Interview with Jen Goode on Colorado Internet Sales Tax

Today I have had a chance to interview Jen Goode, a Colorado-based affiliate marketer and business owner, to get her inside perspective on the Colorado Internet sales tax bill, Amazon’s termination of Colorado affiliate accounts, and other related questions.

Here is the interview:

GP: Once again, thank you for agreeing to be interviewed on the topic, Jen. I know how passionate you are about it, and I really appreciate you dedicating the time to this.

JG: Geno, thank you for the opportunity to share my perspective on this issue. Getting involved in fighting the Ad Tax in Colorado has definitely been a learning experience and whirl wind at that. Let me preface all this by saying I am by no means claiming to be an expert on this topic. I am not a political guru, nor do I know the exact thought processes or reasonings behind what Amazon or the legislators are doing — I am merely sharing my views as I see them.

GP: Jen, besides being a good friend, a talented artist, blogger, and a great affiliate marketer, you’ve been an active advocate for affiliate marketing in Colorado. Could you give us a quick overview of what has happened in Colorado as far as the so-called “Amazon tax” goes?

JG: I came home from a series of business trips in early February to hear that HB-1193, the Colorado Internet Tax bill, was on the table and being debated/discussed down at the capitol. It literally popped up overnight. Before I had returned home, there had already been a hearing in the House where there was a fantastic turn out of Colorado affiliates opposing the bill and testifying on behalf of the industry. The Colorado affiliate community began working together to contact legislators — sending letters, making calls and even visiting the House and Senate offices to speak to legislators in person. The bill then moved to the Senate Finance Committee where again the troops were rallied to show support and testify. At this point, with the help of countless people, the legislators and affiliates had worked together to drastically change the language of HB-1193 so that the affiliates were removed all together. The state government knew they would be passing the bill regardless — so the primary goal was to help protect the residents of Colorado, the Affiliates. The bill then moved on to the Senate floor — and again it passed. The bill traveled back to the House for a final vote and then on to the Governor for his signature.

The State officials were satisfied that the bill no longer endangered the livelihoods of the affiliates and the affiliates were happier that they were no longer a direct piece of the bill’s language — although many were relieved, I believe the affiliate community was still in a “wait and see” mode. The fact there was a bill at all that passed, we’d never crossed this bridge before so we didn’t know where it would lead.

GP: Monday morning (8 March, 2010) all Colorado-based affiliates were terminated from Amazon.com’s affiliate program. I’ve seen you say you’re “very tired of all the ignorant comments by press and opposition that Amazon is holding CO affiliates hostage or using CO affiliates”. What exactly is your take on all of this? What is Amazon doing, and what should Colorado affiliates do now?

JG: First I have to say that statement was made because I am tired of the media sensationalizing the story� against the “big bad Amazon”. I realize the media is being media, but it’s irritating. Yesterday I had the chance to speak with the Denver Post — the reporter didn’t particularly like that I was not simply agreeing with him about evil Amazon. I’m not mentioned in any of the stories the Post published today (grin). The media is reporting from very biased angles, sharing information yet not understanding the industry. When we cried for media help during the bill debates and hearings, they weren’t interested. But now that there is a big corporate America guy appearing to avoid paying taxes, it’s all over the news.

I’m also tired of legislators again pointing the finger at Amazon as being greedy and bullying. Over and over we’ve heard that “it’s just not fair” to our local businesses. In the business world, sales tax is not the biggest obstacle to becoming competitive. I don’t want to come across as disrespectful. I sympathize with the local business owners struggling to keep up with internet retailers. I can relate — I am a local business owner — I even sell in brick and mortar retail shops. But sales tax is not the differentiator and definitely not when it’s handled on a state by state case.

I feel that Amazon is purely working on their own agenda — which to many can be construed as bulldozing over everyone else. I don’t like the tactic and I am not happy that I can no longer promote Amazon products, mainly because it’s a brand everyone knows and trusts and the prices are fantastic… So from a business perspective, it’s a great merchant to work with. But Amazon has bigger issues than just Colorado’s take on Sale Tax or Use Tax or any Internet related legislation. Amazon is in a batter across the country. I don’t know the logistics and I don’t know the details. I am just looking at it from a very speculative business view — a federal tax would better serve the cause.

I had the opportunity to speak with Senator Johnston for a few minutes yesterday — he is one of our opposition. Right now those who like this bill are claiming that Amazon “simply doesn’t want to pay sales tax and is holding affiliates hostage to avoid paying taxes”. I believe this is simply not true. His argument was that Amazon is already dealing with taxes for Target. I believe the technical tax aspect for Amazon is much more complicated and involved than any of the legislators comprehend. I wish Amazon could explain it more clearly and obviously than the big bully actions they have to take. I asked Senator Johnston if he had spoken with Amazon about their view of paying sales tax and if he has asked them if they would pay a sales tax if it were a nationwide/federal mandated tax vs individual state taxes. He said “no” but did say he would contact them. Let follow up on that in a few weeks.

Right now those on our side understand the pain and the need to fix the problem, they are in the minority, their hands are tied. Those against us (even when claiming they are for us) are simply putting the blame on Amazon and won’t budge. They are claiming they are fighting for the little guy. So there isn’t much we can do in the way of expecting the law to change. We won’t be heard and we’re only be fueling the fire that Amazon is bad. The more we show how much we’ve lost or the impact because of Amazon, the worse Amazon looks and the more they want Amazon to pay.

What I think we can do, however, is let those legislators on our “team” know that we are here if they need us. Ask them how we can help. Currently the Republicans are on our side. I think a few Democrats might be as well, but Colorado is too partisan right now to really tell. But more importantly take care of our businesses and families first. Don’t wait for the government to fix the problem, be proactive and work on a solution for your own situation. If you are looking for replacement merchants and want to be extra protected, there is a new service provided by GTO Management that allows you to search for merchants based on their involvement in state tax or nexus status called Nexus Aware.

I also recommend — with any business — diversify. It’s important not to put all your eggs in one single basket (to be a bit cliche) without a plan “just in case”. If you build your business entirely around one merchant, you’re leaving yourself vulnerable to issues out of your control. Not a good idea.

Some other things affiliates can do to help:

• Educate your merchants. Let them know that the Colorado internet tax does not apply to affiliates nor nexus.
• Get to know your legislators so you can educate them on the way this industry works, most really have no comprehension of the enormity of this industry let alone how it all works.
• Build relationships within the industry so that when issues like this arise, you’re not alone trying to figure out what to do next.

GP: What do you recommend online merchants do in connection with the ever-growing number of states considering similar, or most of the time more affiliate-focused tax laws?

JG: This is a tricky question. I am not very versed in legal terms and definitely not in the position to give business nor legal advice. However, I think it is extremely important that merchants really understand these laws and how they will impact their businesses. Prior to Amazon’s termination I received notice that I was not longer eligible in two other programs… Just because I am in Colorado. Merchants need to not simply hear “ad tax passed” and have a knee-jerk reaction. In the case of Colorado, affiliates or nt, the bill applies to all online merchants — so dumping affiliates does no good. Amazon is acting out of of a bigger cause than simply affiliate nexus issues.

GP: Thank you, Jen. I certainly echo most of what you have said above. Once again, thank you for your time.