The Amazon loophole: States seek to collect online sales tax
For several years, the Century participated in Amazon.com's affiliate program. By directing readers to the online retailer to buy copies of the books and music we review, we brought in a little extra revenue. But recently we've removed the Amazon links from our website. Some readers—who were glad for the chance to support us when they shopped at Amazon—have written to ask what's going on.
The reason for the change is that Amazon no longer offers the affiliate program in Illinois, where the Century offices are located. Why? Because last year the state passed a law requiring Amazon to collect sales tax from its Illinois-based customers—a move that found its rationale in the presence of Amazon affiliates here.
Online retailers have generally enjoyed tax-free sales. The 1992 Supreme Court decision Quill Corp. v. North Dakota stipulates that retailers have to charge sales tax only in states where they have a physical presence, such as a store, office or warehouse. But recently cash-starved states have challenged the status quo. Some have simply passed laws requiring online retailers to charge sales tax to state residents. Others have pursued the same end by clarifying that having marketing affiliates—individuals, businesses and nonprofits that make money by promoting Amazon links—is enough to constitute a physical presence in the state.
