Amazon Tax Deal for New Jersey Explained
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Being the biggest retailer online, Amazon must deal with various laws and regulations in different parts of the world. More than that, they also must comply with different laws in individual US states.
Just recently, for example, Amazon has made an agreement with New Jersey to start collecting state sales tax next summer (on July 1, 2013).
This state tax is something all New Jersey based entrepreneurs have to charge their customers, while out-of-state online retailers don’t have to worry about it.
(By law, states can only ask for sales tax collection if the retailer has a physical in-state presence.)
This situation is a very lively topic in New Jersey because it’s considered a competitive disadvantage. In-state merchants want for everyone to be operating under the same rules, which is understandable.
Amazon obviously doesn’t want to pay this tax right away, so instead they’ve reached an agreement with New Jersey that lets them extend their sales tax exemption in exchange for building two large distribution centers in New Jersey.
This will result in 1,500 new full-time jobs and probably thousands part-time and seasonal jobs. In the end, Amazon won’t have to care about the tax for another year, but they do have to participate in New Jersey’s development and help their economy one way or the other.
When the day comes and Amazon finally has to charge the tax, it’s estimated to result in $30 million to $40 million a year in additional tax revenue (which is yet another proof of how big of a retailer Amazon actually is).
What’s In It For Affiliates?
Right now affiliates have nothing to worry about. Amazon will operate normally in New Jersey for another year, and affiliates shouldn’t see any changes until July 1, 2013.
The common belief is that such steps can harm Amazon and its affiliated resellers in the future, however, this isn’t something we can protect ourselves against.
Affiliates can only look at their numbers and decide whether Amazon continues to be profitable for them or not. We still have almost a year before these changes come into force, so a lot of things can sprout up during the process. For now, the advice is to stand still and run your Amazon promotions targeted towards New Jersey audiences like you’ve been doing before.