Today the Colorado House of Representatives voted 33:32 and approved HB-1193 – also known to some as the “Advertising Tax” or “Amazon tax”. The goal of the bill is to collect sales tax from out-of-state online retailers which in turn would then help to fill a major budget hole in Colorado. Out of state retailers are companies like Amazon.com or Overstock.com (and hundreds more). Please note: The next paragraph explains on a high level what affiliate marketing is – skip as needed and continue reading further down below. These online retailers work directly with so-called affiliates in Colorado – individuals and companies who advertise the retailer products and services and receive a commission if a sale is generated through their referral links. As a matter of fact, entire businesses are built around this business model. Who are these affiliates? Affiliates can be companies or individuals like Work at home Moms, the hobbyist next door trying to pay for web hosting, or John Doe next door making a living of blogging. And of course there are many more business models that are based on affiliate marketing.
If HB1193 passes, the retailers will terminate relationships with affiliates. The same thing has happened in the State of NY, Rhode Island, and North Carolina. The number of companies that terminated business relationships was in the hundreds. Companies and individuals affected on the other side: thousands!
HB1193 has passed the House and is moving on to the CO senate. If approved and then signed into law by Governor Ritter it will be putting Coloradoans out of business by the hundreds, maybe even thousands. Rather than gaining much needed revenue for the state, the results of this bill will create more unemployment, reduced state income tax revenue, reduced business and personal spending in the local economy – effectively kicking of a chain reaction financially devastating hundreds, possibly thousands of Colorado families.
Will bill 1193 create more revenue for the State of Colorado? No, it will not. Customers will still buy from Amazon.com and the hundreds of other retailers. And since they cut ties to Colorado affiliates, the state will go home empty handed only to find a bigger hole in the budget because of businesses moving out of state or shutting down. Good job, Colorado House Representatives!
Read more about this issue here, and here and here.
I personally have written over 100 emails to house representatives only to either find silence, or someone who votes on something she does not understand and is not willing to look deeper into the issue. My business is affected as well and I have to see how things turn out. I expect another 2-3 days of lost productivity and to write emails and to make phone calls.
Please follow the PMA blog for more details and get involved by joining the mailing list for Colorado affiliates.
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