Barnes & Noble Luring Amazon Affiliates Threatened with Termination

Barnes & Noble issued an open letter to Amazon affiliates Monday inviting them to “join the Barnes & Noble affiliate family.” Amazon has threatened to end its affiliate program in any state that enacts legislation requiring the company to collect sales tax on residents’ purchases, said the letter, signed by John Foley, BN.com’s president.

"Barnes & Noble is disappointed to hear that Amazon would threaten small businesses’ livelihood rather than comply with state law,” Foley wrote. “Here at Barnes & Noble, we value the 13,000-plus members of our affiliate program worldwide. They are an important part of our overall business success and strategy.” He said Barnes & Noble collects and pays sales tax due on its sales, including online sales from BN.com.

In a 10-Q filing in October, Barnes & Noble noted that Texas had issued an assessment of $269 million last September for uncollected sales taxes, plus interest and penalties, for December 2005 to December 2009. In response, Amazon said in its 10-Q that it would “vigorously defend” itself in the matter, that Texas “did not provide a sufficient basis for its assessment” and that the assessment is “without merit.” The company noted in the risks section of the filing that a number of states and Congress “have been considering or adopted initiatives that could limit or supersede the Supreme Court’s position regarding sales and use taxes on Internet sales.” If the efforts succeed, Amazon said, it could be required to collect taxes and change business practices, creating “administrative burdens” and “a competitive disadvantage.”

In his letter, Foley said, “If Amazon doesn’t want you, we do!” He said Barnes & Noble would take care of collecting and remitting sales taxes due on BN.com sales to its customers, “so you and our customers don’t have to worry about being hassled or prosecuted by state tax auditors.” Amazon didn’t respond to our request for comment right away.