected these proposals mainly because of the negative effect on their states’ residents. NC lawmakers need to educate themselves about the reality of the internet and how it affects their residents. As Linda said, it’s a lose-lose deal for everyone involved — for affiliates, for AMZN, and for NC tax revenue.
Amazon Ends Affiliates Program for North Carolina | bloggersexpose.com Says:

June 27th, 2009 at 4:38 am

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Adsense » Blog Archive » Amazon Ends Affiliates Program for North Carolina Says:

June 27th, 2009 at 9:26 am

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Shared Items - June 27, 2009 « Jeetu’s Shared Memory Says:

June 27th, 2009 at 11:14 am

[...] Amazon Calls NC Lawmakers Bluff, Cancels Affiliate Program Early [...]
Amazon Ends Affiliates Program for North Carolina | Byte Right Domains Says:

June 27th, 2009 at 7:15 pm

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Amazon Ends Relationship with North Carolina Affiliates | Helping You Make Money Online Says:

June 27th, 2009 at 11:20 pm

[...] that they are indeed severing ties. Andy Beal at Marketing Pilgrim received one of the emails and shares it on his blog. It reads: We are writing from the Amazon Associates Program to notify you that your Associates [...]
Jon Says:

June 29th, 2009 at 1:54 pm

This is a ridiculous piece of legislation and it shows how ignorant NC lawmakers must be. It will just make NC a horrible place to own a business. I am an NC resident who relies completely on affiliate income and am seriously considering moving to SC. If more companies follow the lead of Amazon I will have no choice but to leave and stop paying NC my taxes once and for all.

Jon’s last blog post..Scour: The Best Search Engine Which Pays You to Search
Amazon Shrugs « LewRockwell.com Blog Says:

June 29th, 2009 at 2:08 pm

[...] to NC residents via its “Associates” affiliate program. In response, Amazon has shut down its affiliates program in North Carolina, as of last Friday. Good for Amazon! « Previous: [...]
Amazon and North Carolina | Select Networking Says:

June 29th, 2009 at 2:24 pm

[...] some talk over Amazon shutting down its affiliate program in North Carolina. North Carolina is trying to find ways to increase revenue and have decided to try to go [...]
Wayne Q. Says:

June 29th, 2009 at 5:41 pm

Great! Not only have I lost my job this year, (which means I am paying less income tax) but now they have eliminated a major part of the remaining income I had, and which I paid income taxes on.
What’s next, Google closing down the Adsense for publishers program for affiliates in North Taxolina? That would reduce reduce my income to effectively zero.
Guess I’ll just have to start collecting welfare instead.
Way go go, Beverly! Stealing the Education Lottery proceeds wasn’t enough for you?
I think it’s time I moved to New Zealand.

Wayne Q.’s last blog post..Monday’s Daily Jigsaw Puzzle ? Peaches
Young Americans for Liberty » Blog Archive » Amazon Fights Back Against N.C. Tax Scheme Says:

June 29th, 2009 at 6:08 pm

[...] More here. Amazon’s letter is here. [...]
Amazon Shrugs Says:

June 29th, 2009 at 7:16 pm

[...] to NC residents via its “Associates” affiliate program. In response, Amazon has shut down its affiliates program in North Carolina, as of last Friday. Good for [...]
Amazon Ends Affiliates Program for North Carolina « Make Money Online Says:

June 30th, 2009 at 12:38 am

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Amazon Ends Affiliates Program for North Carolina « Make Money Online Says:

June 30th, 2009 at 12:38 am

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]
Freedom or Bust! « CorrectivePerspective Says:

June 30th, 2009 at 3:13 am

[...] online arrangement with the entire state of North Carolina. The NC lawmakers threat of an “unconstitutional tax collection scheme” was just too blatant of a crime for the Amazon Affiliate Program. It’s a relief to [...]
Rob Says:

June 30th, 2009 at 1:48 pm

Awesome! Go Amazon!

It will be hilarious when the NC Government types start getting all kinds of hate-mail from NC citizens who have lost a revenue stream as a direct result of their “leaders”.

I love it when Government gets exactly what it asks for only then to realize how stupid they were to ask for it in the first place.

SMASH THE STATE, STARVE THE BEAST, Whatever gets the job done. Remember it’s not “Left vs Right”, its “The State vs YOU!”.
Wayne Q. Says:

June 30th, 2009 at 2:25 pm

In every dark cloud, there is a silver lining: A potential opportunity for some individual in a non-affiliate taxed state.
If some enterprising individual wants to start a business providing a ‘permanent’ mailing address, like a Mailboxes etc. for NC affiliates to use as their new permanent address in another state, that might get around this stupid tax law by placing the affiliates ‘outside’ of North Carolina.
It may not be entirely legal, but I’m sure that it would make for a heck of a court case and would take years and years to resolve.

Wayne Q.’s last blog post..Tuesday’s Jigsaw Puzzle ? Floral
Amazon Ends Relationship with North Carolina Affiliates - Google Live Search Says:

June 30th, 2009 at 4:03 pm

[...] that they are indeed severing ties. Andy Beal at Marketing Pilgrim received one of the emails and shares it on his blog. It reads: We are writing from the Amazon Associates Program to notify you that your Associates [...]
Wayne Q. Says:

July 3rd, 2009 at 5:14 pm

So if I understand this right, because I live in North Taxolina, whenever someone in another state clicks on an affiliate link on my website that is hosted on a server in another state, and buys something shipped to them from yet another state, with none of the transaction, data or merchandise actually passing through North Carolina, they expect to collect a tax above and beyond the income tax I pay simply because I, the website owner, live in North Carolina?
Yep, that sounds unconstitutional to me.

Wayne Q.’s last blog post..Friday’s Jigsaw Puzzle ? Capitol City Of Malta
Gerald Brunning Says:

July 5th, 2009 at 3:45 pm

Taxation has very little to do with revenue but a great deal to do with control.
Never Put All Your Eggs In One Basket | Blogging Mistakes | Blogging OT Says:

July 8th, 2009 at 5:22 am

[...] mean you should stop testing other revenue sources. If there is anything I have learned from the recent events in North Carolina and New York is that you should put too much hope in a single affiliate program. If Amazon, which [...]
EasyPeasyMoney.co.uk » Amazon Ends Affiliates Program for North Carolina – 2nd Edition Says:

July 13th, 2009 at 4:26 pm

[...] was a similar situation with New York, I wonder which US state is going to be next? There’s more details on Amazon’s calling NC lawmaker’s bluff [...]