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What To Do When Amazon Shuts Down Their Affiliate Program In Your State

Disclaimer: I can not be held liable for any action or inaction that comes from the information shared in this blog post. Talk to your accountant and or lawyer before doing anything.

In a down economy states are always looking to find ways to increase tax revenues and deal with budget shortfalls. Sadly, this usually comes in the form of new taxes from state legislatures / governors and the new tax most threatening to our industry is the affiliate nexus tax.

What Is The Affiliate Nexus Tax?

States argue that even though an online retailer (Amazon for example) doesn’t have a physical presence in their state they claim having an affiliate in the state represents a physical presence for the business because they are helping to sell the online retailers goods in their state (silly huh?). So once there is a physical presence established in the state the state then says they can collect sales tax from these merchants because of the affiliate relationship.

Primary Problem With The Affiliate Nexus Tax Law: It Doesn’t Work

The politicians involved in signing these laws into are either ill informed or just plain stupid because the businesses helping to promote and push these laws into existence aren’t Mom and Pop shops that are “hurting” as the bill proponents would have you believe, but rather huge national retail outlets like Walmart. So as Amazon has proven time and time again, whenever the affiliate nexus tax law passes in a state they simply shut down their affiliate program and then the state not only isn’t able to claim sales tax revenue they thought they could, they also end up hurting thousands of people that rely on affiliate program income to make a living. Now I don’t want to get into any political debate so let me just share how others have gotten out of this mess.

How To Set Up A Business In A Neighboring State:

Disclaimer: Again I repeat – I am neither an accountant or a lawyer, the advice I’m about to share is based on what I’ve heard other affiliates do when the nexus law passes in their state. Consult with your accountant and/or a lawyer before doing anything outlined here.

Step 1: Create an out of state LLC or other business entity
Step 2: Use a registered agent service to forward your mail
Step 3: Open a bank account in the new businesses name
Step 4: Voila, you can now reapply to various affiliate programs that were shut down because of the affiliate tax nexus law under your new business
Update: Good discussions in the comments as to whether or not this method is allowed – just another reason for you to ask your lawyer and/or accountant for advice for your state: See here.

Overall Advice:

As with most things in life when someone throws up a roadblock the easiest thing to do is not look for a way to get around it. But, if you’re willing to put in a little work and hustle to make your business work even in the face of various obstacles thrown at you I’d suggest the alternative of simply moving onto other affiliate programs and other forms of website monetization. Remember there are thousands of ways to make money online you just need to pick one that works for you.

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If Amazon has shut down their affiliate program in your state and you’re not interested in pursuing the above please contact me if you have Amazon focused websites you’re looking to sell now. Have a website you want to sell? Contact me here

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62 comments… add one

  1. As bad as republicans are, the terribleness of democrats on economic issues cannot be matched. Thank for this in advance of Georgia going stupid!

    1. I know they’re all terrible and you can’t really trust either side to do what they say they will. I just see from this issue it looks like the democrats are in favor of using this tax to try to help balance their state budgets. Whether there is a true correlation remains to be seen, all I know is that this nexus tax is a huge issue for those of us making money with affiliate marketing.

      1. It just goes to show that career politicians can’t possibly make the right decisions. Anyone in the real world knows, intuitively, that this is exactly what would happen.

        Amazon, and companies like it, don’t operate in a vacuum. They make decision based on the information they have and they respond to incentives just like everyone.

  2. Hi Chris, I heard of this today, it’s terrible. I am not sure why amazon will not continue their program. Sure they will lose some money due to taxes, but won’t they still be making more because of the revenue from affiliate sales? I don’t really understand their reasoning behind it.

    1. Anya, I don’t think its about actually paying the taxes but they are taking a stand against something that they feel is unconstitutional. I wish Amazon would also fight to prove once and for all if its legal or not for the states to do this.

    2. They will lose more if they had to pay sales tax because they’d have to pay sales tax on EVERY purchase from California and there isn’t a way for them to just do it based on which were sent by affiliates etc.

      They are shutting it down because these states are trying to unlawfully claim that an affiliate in the state represents a physical location. Really? A person working out of their home office is technically an Amazon retail store? Ridiculous…

      1. Yeah, it’s almost unbelievable, isn’t it? Luckily, amazon is fighting just this kind of law in the NY courts. If they win, that precedent will transfer to other states and hopefully get all the california affiliates reinstated.

  3. Hey Chris, great post. Came here from Pat’s blog a moment ago. Glad you addressed it after so many people brought it up in the comments.

    If you had to pick a secondary program outside of Amazon due to where you lived, do you have any suggestions or ideas? I’m interested in the new Google affiliate program too.

    I’m still working to get any sort of real income stream from online. Had my first two dollar day from Adsense last week. Small victories!

    Thanks for everything.

    1. CJ.com, Linkshare.com and ShareASale.com.

      Any merchants through those affiliate programs :)

      Congrats on the Adsense earnings you’re on your way!

      1. Not ANY merchant with those… my inbox is littered with termination notices today from programs (sites) within the big networks that will not work with CA residents.

        1. Perhaps there still may be others that you can use?

  4. Texas passed a similar law but Gov. Rick Perry (Republican) vetoed it earlier this month. Amazon promised to bring lots of jobs to Texas though, so that bill was a bit different from the others.

    Of course, it is all our civic duty to pay the sales tax we owe to our states when we buy online. We are legally supposed to be voluntarily paying it. LOL.

    1. Yah, it’s tough to say that he vetoed it because he was a Republican or because he was promised a bunch of jobs but in the end the bill was vetoed though right?

      This entire affiliate nexus tax law is ripe for the federal government to rule in once for all (as long as they rule in the favor of affiliates that is lol)

  5. Using a registered agent or LLC does NOT work with the Nexus tax bill, it can be construed as tax fraud and you can be held liable and sued by merchants for taxes and penalties that they incur because of you.

    This is why these affiliate programs, such as Amazon, are asking for rent leases/home mortgages, utility bills and all kinds of other proof when affiliates from affected states claim they “moved”, because the main theme of this tax is NEXUS, the nexus is created by the ACTUAL RESIDENCY of the affiliate sending click-throughs, the RESIDENCY is key and the work around of incorporating is not a legal loop hole with Nexus, the merchants will never allow it.

    The only way out is to ACTUALLY move to a Nexus free state or Washington State where Amazon resides where you will always be safe.

    The democrats here in CA continue to screw up our state more and more, gouging us and then overspending and then gouging us again, and now they will damage the 25,000 affiliates that do business in CA.

    And Amazon is a disappointment as well, they should stick by their affiliates instead of sending cancel notices without even 1 hour of notice or warning, they are just making us pawns in their political battle.

    1. Hey JR,

      Where did you see that it can be considered tax fraud? I know several other affiliates that have done what I posted above but obviously if it’s not right then I’ll need to amend the blog post.


      1. Hi Chris,

        Thanks for replying.

        There is an active discussion going on about this at A Best Web Forums at: http://www.abestweb.com/forums/affiliate-tax-laws-543/any-solutions-without-moving-120880.html. Great stuff there with people looking for solutions, there have been some innovative ones.

        And I spoke with an attorney about this who told me that unless I actually move my business and actually DO the work in a tax free state then the Nexus exists where I exist and Incorporation will not apply. There are other comments to the same in that thread. He explained to me that the Nexus is what triggers the tax requirements for merchants, and the Nexus is the physical location of the affiliate.

        I know of one affiliate who had asked Amazon for reinstatement once he moved away from his state that implemented the tax and Amazon asked for all kinds of LIVING documentation (rental lease, utility bills), NOT business address documentation to make sure he actually was residing in the new state.

        I’m not a lawyer, I am just going by what I have learned and of course everyone should check out their info, but I began checking on this several months ago when this tax first came in front of our other governor, Arnold S. and I was looking into alternatives.

        And using someone else’s address is a big NO NO, though I believe there are those who have done it, at some point if they ever get caught they too can be held liable for tons of money (per lawyer) and possibly more consequences.

        1. JR – You are wrong, but thanks for sharing. You’re twisting a small piece of truth.

          If it were fraud, the majority of the Fortune 500 would not be Delaware or Nevada corps and headquartered in other states.

        2. @ Tim

          This is not the same scenario as the Fortune 500 companies, they incorporate for different legal motives, not to hide their actual residency. Here the motive would be to avert Nexus, and that makes those loopholes NOT apply, the affiliates RESIDENCE is what creates the necessity for Amazon to collect tax from CA consumers, because the premise for the law is that since we are located in CA we are in essence a physical entity acting as an agent for Amazon and so that means legally they must collect sales tax the same way any store located in CA must and that is why Nev corps will not work, because you are only in Nevada on paper while continuing to physically work in CA

          But to each his own, go ahead and try it, as I said I can only go by what my attorney told me and others who have done the same research.

          Better yet contact Amazon and ask them if they would accept you as an affiliate under Inc in Nevada or Delaware.

        3. Actually if you have a company with staff outside of CA and the staff is the one expected to do the work, then Nexus wouldn’t apply (it was canceled by now, I know… just saying) and that’s how large corporations “avoid” such problems. They have headquarters with staff and that counts as a legal physical address.

    2. Although I make the majority of my online income from Amazon’s Associate program, I don’t suffer from any delusions that Amazon actually cares about me or or ANY of it’s other affiliates.

      Have you ever browsed a category of products at Amazon and then 2 or 3 days later you get an e-mail from Amazon with a list of bestsellers from that exact same category?

      That’s exactly what happens when someone goes to your site, clicks one of your affiliate links, gets stamped with your 24-hour cookie, and browses a category at Amazon.

      Many times (especially on higher ticket items), the shopper is on the fence about a product. So, they hold off on buying for a day for a day or two. Then, (quite conveniently) after the 1-day cookie has expired, the shopper gets a very high-converting e-mail with a list of bestsellers… ready for the clicking.

      That’s why Chris Guthrie’s method of giving away a buyer’s guide (in exchange for an opt-in) is so very powerful. It allows YOU to play Amazon’s game. Not only can the buyer’s guide have click-able links, but you can also send the same type of e-mail to your subscribers (using a scheduled autoresponder) and reset that cookie!

      Long story short, being an Amazon Associate can be very profitable, but don’t kid yourself into thinking they appreciate you. If Amazon truly cared about you, it would make the cookie last longer and also quit trying to cut you out of the transaction with the timing of their follow-up e-mails.

      1. I completely agree with you and I certainly will never deal with Amazon again, whether this law is repealed or they change their minds sometime down the road or they come up with some other way for us to monetize our sites (as they stated in their email).

        It’s going to take me weeks to redesign several sites because of this and they can take a hike, I could never trust them again.

        Also, what is really a slap in the face is this excerpt from their cancellation email (which came without any warning):

        —————To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com , Endless.com , MYHABIT.COM or SmallParts.com————-

        WHAT A JOKE! I for one am canceling my account, and will NEVER buy from them again, I’ll pay extra if I have to.

  6. Excellent post, Chris.

    I actually had to do something similar, as I live in one of the affected states. However, I simply used my parent’s address.

    It’s funny that AMZ didn’t even need to verify my presence there. So, I didn’t take the “form a new LLC + registered agent” route.

    Politically, I don’t trust either side. By the time a well-meaning guy or gal gets high enough to start affecting REAL change, they have usually been corrupted beyond repair. But, maybe I’m just jaded. LOL.

    1. That’s the other safe bet too. Worst case scenario you could even use your actual parents and just have them give you a portion of the income after taxes or something.

  7. This really sucks for all of those who have been affected by these measures. I just hope that something amicable is sorted out soon. And Chris, I must applaud you for posting this work around for affected affiliates. I am sure there are a number out there who have been generating a healthy income for themselves and may have thought that all was lost – until now!

    1. Just remember that you should talk to your accountant or lawyer first that’s all I want to make sure people know…

  8. Affiliate programs have created a new economy. Lots of people making a living off of them in a world that needs, more than ever, new ways of creating wealth.

    It’s very sad to see how politicians rule about things they don’t know anything about.


  9. Chris,
    Great post on this Amazon issue. Before Cali got pulled, I didn’t even know there was a problem! I live in Utah, which is essentially the Republican Capital of the western U.S., so it was heartening to see mostly democrats making stupid decisions (though I wish they wouldn’t–and I hope Amazon is able to use their power and $$ to enforce some kind of law at some point.

    1. Hey Sean,

      Yah I wasn’t looking to spark any type of argument by sharing my findings but I just took a look through the past 6 states that have passed this law (rather – all 6 states so far) and they were all headed by a Democrat.

      So if you’re a full time affiliate marketer and even if you don’t agree with republicans (again, I hate them all) it might be in your best interests to align with the republicans at least on this tax issue.

      In the end: We get screwed and that’s the worst part of it all.


  10. Always hungry for MORE and MORE taxes, these Democrats Suck.

  11. One other thing that is unfair to Cali and likewise affiliates is when I, a Florida affiliate, go on vacation to Cali. I bring my laptop and do some site building with affiliate links. I am technically moving my “amazon retail store” to Cali for a couple of days. I can freely build an Amazon affiliate site inside the state as a visitor but the residents cannot. That would be enough to piss me off that a visitor to my state has more freedom and opportunity than myself.

  12. I know this may seem like a political ad, but it really isn’t.
    A lot of people call Ron Paul supporters crazy because like me they are people who became passionate after the government have some how screwed them. I am neither a Republican or Democrat. If you own a small business, believe in individual rights, internet freedom, and find it hard to trust any politician look into Ron Paul. Ron Paul is the answer in 2012!

    1. Hey Mark,

      I appreciate your passion but sadly we live in a 2 party system. The only way to win is to be in either the Republican or Democrat party. For the foreseeable future (as in the rest of my life) I highly doubt we’ll ever see anyone besides a Republican or Democrat as the president.

      Yes it sucks as it limits our options but for better or worse that’s sort of how it is. :(

      1. Chris,

        I get your point about a two party system and know many people feel they would be wasting their vote with a third party so instead choose to vote for the lesser of two evils.

        I honestly believe we are at a critical junction in our history and I would rather “waste” my vote than vote for more of the same.

        By the way Ron Paul is running as a Republican even though he is heavily supported and endorsed by Libertarians. I think this is hurting him because many independents just turn off their ears once they see an “R” by a politicians name. In addition to that many conspiracy theorist rabidly support him end up doing more damage then good to his message.

        I don’t want to get to political on an IM blog. I just think the marketing effort put out by the 2 party system of “wasted voting” needs to be recognized for what it is…. more of the same!

        BTW.. been following your blog for a while… Keep up the good work! Looking forward to your next podcast.


  13. Great article. I agree these democrats f**ked up badly with this stupid law. The only solution is indeed making an LLC somewhere else. I don’t like workarounds, but sometimes there’s nothing you can do.

  14. I live in Indonesia and I hope this incident does not happen in my country

  15. If you make tons of money with affiliate programs like Amazon, then it makes sense to pay to talk to lawyer. If you don’t make that much yet and can’t afford or don’t want to move to another state, then try a 3rd party company that will allow you to get around this issue without the hassle and headache. In the meantime, write to your governor to express the destruction of this ridiculous bill and hopefully, it will be overturned.

    1. Great advice Kai!

  16. There’s another option which is to have a holding company in NV, and receive distributions (payments, salary, etc) from that holding company.

    A few affiliates (myself included) are setting this up. Read more here:


  17. Thank you very much for the great information you have shared with us…How generous you are posting this for all people…

  18. You do realize that setting up a business in another state doesn’t end the nexus issue, right?

    In fact, you are opening yourself up to considerable liability on the tax front, and possible criminal tax evasion charges if you do not IN FACT operate from the new state.

    If you don’t move yourself, and not just your entity on paper, you have problems. You would in fact be operating a foreign LLC or corporation from your home state, without authority to do business in your home state, and the big problem there is once you have gotten authority to do business in your home state, you are no longer in compliance with the new policy by Amazon.

    Of course, the real problem is that this tax fails the nexus tests under the “International Shoe Doctrine” -no, I’m not making that up, it is a US Supreme Court case that spells out the connections necessary for a business to be “doing business” in a state, and for the state to be subject to that state’s authority to collect sales tax.

    Amazon has been fighting these laws in court since New York first proposed a law, which fails the nexus test on just about every level.

    Amazon with its affiliate program created a new pricing strategy for advertising, not a genuine commissioned sales force.

    If you want to continue as an Amazon Affiliate, move to a state with no sales tax, not simply a state with no affiliate tax issues. Of course the loss of sales tax revenue due to online consumption is clearly coming to a head, and the issue will soon be addressed.

    Several states have already begun work on an interstate compact on Internet sales tax, and the federal government will likely impose some new regulations soon because the loss of revenue is staggering.

    Amazon’s reaction is mind boggling. The company has attempted to claim that even when it operates subsidiaries in a state like the laboratory it operates in California, it is not subject to tax, and this is ludicrous under the “International Shoe Doctrine.” There is a nexus in that instance.

    The reality is that this issue is Amazon’s effort to convince a small number of people who are making a small fraction of the money that Amazon makes to fight a losing battle on its behalf.

    The Internet will be taxed. There is too large of a drain on the basis of the sales tax pool for online sales not to be taxed, along with all other mail order operations.

    It would cost Amazon a pittance, given present technology to comply with the law, and it would be short work for most cart providers to give their users the tools to comply with sales tax regime’s nationwide, but they don’t want to play that way because it has been a significant strategic advantage over big box stores and other retailers.

    That advantage will be going away. The playing field will once again be leveled.

    Deal with it, but don’t take bad legal advice. Setting up an LLC in a foreign jurisdiction WITHOUT ACTUAL PRESENCE there is setting yourself up for criminal tax evasion charges.

    1. All true, and as I stated in my previous comment the tax liability for affiliates faking Nexus with an LLC can be huge, as well as the possible criminal liability as well (per my attorney).

      I for one blame Amazon as much if not more for this, they claim constitutional issues and taking a stand, but really they just don’t want to give up a big chunk of business they get because there is no sales tax.

      They could have stuck by us (and the other states they canceled) and just configured their site to collect the tax.

      As you said eventually this will become regulated and all websites will have to charge tax one way or another, at that point Amazon will open their arms again and ask us back, and I for one will say NO WAY!!!!!!!!!!!

      1. I think there’s a better way to do this (and a few of us are doing it – feel free to email llcca n db llc @gmail.com (all one word, remove the spaces).

        I mentioned it above: http://forums.digitalpoint.com/showthread.php?t=2218175&page=2&s=9a9ab10182159bfc5e42e4b4dc8ec5cd#post16455925

        But the basic setup is this – someone who truly does live in NV forms a holding company. That holding company forms joint ventures with Affiliate websites. The holding company pays the Affiliates based on their earnings (via W2 or 1099 etc).

        Sure, the Affiliate has to pay tax on the earnings, but they get to keep on earning. :)

        Basically, you’re working for a company that is headquartered in NV. You own a piece of the company. That piece depends on how well you perform (in that way it’s just like a sales commission model).

        We’re comfortable that this is above board legally, and we have a discussion with Amazon later this week. But I’d love to hear if someone can poke any holes in this.


        1. I’d suggest just doing this on a solo basis rather than partnering up with people you don’t know. Getting into bed with someone when you don’t know them is risky and the same can be said when you apply that mentality towards business as well.

        2. That’s one way to go, but it’s a business deal.

          Of course it can go sour, but there are ways to control for that to the extent possible. We’re picking our partners carefully. Moreover, individual entities will be arms length from each other (for example, in different LLCs).

      2. Couldn’t agree more. Amazon is just screwing over Californians by not collecting and remitting sales tax in the state. This posturing from Amazon (and other ecommerce players) really sickens me — they’re no different from Walmart or GE in that they’ll dodge their corporate tax responsibilities every chance they get.

        Same goes for Google and it’s double-tax-wash treatment:

        Sure it’s within their rights under current tax legislation which will they lobby heavily to retain but where’s the bigger vision? Where’s the sense of responsibility for all the federal and state-level resources these companies consume to be successful?

        Do not evil = Do no good either.

  19. Insanity – Doing the same thing over and over and expecting different results.

    The states just can’t learn from each other. I am paying my niece in Florida $500 + any taxes on “her” income (probably won’t be any because earnings are too low) for now because it was easier to do that than incorporate for me.

    As far as the People’s Republic Of Illinois, the chairman said that they needed to collect these taxes to pay for the new Governor’s prison wing because they fear overcrowding.

  20. By the way Chris, I was wondering if you are willing to give out refunds for those of us that bought the EasyAzon plugin just a couple of days before this Nexus passed?

    I was one of those that bought it and loved it, but now of course it’s useless to me.

    I left you a PM at Warrior, but have heard that their PM is having issues and I have not received a reply.

    Thanks for considering

    1. Contact support [at] easyazon.com

      1. Okay, will do, thanks

  21. There’s actually another solution that is a lot easier and less shady than setting up a business out-of-state.

    There are affiliate aggregating services that you can use. My Amazon account was closed over 1 year ago and I eventually found a company called skimlinks. They are based in the UK so these types of laws don’t affect them and you can still get paid from your Amazon links and other sites. The catch is that they take 25% of the revenue, but they are on the higher pay scale so it’s hard to calculate the actual difference.

    The solution isn’t perfect–their reporting isn’t nearly as detailed as Amazon’s so it’s hard to tell which links are performing the best, but is an easy solution that takes very little effort to setup, especially using their WordPress plugin.

    Chris, I love this website. I found it via Google looking for info on Vibrant and came across a bunch of helpful articles (apparently my site is worth more than I thought). You really should consider trying out Skimlinks to review, given your expertise in this niche.

    I think that kind of service has a lot of potential moving forward for monetizing websites. The whole aggregating thing makes affiliate marketing so much easier. You just use regular urls and they get converted to affiliate links automatically when someone clicks on them. I find it so much easier than messing with CJ, GAN, etc., having to create links for everything–I wish they would start using this type of technology too.

  22. I’m using a Nevada group to do this. http://www.amazontaxfix.com

    Anyone else doing it this way? It seems one step further than just setting up an LLC in NV, getting an address, etc. Legal? I’m checking it out with a friend.

    1. Don’t know anything about Amazon tax fix. I do know usig Amazon in the URL is a recipe for disaster especially if the company name includes the word Amazon. IMO if you do any separate companies you shouldn’t partner with anyone else unless you know them.

  23. Hi…Thanks for the great information you have shared us…I hope you can post more to help other people…

  24. So in effect there is no real sales-tax free state unless you use Google tax free wash strategy..
    What about affiliate who actually live overseas though?
    will they use your last known USA address

  25. Does anyone know if this was actually passed in Hawaii? I’ve heard otherwise from another forum.


  26. It seems really risky to rely upon an out-of-state LLC or PO Box. Apparently Amazon has started asking for proof of residence (like a utility bill or drivers license) for those who changed their address after their state was shut down. A previous comment mentioned Skimlinks, I tried them out and had better luck with Viglinks.

  27. What if I have a 2nd location in Florida already? Do I still have to go through all of that LLC hassle?

  28. There is a Company that you can go through to be an affiliate for Amazon. They are the official affiliate and the would give you a portion of the earnings. Matt Carter mentioned this in one of his video’s, I have to watch them all again to find the name!

  29. I had the same idea, but I did speak to a lawyer recently. And, just as I figured, the answer: it is ILLEGAL.

    If you have a *legitimate* reason for establishing a business elsewhere, then so be it. If you do not – if your ONLY reason for setting up a business in another state/country – is simply to get accepted to an affiliate program and usurp the governments ability to collect taxes, then you are in fact breaking the law.

    This actually seems to be pretty basic common sense. I feard this was the case for a long time before speaking to a lawyer, and this is in fact what I was told by an attorney. Still, having said that, that is just one lawyer and I am well aware that not professionals are created equally.

    1. The other thing to consider is that he was playing it safe too… you can always go to Viglink.com

  30. Does anyone know if the nexus is satisfied if you do not LIVE in the state in which you want to do business, but you own land there–which would be your office–and you do all the work on the website there.

  31. Thanks for the great post. I am bummed I am not able to take advantage of the amazon affiliate program because I am an RI resident. What are the top alternative affiliate programs that you know of?


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