Affiliate Tax Battle Heats Up in Colorado

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The affiliate tax (or Amazon tax) just gained some momentum in Colorado, passing through the House. The bill (HB-1193) is now moving to the Senate. The argument against the tax is the same - that taxing out-of-state retailers who use Colorado-based affiliate advertisers will destroy businesses and result in less overall revenue for the state.

As expected, both retailers and affiliates are working to keep this bill off the books. Overstock.com recently sent a note to its affiliates, stating they will be forced to terminate relationships of Colorado-based affiliates should the bill pass into law. Overstock has already implemented this measure in states where the bill has become law - New York, North Carolina and Rhode Island. And while Overstock is the most outspoken on the issue, it won't be the only online retailer to shut down local affiliates.

Rhode Island presents an interesting case as it pertaines to the affiliate tax. The Providence Business News reports that Rhode Island has yet to collect any taxes as a result of the tax law. In addition to the lack of collection, less taxable income is being produced in the state. Amazon has already dropped their affiliate operations from Rhode Island.

Genral Treasurer Frank T. Caprio, who is running for governor of Rhode Island said, "The affiliate tax has hurt Rhode Island businesses and stifled their growth, as they’ve been shut out of some of the world’s largest marketplaces, and [it] should be repealed immediately."

David Asseoff, CEO of Denver-based internet marketing company Adperio (who generates $35 million per year in revenue) said, "It's going to kill jobs, there will be no incremental revenue the bill is flawed from the get go and unfortunately businesses like ours and our industry are going to suffer we anticipate over four thousand jobs," said Adperio CEO David Asseoff, "Affiliates, many of them small moms and pops are going to lose their business."

This will be an interesting battle to watch in the coming days and weeks. To stay up-to-date on developments, check out this forum at ABestWeb, this Facebook Group and use the #advertisingtax hashtag on Twitter.

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