Amazon eliminates affiliate program in North Carolina over tax dispute

Remember last year when New York passed a law to start collecting sales tax on items sold by online retailers with affiliate deals with New York residents? Basically stores like Amazon had been able to get around collecting sales tax in states where they had no physical retail presence. But New York decided that if John Smith posts links to Amazon products on his web site and gets a commission for any items sold, and if John Smith happens to live in New York, that constitutes a retail store.

Amazon, Newegg, and Overstock were having none of it, and Amazon even filed a lawsuit. It lost.

Now North Carolina is preparing to adopt a state budget that would similarly require retailers like Amazon to collect taxes if they have affiliate relationships with individuals living in North Carolina. And this time Amazon took a different approach. It canceled its affiliate relationships with North Carolina residents.

Search Engine Watch points out that North Carolina lawmakers have instituted tax breaks for a handful of other major companies including Apple and Google in an effort to convince the companies to build data centers in the state. The result could be that these companies will play by different rules than the ones that would have applied to Amazon had the retailer not severed its affiliate relationships in North Carolina.

Tags: amazon, internet-tax, news, north-carolina, tax