ADOTAS — Overstock has dropped affiliate advertisers in California, Hawaii, North Carolina and Rhode Island Co sent notices to all of its affiliate advertisers in California, Hawaii, North Carolina and Rhode Island.
On Monday, Amazon said it was ending its business relationships with marketing affiliates in Rhode Island so the online retailer could avoid collecting sales tax in the state. The Legislature recently passed a bill forcing companies to collect taxes *if they have online-marketing affiliates, which get a sales commission by featuring links to outside e-commerce sites on their own Web sites, in the state. This comes shortly after a similar bill in North Carolina prompted Amazon to end its relationship there.
A similar move last year in New York prompted Amazon, which is still there, and Overstock, which isn’t, to file a lawsuit against the state, which is still pending, arguing the tax law was unconstitutional.
According to the WSJ, Rebecca Madigan, founder of the affiliate trade group Performance Marketing Alliance, estimates there are some 2,000 online affiliates in Rhode Island, who pay about $3 million in state income tax.
“We’re seeing small businesses being hit,” she told the WSJ. “They are the collateral damage through all of this legislation, which inaccurately classifies affiliate marketers as sales agents” rather than advertising channels.
Amazon needs to find a different way instead of leaving people flat.
*Corrected from an earlier version.