Amazon.com has “jumped the gun” so to speak and shut down its affiliate program, the Amazon Associates Program, to associates who live in the State of North Carolina. Amazon.com is taking this unprecedented step of shutting down their affiliate program ahead of what they’re calling an “unconstitutional tax collection scheme expected to be passed any day now by the North Carolina state legislature (the General Assembly) and signed by the governor.”

I have received a copy of an email sent by Amazon.com to a member of the Amazon.com Associates Program who is a North Carolina resident:

We are writing from the Amazon Associates Program to notify you that your Associates account has been closed as of June 26, 2009. This is a direct result of the unconstitutional tax collection scheme expected to be passed any day now by the North Carolina state legislature (the General Assembly) and signed by the governor. As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 26. We were forced to take this unfortunate action in anticipation of actual enactment because of uncertainties surrounding the legislation’s effective date.
Please be assured that all qualifying referral fees earned prior to June 26, 2009 will be processed and paid in full in accordance with our regular referral fee schedule. Based on your account closure date of June 26, 2009, any final payments will be paid by September 1, 2009.

In the event that North Carolina repeals this tax collection scheme, we would certainly be happy to re-open our Associates program to North Carolina residents.

The North Carolina General Assembly’s website is http://www.ncleg.net/, and additional information may be obtained from the Performance Marketing Alliance at http://www.performancemarketingalliance.com/.

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

Best Regards,

The Amazon Associates Team

In an effort to get more revenue for the State of North Carolina, the State has decided to pass legislation that would add a “click-thru tax”, a tax on sales that go through affiliates. So, if you are a website owner that provides “free content” on the internet and gain most of your revenue from affiliate marketing, you’re out of luck: the States, such as North Carolina, are starting to add taxes to your affiliate marketing efforts. New York has apparently already passed such a tax, and North Carolina’s affiliate tax is supposed to be on the law books soon.

I do believe, though, that Amazon.com’s shutting down North Carolina affiliates “jumps the gun” so to speak and it not warranted. The North Carolina tax on affiliate sales has not officially passed yet, and perhaps this is just an effort “not to have to pay” affiliates who have made them sales. No word on how many affiliates Amazon has in the State of North Carolina.

If you’re interested in following this there’s more information here and here and here and you can check the Performance Marketing Alliance for updates and what’s going on in other States.