I previously reported on the “Amazon Tax” Bill (HB 3659) making its way through Illinois Legislation and landing on the Governor’s desk. Two months later, Governor Pat Quinn (recently elected Governor by .9%) has signed the bill into Public Act 096-1544. The Act “closes the loophole” (a.k.a. twists the law in lobbying groups’ favor) so that the same law that requires businesses with a physical presence in Illinois to collect sales tax is extended to those businesses with affiliates residing in the state. I reached out to Amazon, one of the companies with the biggest and most successful affiliate programs, Amazon Associates, and received word that they’re not willing to play ball.
The thing about this law that gets under my skin is not that I will be out a source of revenue that supports 404 Tech Support. Instead, the problem is that the law is very business unfriendly. It’s a move by a greedy state. A state with a 9% unemployment rate as of January 2011, should be working to create jobs not scare businesses off and close off sources of income. Companies like FatWallet.com and BradsDeals are based in Illinois and have received notices from related affiliates like Overstock.com and Amazon stating that current affiliations have been terminated. FatWallet has previously mentioned leaving the state if this law went into effect. Politicians like Governor Quinn see this law as a new source of income for the state. It would be if any companies left their affiliates in place. Instead, there will be less revenue coming into Illinois as Internet companies terminate their relationships with their affiliates.
Personally, I’m happy that Amazon and Overstock have shut off Illinois-based affiliates in response to the law passing. Following the bill passing through the House, I found a lot of discussion stating that ‘Illinois is too big for Amazon to cut us off’ or comments from the lobbying group, Illinois Retail Merchants Association, pushing for the bill. I disagree with the IRMA’s points and feel that consumers choose online shopping because it provides benefits like greater selection through the infinite warehouse and a greater capability to research products and compare prices. Showing he was already in the Lobbyist’ pocket, Quinn called the law the ‘Main Street Fairness Act’. Why not call it the ‘We Don’t Really Get This Whole Internets Thing Act’?
The law’s previous version made a little more sense. A retailer with a physical presence must collect sales tax. A physical presence takes resources that the state pays for like roads, legal protections, and others. Collecting taxes makes sense in that scenario, taxes pay for the benefits that companies receive by being in the state. Frequently, you’ll hear of companies receiving a tax break in order to move to or remain in the state (See Quinn providing Mitsubishi a $29 million cut just last month). Being an affiliate costs the state no more than if I lived here and wasn’t an Amazon Associate. In fact, it costs more because the little bit of revenue I make from Amazon gets spent locally. I intentionally moved my hosting to WiredTree here in Illinois to keep my money in the state.
Amazon sent out the following letter to its associates. The affiliate relationship will be terminated on April 15th.
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.
The Amazon Associates Team
Screw Quinn as he screws Illinois and its individuals. Scumbag Quinn. Campaigns on 1% income tax increase, institutes 3% income tax increase.