Online fine jewelry retailer Blue Nile has announced it would stop working with their local affiliate websites in North Carolina and Rhode Island after the two states announced they would begin charging state sales tax on online purchases, previously exempt from local taxation.



The move comes as cash-strapped US states have passed legislation in an effort to increase their tax revenues due to the global recession and the sluggish US economy.



Giant online fine jewelry retailer Amazon.com announced it would also be cutting its ties with local affiliates in North Carolina, Rhode Island, and Hawaii. Local affiliates are paid a commission for posting advertisements and channeling customers to the Amazon website.



In a letter to its affiliates in Rhode Island obtained by TechFlash.com, Blue Nile said it was severing it ties with all of the Rhode Island affiliates because of the new legislation, saying it was "unconstitutional as it requires sellers with no physical presence in the state to collect sales tax on sales to buyers in that state."