Amazon Shutters Vermont Program Over Tax Issue

Jan 6, 2015

The potential for a sales tax on Internet sales is causing Amazon.com to shut down operation of its “Amazon Associates” program in the state, the company announced today.

The associates program allows members who frequently refer people to Amazon to collect a small commission on the sales based on those referrals.

For Dan Russell, who earns a side-income reviewing photography equipment and making video tutorials on YouTube, the move to shut down the program is going to cost hundreds  of dollars.

In 2014, Russell said, he made about $700 through the program.

He said he makes money through advertisements on his YouTube videos as well, but “I can really see that it would impact people that rely on that for 100 percent of their income.”

The associate program is closing, Amazon said in an email to members, as “a direct result of Vermont’s state tax collection legislation.”

The company said it opposes state efforts to implement taxes on Internet click through sales and instead favors a universal federal standard.

“Amazon strongly supports federal legislation creating a simplified framework to uniformly resolve interstate sales tax issues,” the company said in its email. “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.”

Amazon didn’t immediately respond to comment Tuesday, but according to an Amazon web page the program is also inactive in Arkansas, Colorado, Maine, Missouri, and Rhode Island.

For Russell, the program’s closure spurred some political action. He said he contacted a local politician Tuesday with the hopes of raising awareness of the issue among lawmakers.

Update 9:15 a.m. Jan 7, 2014: At least one lawmaker is already aware of the issue, and said the move by Amazon is nothing more than a bullying tactic - and it's a reaction to a law that hasn't even gone into effect.

Chittenden Sen. Tim Ashe, the chairman of the Senate Finance committee, said in an email that the law "does not go into effect until 15 other states adopt a similar provision, which would be triggered by a determination by the [Attorney General]. I do not believe that has happened, and Amazon appears to be just trying to bully their way forward. Which is typical for a company like them."

The state's tax commissioner, Mary Peterson, said her department hopes to figure out a solution to the situation that works better for Vermont businesses.

"We will be reaching out to Amazon and affiliates in Vermont to work towards a solution without harm to Vermont businesses if at all possible," she said in an email.

Peterson seemed to agree with Amazon that taxes on services like the associates program need to be enacted at the federal level.

"Ultimately, the solution to these interstate tax issues needs to come from Congress," she wrote. "The inaction in Congress is having real-world consequences."

Correction: This story was updated at 8:40 a.m. Jan. 7, 2015 to note that Amazon objects to a state sales tax on Internet sales, not a tax on cloud computing.