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Amazon drops Minnesota affiliate websites over sales tax

ST. PAUL, Minn. (AP) — plans to cut ties with affiliate websites in Minnesota before the state's online sales tax becomes law July 1.

The websites receive a fee for referring shoppers to Amazon's online store. The new law requires certain online businesses with a physical presence or affiliates in Minnesota to charge a sales tax on items it sells to state residents.

Amazon, in an email to affiliates, said it's not opposed to collecting an online sales tax, but not on a state-by-state basis.

"While we oppose this unconstitutional state legislation, we strongly support the federal Marketplace Fairness Act now pending before Congress," Amazon told its affiliates in an email. "Congressional legislation is the only way to create a simplified, constitutional framework to resolve interstate sales tax issues, and it would allow us to reopen our associates program to Minnesota residents."

It's technically not a new tax. Online shoppers already were supposed to report and pay the sales tax themselves, but almost nobody did. The new law requires the vendor, such as Amazon, to collect the taxes upon purchase. By ending the affiliate relationships, Amazon exempts itself from that obligation, but that doesn't exempt the consumer.

There are about 5,200 affiliates in Minnesota that make money from online advertising, according to the Performance Marketing Association, a trade group that represents the affiliates. They don't just work with, they may be affiliates of Cabela's or Blue Nile or other sizable Internet retailers.

Amazon also has ended affiliate relationships in other states that have passed similar laws, including California.

Copyright 2013 The Associated Press.