More States Try to Get In On "Amazon Tax"

As we have previously written and spoken about, states are increasingly looking at out-of-state e-commerce as a source of new tax revenues. New York led the way with its "Amazon Tax," which extended "nexus" for sales tax purposes to the 3rd party affiliates who referred deals to Amazon.com via its Associates Program, leading to a lawsuit from Amazon and other retailers.

More recently, Colorado passed a new law that takes a different approach to New York's, although it has still led Amazon to drop its Colorado-based affiliates. What Colorado did is make out-of-state retailers responsible to help enforce and collect its existing sales or use tax from Colorado residents, by providing statements of all Colorado sales to the state. Colorado is using the affiliates as the connection to provide jurisdiction for retailers like Amazon that don't have other personnel or operations there.

Meanwhile, Connecticut is once again seeking to pass its own Amazon Tax law, prompting Amazon to threaten a pullout of its Associates Program from that state, and we will continue to follow and advise its clients on these issues, which can pose significant challenges for both affiliates and the merchants who depend on their referrals. For more information, please contact the attorneys in our Internet law practice.

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