Why would the Vermont legislation endanger the livelihood of their independent business constituents?
Yesterday, at 3:34 PM, I received the following email from Amazon:
We are writing from the Amazon Associates Program to notify you that your Associates account will be closed and your Amazon Services LLC Associates Program Operating Agreement will be terminated effective January 6, 2015. This is a direct result of Vermont’s state tax collection legislation (32 V.S.A. § 9701(9)(I)). As a result, we will no longer pay any advertising fees for customers referred to an Amazon Site after January 5, nor will we accept new applications for the Associates Program from Vermont residents.
Please be assured that all qualifying advertising fees earned prior to January 6, 2015, will be processed and paid in full in accordance with your regular advertising fee schedule. Based on your account closure date of January 6, 2015, any final payments will be paid by March 31, 2015.
Amazon strongly supports federal legislation creating a simplified framework to uniformly resolve interstate sales tax issues. We are working with states, retailers, and bipartisan supporters in Congress to get legislation passed that would allow us to reopen our Associates program in Vermont.
We thank you for being part of the Amazon Associates Program, and hope to be able to re-open our program to Vermont residents in the future.
The Amazon Associates Team
This email announced immediate termination of all Vermonters’ Amazon Affiliate accounts.
What is the Amazon Affiliates program?
The Amazon Affiliate program allows me to earn commission on referrals that originate from links on my websites and YouTube channel. When I published this Nissan Pathfinder Knock Sensor repair video on YouTube in 2010, I added Amazon Affiliate tagged links to tools and parts I used in the video. When someone clicked the link and made a purchase on Amazon, I received a commission between 5 and 10%. Since 2010 this has generated passive income for me of a few thousand dollars. This will have a large impact on Vermont creatives that blog and depend on this revenue stream for a large portion of their income. The Amazon affiliate link can be seen in the screenshot of my video below. This one link has generated 2,115 clicks and 248 orders since January 2012.
OK, So what changed?
In 2011, the Vermont legislation amended the Sales and Use tax law definition of a ‘vendor’ to include internet affiliate programs such as Amazon (source). This was dubbed the ‘Amazon tax’. It’s not clear when this law change took effect, but it may have been the first of this year. An excerpt of this Vermont statute 32 VSA 9701 (9)(I), can be found below:
(I) For purposes of subdivision (C) of this subdivision (9), a person making sales that are taxable under this chapter shall be presumed to be soliciting business through an independent contractor, agent, or other representative if the person enters into an agreement with a resident of this State under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, to the person if the cumulative gross receipts from sales by the person to customers in the State who are referred to the person by all residents with this type of an agreement with the person are in excess of $10,000.00 during the preceding tax year. For purposes of subdivision (C) of this subdivision (9), the presumption may be rebutted by proof that the resident with whom the person has an agreement did not engage in any solicitation in the State on behalf of the person that would satisfy the nexus requirements of the United States Constitution during the tax year in question.
The vagueness of this line is of particular concern:
directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise
This has the potential to impact other much more significant revenue streams that Vermont bloggers depend on such as Google’s AdSense. (Google AdSense is a program that pays you to put ads on your website.) It’s unclear at this point the extent to which this law change will impact the income of Vermont’s bloggers and content creators.
For me personally, it means I will be shutting down a website that relied heavily on revenue from Amazon affiliate links. It also makes me question whether it’s worth posting ‘how to’ videos such as the one above that take a significant amount of time to produce.
Questions or concerns? Please leave a comment below.
Special thanks to Cairn Cross (@vtcairncross) for providing me information regarding the ‘Amazon tax’ passed by the Vermont legislature.
You can also follow this story on VPR online at “Amazon shutters Vermont program over tax issue.”