We’ve been warning our readers for awhile that the proliferation of state online tax legislation was only going to continue here in 2011. We weren’t kidding.
Lo and behold, Arkansas last week became the latest state to move closer to an affiliate tax that so many other states have either adopted or are in the process of considering.
SB 738, also known as both the Amazon Tax law and the Main Street Fairness law down in The Natural State, passed the Arkansas General Assembly last week and has been sent to Governor Mike Beebe’s desk. Beebe, a Democrat, has already gone on the record supporting the bill so final approval should come sooner rather than later.
Mirroring similar legislation in other parts of the country, the measure’s primary action would be a requirement that retailers begin collecting sales taxes if they have affiliate partnerships within the state’s borders and do more than $10,000 a year in sales.
Once Beebe signs the bill into law, Arkansas will become the fifth state overall to enact affiliate/sales tax legislation, following in the footsteps of New York, North Carolina, Rhode Island and Illinois.
Illinois is the only one of the bunch to actually pass such a bill into law here in 2011, but according to some experts, there are similar pending bills up for review in at least another ten states across the nation right now as well. As such, we could be seeing the first of a steady stream of new state tax laws over the coming months that will dwarf those passed just a year ago.
Of course, the biggest question now (as has been the case in those other four states) is how the Arkansas bill will affect Amazon. The very fact that Amazon’s name has found its way into the bill’s aliases proves that the company is in the crosshairs of this kind of legislation more than any other. Amazon’s actions in response to online tax bills lately have served as an example for other retailers affected by the bills as well.
We couldn’t find any official response from Amazon about SB 738 (while ironically, Walmart, which calls Arkansas home, supports it) but it’s not hard envision the company severing ties with its Arkansas’ affiliates, just as it has done in several other states. Simply put, it makes more financial sense for Amazon to just pull out of states with tax laws it considers burdensome rather than stick around. We wouldn’t be surprised to see Amazon officially end its’ affiliate relationships in Arkansas within a month of Governor Beebe’s approval of the new law.
But what do you think? Leave us your thoughts on this latest online sales tax development!