Seattle Online jeweler Blue Nile has cut its ties with North Carolina affiliates over pending legislation, according to a report in the Puget Sound Business Journal.
Amazon.com took similar actions in North Carolina and Rhode Island, seeking to avoid sales tax collection. Both Blue Nile and Amazon are fighting classification as a physical retailer because of ties with locally based affiliates.
Affiliates receive a sales commission for linking to products, and play a role in driving business for many e-commerce companies. According to the report, Blue Nile feels the potential tax burden outweighs the benefit of affiliate programs. It terminated its North Carolina relationships effective June 27.
Included in an excerpt of the e-mail Blue Nile sent to its affiliates was the following language: “Blue Nile regrets the need to take this action. As the U.S. Supreme Court’s 1992 Quill decision makes clear, the proposed bill is unconstitutional as it requires sellers with no physical presence in the state to collect sales tax on sales to buyers in that state. Blue Nile has taken this action in advance of the legislation’s implementation because the effective date is unclear. We have enjoyed working with you, and want to assure you that you will earn commissions on any qualified sales through June 27, 2009.”