Amazon Cutting All Ties To Minnesota Business Before Online Sales Tax Law Kicks In

Amazon would rather not collect online sales tax in Minnesota — at least, it doesn’t want to do so because the state orders it to — so instead, by the end of the month it will cut all ties to its Minnesota-based affiliate websites. Those sites get a fee every time they refer shoppers to Minnesota, so they’ll be out of luck as of July 1.

The law signed by Gov. Mark Dayton last month says any online businesses with a physical presence in Minnesota must charge sales tax on items sold to the state’s residents. Instead of having to do that, Amazon will let itself off the hook by dumping its Minnesota businesses, while consumers will still be held responsible for paying those taxes.

Amazon explained its stance in an email to affiliates, via the Pioneer Press. Basically it doesn’t want to have to deal with online sales tax laws on a state by state basis.

“While we oppose this unconstitutional state legislation, we strongly support the federal Marketplace Fairness Act now pending before Congress,” Amazon told its affiliates in an email. “Congressional legislation is the only way to create a simplified, constitutional framework to resolve interstate sales tax issues, and it would allow us to reopen our associates program to Minnesota residents.”

Now it’ll be up to shoppers to voluntarily pay those taxes, which is tricky because plenty of online shoppers don’t even realize they’re responsible for them.

Minnesota has pulled a similar move in ditching affiliate relationships in other states with similar laws, including California. Around 5,200 affiliates in Minnesota will now lose money that they used to make from online advertising that sent shoppers to Amazon.

They could also stand to lose income from other online businesses who don’t want to be responsible for charging taxes. All told, the affiliates bring in about $500 million worth of business, at least in 2012, and paid $35 million in state income from that.

So that means the state loses money as well.

If the federal legislation on collecting sales taxes on online purchases passes the House and is signed into law, that could change everything and bring Minnesota back into the ever-loving arms of Amazon’s affiliate program.

Amazon dumps Minnesota affiliates to avoid collecting online state sales tax [Pioneer Press]