It’s Official: Governer Quinn Signs Illinois Internet Tax Bill and Amazon Cancels My Affiliate Program

By - March 10, 2011 - 15 Comments

It’s done.  Pat Quinn of Illinois,  just signed a bill forcing companies like Amazon and Overstock to collect 6.25% tax on their sales from affiliates, or anyone who has a presence in the state of Illinois. House Bill 3659, the Mainstreet Fairness Bill (of course this doesn’t help Mainstreet, only Springfield) was passed in January and would have become law tomorrow with or without Quinn’s signature.

As a brick and mortar business, I understand why people are fighting for the bill.  They are uninformed business owners who are behind the technological times and think this will level the playing field.  Of course the state keeps the money that leveled it, not the business owner.  The local business is not losing business because of taxes.  They’re losing because of economies of scale that the Internet retailers achieve and adding taxes online won’t make that any better.

As for Amazon, I received this tonight, officially ending our business relationship.

Hello,
For well over a decade, the Amazon Associates Program has worked with thousands of Illinois residents. Unfortunately, a new state tax law signed by Governor Quinn compels us to terminate this program for Illinois-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by Illinois-based affiliates like you – even if those retailers have no physical presence in the state.

We had opposed this new tax law because it is unconstitutional and counterproductive. It was supported by national retailing chains, most of which are based outside Illinois, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that its enactment forces this action.

As a result of the new law, contracts with all Illinois affiliates of the Amazon Associates Program will be terminated and those Illinois residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, or SmallParts.com. Please be assured that all qualifying advertising fees earned prior to April 15, 2011 will be processed and paid in full in accordance with the regular payment schedule. Based on your account closure date of April 15, 2011, any final payments will be paid by July 1, 2011.

You are receiving this email because our records indicate that you are a resident of Illinois. If you are not currently a permanent resident of Illinois, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state after April 15, please contact us for reinstatement into the Amazon Associates Program.

To be clear, this development will only impact our ability to continue the Associates Program in Illinois, and will not affect the ability of Illinois residents to purchase online at www.amazon.com from Amazon’s retail business.

We have enjoyed working with you and other Illinois-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to Illinois residents.

Regards,

The Amazon Associates Team

Although I understand their reasoning, I do think Amazon is using me to prove a point.  They have made no effort to reduce commission or work it out. They simply said they can’t afford to keep us Illinois people.  Ironically, Wal-Mart, Best Buy, and many others are actively pursuing affiliates and asking them to come over and work for them.  Because they’ve always had stores in the area, nothing has changed and their system is already set up for the new law.  I never made very much money from Amazon affiliates so it’s no big deal but Mike Cohen and I never got to build that million dollar minisite together.   Tear.

On a side note I noticed they sent out the notice with the email nobody@amazon.com.  Which is ironically the answer to “How many people were making good money in the Amazon affiliate program anyway? “

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15 Responses to It’s Official: Governer Quinn Signs Illinois Internet Tax Bill and Amazon Cancels My Affiliate Program

  1. I can see both sides of this bill for the affiliates and the land based companies in Illinois. However, I feel that both parties are losing.

    Do you think Wal-mart really cares if Amazon collects a sales tax for an even playing field? I doubt it. There are thousands of affiliates who make their money through online marketing, and then spend that money in their local community and stores.

    This bill has just sucked more money out of Illinois. Way to go Quinn…

    That’s my take on it. Good Luck Affiliates.

  2. As far as making good money as an affiliate, not me… but the implications here are huge. Will we see a domainer on the ballot next election? Governor Shane?

  3. John says:

    I make a lot of passive money though Amazon ; I’m in Georgia . Just waiting for it to happen and take a chunk out of my earnings.

    If it’s not Google or Bing keeping all the cash, it’s the Gov’t destroying us from the regulatory side.

  4. GPS says:

    I feel honored that I’ve been fired by Amazon twice now. First, the CO program got shut down a year ago, then I established a presence in IL, got a new Associates account, and now this.

  5. Louise says:

    @ Shane said: “It’s done. Pat Quinn of Illinois, just signed a bill forcing companies like Amazon and Overstock to collect 6.25% tax on their sales from affiliates, or anyone who has a presence in the state of Illinois.”

    The state wants a cut of Amazon’s business. I agree. To the extant Amazon or any online retailer does business in a state that isn’t its homestate, it has a presence in that State. The law doesn’t make sense, penalizing only affiliates with a presence in the state. Maybe the affiliates are considered a presence, so Amazon would owe taxes on all its sales, because of the affiliate presence.

    What you said, “I do think Amazon is using me to prove a point,” seems exactly true. Tit for tat. Illinois wants a cut of Amazon’s business, so Amazon takes it out on the state residents.

    The law seems misworded. State laws are crazy anyway. The US is past the point of needing state government, with the internet and the ability for people to make decisions without representation. State government is a drain on the economy.

    But Amazon or any online retailer [Godaddy] which does business in that State should be liable to that State’s laws and taxes.

  6. While I have made more money with Amazon.com than Commission Junction (zero), if Florida decides to do the same thing it would not be heartbreaking. However, given what I am seeing in the retail landscape with sellers of books, music & videos I would anticipate one of the two Barnes & Nobles in my city will no longer be there five years from now. The Waldenbooks and Borders Express at my mall closed quite some time ago. IMO the experience of going to a bookstore will change radically over the next several years as Amazon is a real powerhouse in this space and ebooks are gaining in popularity. Basically the retail space will shrink considerably and a bookstore will be more of an internet cafe / coffee shop where one can browse an ebook before downloading it – no bookshelves.

  7. Terri Gilbert says:

    I’m a single mother of 2 which I home school. My only source of incomes comes (came) from Amazon.com as an affiliate. I earn (earned), on average, $2,000 a month ($24,000 a year). Thanks to the new law, I am out of business. Broke. No food stamps. No unemployment benefits. Bills needing to be paid. No good job prospects, though I can work part time at McD’s of at which time I would have to pay a babysitter to watch the kids. Even if I was lucky to get 2 part time jobs, after paying a babysitter(s) I would have less money to pay all my obligations and be with my children a heck of a lot less. I may have to put them in a public school. I will diffidently lose my home of which I have never missed a payment in 6 years. I just bought a new car 4 months ago, and am now wondering how I’m going to keep it. I truly thought that all my efforts helped this economy, even thought it’s only a tiny, tiny, tiny bit. Now I’m a victim. I did everything right Governor Quinn. Everything! Now I feel it’s all for not. This is the saddest day of my life. It has taken me 45 minutes to write this comment. All kinds of thoughts have rolled around in my head. I see only one way out. I need someone to take my kids and raise them. I don’t want them to go to the state or live in a home. They are both girls ages 8 and 10. I have no family to give them to. I will check back within 24 hours to see if there’s any takers, otherwise… There may be a wee chance I may not go through with it, but I doubt it. I’m so depressed now. So depressed! Help me! Please! Thank you. Terri.

  8. Robin Ong says:

    @Shane. I’m just wondering, is it possible to register your business elsewhere say Singapore, or Switzerland… Here, as long as your business entity is registered with another country, we are exempted from paying tax to our own Government.

  9. William says:

    @Terri. Get a Post Office Box out of state and update your Amazon Affiliate information with that new address, I’ll be likely getting one in the city/state I plan on eventually moving to.

  10. John says:

    I can’t tell if Terri’s joking or not. Give away your two daughters? Really?

    Terri’s fast answer is to simply to move to another state where Amazon still operates, at least for now until you figure out what to do when Amazon moves to the next state.

    As far as paying for the home, rent it out. Use a property management service if you have to.

  11. Kevin says:

    I’m with William – just pull a “Reverse Wisconsin” and change your address to a border state, having your Amazon Account hiding out across state lines.

  12. Jason says:

    HI Terri,
    I can understand your frustration. Amazon took away our business 4 years ago due to a dispute and we were counting on Amazon almost 100% for our income. I think you may just be trying to prove a point with your post, and it is a good one, but if your comments are genuine, then you do have solutions. For one thing, you have successfully built a $2000.00 per month income using affiliate programs, that means you have online marketing skills, no doubt. Another like other posters said, change your address, not sure if Amazon accepts PO boxes, but if not there are other alternatives. You can contact me through the link on my name if you really need assistance.

  13. Louise says:

    Here is another aricle:

    Amazon Ditches Illinois Affiliates (Including Roger Ebert) To Avoid Web Tax
    http://paidcontent.org/article/419-amazon-to-avoid-web-tax-by-shutting-down-illinois-affiliates/

    Sorry I’m not well-spoken or smart about alot of things, but Roger Ebert seemed to echo my sentiment at the end of the article:

    “Even though the change is going to hit Ebert’s pocketbook, he’s not on Amazon’s side. The retail giant is simply trying to “evade fair and just Illinois tax,” he tweeted.”

    The law seems a sloppy method to collect taxes on Amazon, without going to the real effort: make US taxes uniform across state lines.

  14. Yadda Yadda says:

    @Terri,

    Please advise me as to how you can make house payments and buy a new car on $24K a year. You may have a future as a financial advisor. A bit of advice: stop calling yourself a victim and stop voting for horse asses like Quinn.

  15. Louise says:

    @ Shane, see, you didn’t have to lose your affiliate status:

    Democratic senator wants Internet sales taxes
    http://news.cnet.com/8301-31921_3-20052999-281.html

    I knew that was coming down the pike!

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