We’ve talked about Amazon’s desire to influence legislation with their decision that’s cut off all affiliates in North Carolina from their Amazon affiliate accounts due to an impending bill to tax sales made over the internet.  Those that said this was going to be a limited and ineffective phenomenon have been proven wrong as the effort to limit states from taxing Internet sales.

Techflash reports that online diamond retailer is following in Amazons footsteps not only in North Carolina, but also Rhode Island. They printed the text of the termination email from Blue Nile in their story:

We are writing to notify you that we are terminating our relationship with all Rhode Island affiliates, effective immediately. This is a result of the tax collection legislation passed by the Rhode Island state legislature, and expected to become law.

Blue Nile regrets the need to take this action. As the U.S. Supreme Court’s 1992 Quill decision makes clear, the proposed bill is unconstitutional as it requires sellers with no physical presence in the state to collect sales tax on sales to buyers in that state.

Blue Nile has taken this action in advance of the legislation’s implementation because the effective date is unclear. We have enjoyed working with you, and want to assure you that you will earn commissions on any qualified sales through the time of termination on June 30, 2009.

We remain hopeful that this unconstitutional legislation will eventually be repealed, at which point we would be happy to resume working together. Thank you for your participation in the Blue Nile Affiliate Program.

Several states are considering hiking and revising state sales tax programs in this less than stellar economy. Look for this trend of affiliate program closures to expand soon.