Amazon.com last month cut off its affiliates in Hawaii as part of an escalating battle with states over sales tax collection. But now that an effort to force Amazon to collect sales tax died in the Hawaii state legislature, the online retail giant is inviting its affiliates there back. In a message posted on its Associates blog, Amazon thanks Hawaii affiliates for their patience and says it hopes they will re-enroll in the program.
Affiliates are websites that drive traffic to Amazon sites and products in exchange for a cut of resulting sales, and play a role in Amazon's ecommerce business. But they've become the focal point of a struggle between Amazon and cash-strapped states over sales tax collection. A variety of states, following the lead of New York, looked to classify Amazon as a physical retailer through its work with local affiliates -- and thus require the company to collect sales tax on purchases (Amazon currently collects sales tax in only a handful of states).
But Amazon -- apparently believing sales tax would be a turnoff to cost-conscious consumers during the recession -- struck back, cutting off affiliate programs in states, including Hawaii, that were advancing such legislation. In Hawaii at least, Amazon's brinkmanship worked. Here's Amazon's note to Hawaii affiliates:
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