As of this morning, March 8th, Amazon has announced that they are closing Amazon Affiliate accounts for Colorado residents in reaction to a new state sales tax law enacted on February 24, 2010. While users may not be aware, I’m a Colorado resident, and the Amazon Affiliate program is how NovelRank survives as a free service for authors to track their sales rank. The program pays a small percentage fee to me when anyone purchases any product on Amazon when clicking through NovelRank book links to Amazon pages. This costs the buyer nothing at all.
Amazon Affiliate payments were covering the website hosting costs for running the service for a total cost of $348 a year, but did not cover the 217+ hours I have spent building and improving NovelRank. I LOVE doing NovelRank, but this is really really bad as the hosting costs are now an out-of-pocket financial cost for me. I’m scrambling to try and get around this (or hope that Colorado law makers repeal the law and thus Amazon reinstates the Associates account). Till then, thank you to the two individuals who have donated directly to support NovelRank, and if you are able and wish to, a small donation would go a long way in allowing NovelRank to continue serving you (I have a lot of books to giveaway!).
The full email I received this morning:
Dear Colorado-based Amazon Associate:
We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.
We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.
There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly [ http://www.leg.state.co.us/Clics/CLICS2010A/csl.nsf/directory?openframeset= ] and to Governor Ritter [ http://www.colorado.gov/cs/Satellite/GovRitter/GOVR/1177024890452 ], who signed the bill.
Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.
We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.
The Amazon Associates Team
Update: March 9, 2010 10:04 AM
According to WSJ about $35 million was generated for the 4,200 affiliates in Colorado. Estimated $1.62 million then in lost state tax revenue for a ‘projected’ $5 million from the new law.
Update: March 12, 2010 7:14 AM
No movement from Colorado Legislature. NovelRank isn’t going away, even if it is out-of-pocket, it will be here for at least the rest of 2010. I’m working with family to move affiliate revenue to one of them in the state of Florida. It’s a ridiculous burden, but it will work. Thanks for the kind emails and the donations that have been made.