Amazon Cuts Ties With Colorado Sales Associates

Company Blames Law Requiring Online Retailers To Collect Sales Tax Or Send Notices To Customers

Amazon abruptly cut ties with its Colorado-based online business associates on Monday because of the state's new enforcement of its online sales tax law.

Amazon told affiliates in an e-mail on Monday it would no longer pay them advertising fees because of the new state law.

The law says online retailers either have to start collecting state sales tax themselves or send annual notices to customers telling them to pay the tax.

The move hurts businesses -- many of them small, home-based operations -- that earn money by using their Web sites and blogs to link customers to online retailers. Colorado has at least 4,200 such businesses, known as affiliates or associates, accounting for about 5,000 jobs, and most of them rely on Amazon to some degree, according to their trade group, the Performance Marketing Association.

The group's executive director, Rebecca Madigan, said some get only about 10 percent of their revenue from Amazon but others are totally reliant on it.

"There are a lot of people who are going to be hurt, and that's a shame," Braunstein said.

Amazon said the law is cumbersome and no other state has similar rules.

Ray Krueger-Koplin is among the online retailers affected by Amazon's action. He and his wife sell maps and books about Costa Rica. They mailed out several Monday afternoon.

When you purchase a book from their Web site, mapcr.com, you're actually purchasing it from Amazon, which paid them a commisson.

"They say add to shopping cart and then proceed to checkout," Krueger-Koplin said. "They just bought a book from Amazon. Yesterday, we would have gotten 50 cents. Today, Amazon's keeping that 50 cents."

Krueger-Koplin said he understands why Amazon is upset -- because of the different tax rates in all the cities, counties and states in the U.S.

"Keeping track of that would be a full-time job for me," he said. "It would destroy my business."

At the same time, Krueger-Koplin said he understands that online retailers now have an unfair advantage over brick and mortar stores.

"Eventually the two big boys are going to have to figure it out," he said. "And the states will have to figure out a way to collect the money, and Amazon will have to figure out a way to pay it."

But Krueger-Koplin said he'd like to see a single flat sales tax.

Gov. Bill Ritter said his office worked closely with Amazon's affiliates and associates to protect small businesses and to provide a fair level playing field for online retailers and main street brick-and-mortar shops.

He said Amazon's position is unfortunate and that Coloradans deserve better.

Republican lawmakers, who opposed the online sales tax bill and other tax hikes to balance the budget, criticized Democrats for pushing ahead with it.

"It's exactly what we said would happen. They're going to put people out of work. It's a game of chicken with people and their jobs, and they lost," said House Minority Leader Mike May, R-Parker.

Sen. Greg Brophy, R-Wray, said lawmakers should move to repeal the law.

"Their actions have had real-life consequences for real-life Colorado citizens," he said.