My personal frustration is not really about Amazon, as I derived little to no revenues from them. My concern is that I am an online retailer who uses affiliates to help drive business. It is effective because as a little company, I can’t afford a lot of up-front expenses, but I can afford to pay-for-performance. This is the beauty of affiliate marketing, I only have to pay an advertiser when they make the sale.

Now, from what you are telling us, according to the law (and assuming a similar law is created in other states), I know have to calculate and figure out sales tax for every state that passes this law. How I will know about all these little laws is beyond me. I wouldn’t even know Colorado passed one if I hadn’t received a letter from Amazon. So I guess I have to pay money to hire an attorney to figure that out. And they have to be on retainer because the laws are going to keep changing.

Then I need to send Colorado reports of every customer that bought from me, their contact information and how much money they owe you. Now you are requiring me to violate my privacy policy resulting in more legal fees.

And, I need some software shopping cart product to make all these calculations and print these reports. Now I need to wait until someone else creates one because I don’t have the resources to create one myself. Now I’m open to more legal attacks as I can’t comply to the law.

I realize Colorado is trying collect sales tax from Colorado residents. Now how are they actually going to do that? How many millions of dollars are they going to spend to process all that data that is sent to them? What are they going to do, send me a letter because I bought 1 book online from Amazon last year? The cost of processing that information far outweighs the benefit they will gain. The postage on the letter is greater than the sales tax owed on that book. How many years is it going to take them to write a software program to process all this data?

Hmmm. Small business is screwed because it is too costly to comply. The Colorado resident has lost their privacy. The Colorado government has to spend millions if not billions to process the data and enforce the new law.

How does anyone benefit?

I really hate how people in support of the bill speak badly of Amazon. They aren’t the only ones who will shut down affiliate programs. I think it was a brilliant move by them and helped bring attention to the issues.

The law passed in Colorado does not say that affiliates constitute a physical presence. It merely states that Amazon, and other online retailers, are required to disclose to a buyer the sales and use tax that the customer owes the state of Colorado. It doesn’t require Amazon to collect that tax or to pay that tax in any way. The decision to end relations with affiliates was merely a spiteful response to the Colorado, and to scare California into killing a similar measure under consideration.

Amazon took their anger out on affiliates and Colorado citizens. If we let one company bully us into passing tax breaks that favor them then what will stop every other major corporation from doing the same?