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Amazon Dumps Hawaii Affiliates

June 30th, 2009 by Ryan Ozawa · 4 Comments · Hawaii, Politics, Technology, The Web

Amazon Associates

Amazon.com has pulled the trigger. As reported earlier, a looming Hawaii state tax law change relating to online affiliate marketers has prompted the Internet retailer to close the Amazon Associates accounts of Hawaii residents. Members of the local tech community are pushing Gov. Linda Lingle to veto HB1405, but Amazon.com is acting pre-emptively, clearly hoping that its action prompts even more people to express outrage.

The new law takes effect tomorrow, but Gov. Lingle has until today to notify the legislature of her intent to veto (which she must then do by July 15).

The text of Amazon.com’s termination notice is below (emphasis added):

We are writing from the Amazon Associates Program to notify you that your Associates account has been closed as of June 30, 2009. This is a direct result of the unconstitutional tax collection scheme passed by the Hawaii State Legislature with an effective date of July 1. As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 30.

We were forced to take this unfortunate action in anticipation of actual enactment because of the uncertainty and timing of a veto, and the possibility that a veto could be overridden. The governor has until July 15 to veto the bill but, as indicated, the bill has an effective date of July 1.

Please be assured that all qualifying referral fees earned prior to June 30, 2009 will be processed and paid in full in accordance with our regular referral fee schedule. Based on your account closure date of June 30, 2009, any final payments will be paid by September 1, 2009.

In the event that Hawaii’s governor vetoes this tax collection scheme, and that veto is not overridden, or in the event the law eventually is repealed, we would certainly be happy to re-open our Associates program to Hawaii residents.

The Hawaii General Assembly’s website is http://www.capitol.hawaii.gov/, the governor’s website is http://hawaii.gov/gov and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/.

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

Best Regards,

The Amazon Associates Team

The move comes a day after Amazon.com did the same thing in North Carolina, which garnered considerable national media coverage.

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4 Comments so far ↓

  • Dave

    I don’t know what kind of incremental tax revenue Hawaii expects to receive by being banished from these programs which currently generate tax revenue through income tax.

    This is obviously one of those bone-headed, “Throw the baby out with the bathwater” types of things.

    I have heard misguided people say that this move is “Pro-Hawaii” but in reality, it only punishes local Hawaii webmasters while rewarding folks on the mainland who monetize Hawaii related websites. Its a real competitive disadvantage for people who live in Hawaii & nobody else. Brilliant!

    Its not just Amazon… Merchants who use LinkShare, Performics & Commission Junction to manage their affiliate programs usually dump there affiliates as well because of legislation like this.

    As far as I know… Merchants with affiliate programs have two options.

    A) Spend time and money to create and install complex collection systems to monitor a Hawaii specific Tax. (Are you crazy? Who is going to do that just for us?)

    B) Give Hawaii based webmasters the boot! (Wow! – That was easy!)

    It’s not a joke or a bluff…

    It happened in New York. Hundreds of affiliate programs gave New York based webnasters the ax.

    Does anyone over here believe that Merchants will go out of their way to accommodate a tiny little state like Hawaii when they don’t have even have the resources to accommodate a huge, revenue producing juggernaut like the state of New York? Seriously? Anyone?

  • Linkmeister

    As I said at my place: “Sucks to be you, Hawai’i bloggers with Amazon affiliate accounts. You’ll just have to pay your (probably Mainland-based) web hosts out of pocket, rather than with the small commissions you earned from sales through that program.”

  • Vern | IncAnswers

    This is a really scary idea that I hope doesn’t catch on to the other 47 states. I just inc’ed my business, Aim for Awesome, Inc. in Hawaii a few months ago.

    Can you imagine if this spreads to all states – effectively killing all affiliate accounts because what company is going to want to deal with the hassle of taking taxes out of affiliate income?

    They’re picking a great time to destroy the little guy’s online business. Hope it blows over – vetos and then bonfire the whole idea.

  • Gary

    Looks like it was killed. Amazon sent me a email saying to activate my account to resume since bill was veto.

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