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Amazon and Missouri: More Affiliates Bite the Dust

  • Aug 16, 2013 | Gail Cole

 Amazon: goodbye missouri affiliates.

It's becoming a familiar pattern. A state passes legislation requiring remote retailers to collect and remit sales tax if they meet certain criteria. To express their displeasure with the law, remote retailers terminate the affiliate program in that state. No business = no sales tax. End of story.

The street name for this type of legislation is "Amazon Tax," because Amazon.com is a retail giant that does enough business in every state to trigger the tax that smaller retailers might avoid.

Amazon does collect sales tax in many states where it has substantial nexus as it has traditionally been defined--a physical connection with the state. It collects tax in Washington State, for example, where it is headquartered. And it collects tax in Arizona, California, Texas and several other states where it has fulfillment centers, customer service centers, data centers or software development centers. While it does not yet collect sales tax in all states where it has a physical connection, it has reached agreements with most of those states to collect it in the future.

Many lawmakers and Main Street retailers argue that the Internet has changed the look of nexus. They say that although remote retailers may not have a substantial physical presence per se, they do have substantial connection through the Internet and affiliates and should therefore collect and remit tax on their sales. The Marketplace Fairness Act of 2013 (MFA), currently waiting on the table of the House, would allow states to impose sales tax collection requirements on many businesses. Some states are waiting to see if it will pass. Others are less patient.

On July 5 of this year, Missouri Governor Jay Nixon (D) signed SB 23 into law. Under it, vendors that enter "into an agreement with a resident of Missouri to refer customers to the vendor" are presumed to have nexus in the state if "the sales generated by the agreement exceed $10,000 in the preceding twelve months." Read more about the new law here.


On August 15, Amazon notified affiliate vendors in Missouri that it would be terminating the affiliate relationship on August 27, 2013. The letter makes clear that this action is in response to the new Amazon tax:

"This is a direct result of the unconstitutional Missouri state tax collection legislation passed by the state legislature and signed by Governor Nixon on July 5, 2013, with an effective date of August 28, 2013. As a result, we will no longer pay any advertising fees for customers referred to an Amazon Site after August 27 nor will we accept new applications for the Associates Program from Missouri residents." 

Read a copy of the letter here.

And so, Missouri affiliates will soon join Minnesota affiliates and learn what life is like after Amazon.

The after life

If the MFA gets the president's signature, companies like Amazon will not be able to call laws like Missouri's SB 23 unconstitutional. Amazon supports MFA--even the letter sent to Missouri affiliates says so:

"While we oppose this unconstitutional state legislation, we strongly support the federal Marketplace Fairness Act now pending before Congress. Congressional legislation is the only way to create a simplified, constitutional framework to resolve interstate sales tax issues and it would allow us to re-open our Associates program to Missouri residents."

Do you do business in multiple states? How will your business handle sales tax changes?

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.