The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.

This TechFlash article about the Colorado law is a little bit less vague:

The law requires Amazon and other online retailers to inform Colorado residents how much they owe in sales tax on web purchases. [...] While the law doesn’t try to force Amazon to actually collect sales tax — a strategy pursued by some other states — it does draw Amazon into Colorado’s sales tax collection efforts.

I personally do not rely on an Amazon Associates account, and I have never drawn a large amount of revenue from Amazon.com. I am concerned about what this will mean for other affiliate programs that I am involved with. Since I began exploring SEO, and beginning to employ SEO strategies in the sites I have been building, I have seen a marked increase in the amount of affiliate revenue I have been fortunate enough to collect. I have been making plans to grow my affiliate marketing revenue, however I don’t know if other retailers will be following through with the same measure as Amazon.com.

I have a lot of questions about the possible precedent that this will set. Is it only retailers that this is effecting? What about Clubs and subscriptions?

If anyone has more information about the possible reach of this new law, please let me know. I would be very grateful.

The full text of the notice from the Amazon Associates Program is listed below:

Dear Colorado-based Amazon Associate:

We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to “voluntarily” collect Colorado sales tax — a course we won’t take.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.

You may express your views of Colorado’s new law to members of the General Assembly and to Governor Ritter, who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

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

Best Regards,

The Amazon Associates Team