The Arkansas Amazon Sales Tax is Now Live. How’s That Going So Far?

Guess what happened yesterday (October 27, 2011) while you were not paying attention? Arkansas Act 1001—better known around these parts as the “Amazon Sales Tax”—went into effect.

I guess this means that now the state will be swimming in new revenues, ensuring a higher level of services and a brighter outlook stretching unto the horizon. Farewell, bygone era of fiscal uncertainties! We just hit the Internet Jackpot! Huzzah! Huzzah!

Say, I’ve been meaning to buy a couple of books on Amazon.com. I think I’ll go do that right now…

There, done. Wait, what’s this on my invoice?:

The price of futility

Well, everything appears to be working just as anticipated. No further questions, please!*

Since Amazon, in response to the passage of the Arkansas law, ended its affiliate marketing contracts with Arkansas businesses this summer, they won’t be paying collecting any sales tax to be remitted to the state. The same goes for hundreds of other online retailers, big and small, who discovered that avoiding paying collecting sales taxes in Arkansas was as simple as ending their business relationships in the state.

Were it just a matter of the new law not living up to its purported benefits (“More revenues for state government! Fairness for Main Street brick ‘n’ mortar businesses!”), that would be one thing. Unfortunately, since online retailers axed their affiliate contracts in the state, the law ended up hurting some business owners.  Last summer, we spotlighted two affiliate marketers in central Arkansas (here and here) who found themselves on the losing end of the new law.

Arkansas isn’t the only state that pursued the siren song of online sales taxes in 2011. Illinois also enacted an online nexus sales tax law this spring, and the good folks at the Illinois Policy Institute have developed a nice policy briefing paper and video combo detailing how the new law has wrecked the businesses of some small affiliate marketers:

Noted and quoted: “I think this law is just a flashing neon sign to young start-ups and entrepreneurs saying, ‘You’re not welcome in Illinois,'” says the poorly shaven lad pictured above.

And of course, in the meantime, our Third District Congressman Steve Womack, a Republican, is leading the charge at the federal level to tax online transactions. It is just enough to make you despair of a two-party system.  So there you have it: You can run, but you cannot hide.

* I will, of course, be remitting the appropriate sales tax payment to the Arkansas Dept. of Finance and Administration. No need to look closer, DFA! Nothing but us upstanding citizens over here! 

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