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Weeks before Minnesota's new sales tax law takes effect, online retailer Amazon is cutting its ties to members of its Associates program who live in the state. The new law requires businesses that have a presence in Minnesota to collect sales tax.
Amazon has taken similar steps in other states that have passed laws like Minnesota's, ending the contracts of Associates — people and businesses that are paid for sending customers to the retailer.
"Online retailers who have relationships with an associate or an affiliate like me and do a certain amount of business in the state of Minnesota, they have to collect sales tax," Carrie Rocha of Maple Grove, Minn., tells Minnesota Public Radio. "There's a very easy workaround for these businesses and that's to sever their business relationship with me, basically fire me. They don't then have to collect the sales tax."
In a letter to affiliates reprinted by the Twin Cities' Pioneer Press, Amazon informed recipients that their account "will be closed" and the company will not pay them for any customers referred to Amazon after June 30, "nor will we accept new applications for the Associates Program from Minnesota residents."
There are more than 5,000 Amazon Associates in Minnesota, the Pioneer Press reports.
The letter from Amazon says the change is a result of "the unconstitutional Minnesota state tax collection legislation" that will take effect on July 1. It concludes by saying Amazon will restore its ties after Congress approves the Marketplace Fairness Act. The Senate approved that measure in May, but it faces opposition from many other online retailers.