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Amazon.com closes associates accounts for Hawaii residents

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Baron Sekiya/Hawaii247.com

Internet retail giant Amazon.com closed the associate accounts of Hawaii residents as of Tuesday, June 30, in reaction to House Bill 1405, which would collect taxes on all sales to Hawaii-based customers should the associates program continue. House Bill 1405 takes effect Wednesday, July 1.

Amazon.com has urged associates affiliated with the company, or its sister site Endless.com, to voice opposition to the legislation with Gov. Linda Lingle who has until July 15 to veto the bill.

Typically, residents with Amazon associates accounts who used banner ads on their Web sites, e-mail notices or other means of directing sales traffic to Amazon.com or Endless.com earned up to 15 percent of the sale. Amazon.com used an associate’s account identification to mark the referrals to its site and to track sales.

Amazon.com terminated associates programs June 26 in North Carolina and June 29 in Rhode Island due to similar legislation. California also is considering instituting a similar tax on out-of-state businesses.

The legislation goes beyond Amazon.com as it covers any business in another state that has 20 or more affiliates in Hawaii or if the business generates more than $100,000 through any referrals from Hawaii residents or if a single resident generates at least $10,000 in sales during the calendar year.

Without House Bill 1405 any U.S. businesses outside Hawaii without a physical presence in the state did not have to pay the general excise tax on sales. Currently, Apple has retail stores in Hawaii and charges tax to Hawaii customers who purchase goods, music and software online.

Below is the e-mail sent to Amazon.com associates:

We are writing from the Amazon Associates Program to notify you that your Associates account has been closed as of June 30, 2009. This is a direct result of the unconstitutional tax collection scheme passed by the Hawaii State Legislature with an effective date of July 1. As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 30.We were forced to take this unfortunate action in anticipation of actual enactment because of the uncertainty and timing of a veto, and the possibility that a veto could be overridden. The governor has until July 15 to veto the bill but, as indicated, the bill has an effective date of July 1.

Please be assured that all qualifying referral fees earned prior to June 30, 2009 will be processed and paid in full in accordance with our regular referral fee schedule. Based on your account closure date of June 30, 2009, any final payments will be paid by September 1, 2009.

In the event that Hawaii’s governor vetoes this tax collection scheme, and that veto is not overridden, or in the event the law eventually is repealed, we would certainly be happy to re-open our Associates program to Hawaii residents.

The Hawaii General Assembly’s website is www.capitol.hawaii.gov/, the governor’s website is hawaii.gov/gov and additional information may be obtained from the Performance Marketing Alliance atwww.performancemarketingallian….

We have enjoyed working with you and other Hawaii-based participants in the Amazon Associates Program, and wish you all the best in your future.
Best Regards,

The Amazon Associates Team

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