I received a truly bizarre email this morning, in fact so bizarre that I assumed it was some elegant Phishing scheme. However a little bit of Due Diligence revealed that the email was real.

As of right now, anyone that is using Amazon as a revenue stream, in other words is part of the Amazon Affiliates program and resides in Colorado has been shut down. Any earnings to date will be paid, but Amazon will no longer serve ads (for payment) on any web site registered in Colorado.

The problem apparently stems from some recent legislation in Colorado (HB 10-1193). The state decided that the internet sales marketplace was ripe for the picking as a source of tax revenue.

While Colorado was not trying to hijack Amazon, they wished to impose a burden on the giant e-tailor in reporting on their Affiliates in the state.

This is very much a double edged sword. I admire Amazon for taking a stance. They are not based in Colorado and should not be forced to comply to these reporting requirements. Score one for Amazon!

Alas there is also a downside to this decision. There are a number of people in Colorado that have created businesses around Amazon. They may not make huge amounts of money, selling $1,000 worth of product will likely net you about $70. But in this economy that $70 might well be the difference between eating and not eating.

Who are Colorado hurting? Well they certainly are not inflicting any pain on Amazon. The company has already said that they are happy to ship to the state. No consumers are hurt, if someone wants to buy something, they can. The only people hurt in this idiocy are the folks that have been using Amazon as a way of earning a few extra dollars.

HB 10-1193 was a very poorly thought out piece of legislation. Rather than increasing revenue for the state it is having the opposite effect.

This is a prime example of idiocy government in action.

Here is the letter that I received:

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.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.
You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,

The Amazon Associates Team

Colorado has done a wonderful job of ‘cutting off your nose to spite your face.’

They have not increased their tax revenue, in fact they have done the opposite. Those people that were making small amounts of money from Amazon now have less money to put back into the economy.

I am not a fan of the movie Forest Gump, but the line ‘Stupid is, as stupid does’ springs to mind.

Simon Barrett

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