Amazon Ends Affiliate Relationship in Illinois

Amazon Ends Affiliate Relationship in Illinois

Well, I guess you can say Amazon is good to it's word when they say that they would end their affiliate relationship with affiliate marketers if Illinois put through the Internet sales tax.

As I stated in an earlier post the Illinois state government wanted to start collecting sales taxes from affiliates in the state, for all sales made by Illinois residents. How many affiliates will this affect in Illinois? 9000.



So far, Amazon has closed its affiliate program in: Colorado, North Carolina, Rhode Island, and now Illinois. Will other states look to the Internet to close their deficits? They are trying.

California was considering the same such move. However, Amazon threatened to choke off their affiliate marketing program in California if  (10,000 affiliates would be affected in that state) state lawmakers proceeded with  legislation that would require the Internet retailer to collect sales tax from their state residents.

California, not deterred, decided to have a study done, to see the revenue affects it would have on their state. According to a study by the State Board of Equalization Staff Legislative Bill Analysis in CA it showed that if Amazon shut it's affiliate program down,  it would affect the state adversely. It estimated that Amazon currently comprises roughly 50 percent of the Internet sales of large firms who have no
residence in California.


If Amazon and Overstock stayed on board and other people continued to sell on Ebay, the sales tax that California would collect would be:

        $152 million in 2011-12
        $317 million in 2012-13

Since Amazon stated that they would not continue their affiliate program, the revenue would shrink to:

        $114 million in 2011-12
        $234 million in 2012-13.



Mind you, that is just Amazon. If other online businesses followed the same path as Amazon, the revenue would be further diminished. In addition, the termination of the program would further lower revenues because it would adversely affect employment, which would translate into less revenue from personal income taxes and corporation taxes.

I wonder if the other states did a comparison study?

In addition, Texas slapped a  $269 million bill for uncollected sales taxes at Amazon distribution center in Texas. Amazon threatened to close the doors on the distribution center if they proceeded with the billing.


Why is Amazon proceeding in this manner? They feel the law is unconstitutional and there is a U.S. Supreme Court ruling in 1992 that is also relevant. The ruling stated that retailers can't be forced to collect sales tax on out-of-state shipments unless they have offices in those states.

Eventually, this issue will have to be addressed by Congress. Don't you think.