This week, Amazon sent termination letters to affiliate in the state of Colorado. Amazon had made very clear that they would stop advertising through Associates based in any state who passes nexus or online tax. They, along with other merchants, feel that the new nexus laws are unconstitutional and that we need to have a fair and constitutional approach.

Thousands of Colorado small businesses, mommy bloggers and other online entities have links using the Amazon Associate program and these links are now invalid. The impact may not necessarily be noteworthy per individual affiliates but as a group it’s enormous.

The letter reads as follows:

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.

The law passed in Colorado (HB 1193) is the most extreme one that has passed so far. Some are expressing confusion over the decision to remove Colorado Affiliates from programs. Rather than personally reading the bill, some may have relied on someone’s interpretation.  I am sure Amazon made good use of the legal counsel and made the decision that is right for them.  Sometimes the best approach is to prepare for the worst and hope for the best. It’s not pessimism but realism.