How would you feel if your business had to pay sales tax in a state or country where it had no physical presence?

This is the dilemma that Amazon is facing as a number of states in the US are passing legislation that would require businesses to collect sales tax if they have any marketing affiliates in the state.

In a response to the legislation, Amazon have decided to make a potentially risky decision by choosing to end their business relations with affiliates in North Carolina, Rhode Island and now also Hawaii.

In an email sent to Hawaii affiliates on Tuesday, Amazon wrote: “We were forced to take this unfortunate action in anticipation of actual enactment because of the uncertainty and timing of a veto, and the possibility that a veto could be overridden,”

Is this a bold move by Amazon in an attempt to call the states bluff? Amazon pays out millions of dollars a year in commission to affiliates who refer customers to Amazon from websites and blogs. This commission would be taxed as income which the states would now be losing out on.

It’s quite fitting that Amazon’s slogan is “And you’re done” as this messages seems to speak with meaning to both affiliates and the state legislators themselves. What is your opinion? Do you think the states that are proposing these taxes are shooting themselves in the foot? It would be interesting to hear your comments.

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