This guest post is by Yasmine Mustafa of 123LinkIt.com.
The Business Insider recently reported that ten thousand affiliates were recently dropped from Amazon's Affiliate Program with little warning.
How much income would you lose if you were no longer permitted to use the program?
This is an issue that bloggers in California, Colorado, Illinois, New York, North Carolina, Rhode Island, and Connecticut are currently facing. They were instantly cut from Amazon's affiliate program due to a new affiliate tax law.
How did it happen? What can you do to avoid this law from passing in your state?
All about the affiliate tax law
Online retailers such as Amazon that do not have a physical presence are not required to collect sales tax like brick-and-mortar businesses. Big companies like Wal-Mart who are taxed see this as an unfair advantage and are paying lobbyists to push what is now called the "Amazon tax" or the "affiliate nexus tax."
In short, this affiliate tax states that online merchants can in fact be taxed if they have a "nexus" or connection within the state. Affiliate marketers are one of the groups of people viewed as a connection. As a result, state governors in the above-mentioned states are signing a law that taxes Amazon and other online vendors through its affiliates. They are now being treated as having a physical presence and are subject to pay taxes.
Amazon has reacted immediately. Wanting to avoid being subject to costly tax inquiries from the government, they are cutting connections to every state that passes the affiliate tax by terminating agreements with all affiliate marketers, leaving many bloggers with decreased incomes and some with no incomes from their blog. As long as there are states that do not tax its sales, Amazon has stated that it will continue to avoid affiliate marketing in the states that do. As of June 30, 2011, California, Colorado,...
