California Newest State Dumped by Amazon After Passing Affiliate Sales Tax

The Internet Patrol - Patrolling the Internet for You

 

California is the newest state to pass a law taxing sales at companies like Amazon when those sales are generated by a local (in this case California-based) affiliate or associate. And, not unexpectedly, about five minutes after California Governor Jerry Brown signed the legislation, California becames the newest state to have their affiliates dumped by Amazon.

As we’ve pondered before, is it arrogance or simple ignorance that is leading these state legislatures to pass laws that, instead of bringing in new taxes, are depriving their state economic engines of taxable spending fuel? Instead of bringing more income into the state, by chasing away the affiliate programs, they are depriving their own residents of income – income which would come back to the local economy.

Yesterday afternoon (Thursday, June 29th, 2011), Amazon sent this note to all of their California affiliates:



Hello,
For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.

No Paywall Here!
The Internet Patrol is and always has been free. We don't hide our articles behind a paywall, or restrict the number of articles you can read in a month if you don't give us money. That said, it does cost us money to run the site, so if something you read here was helpful or useful, won't you consider donating something to help keep the Internet Patrol free?
Click for amount options
Other Amount:
What info did you find here today?:
Get notified of new Internet Patrol articles for free!

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

 

Regards,

The Amazon Associates Team

Then, 13 hours later, at 6:41 a.m. this morning, Amazon delivered the news:


Hello,
Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

 

Anybody want to take a bet on which state will be next?

No Paywall Here!
The Internet Patrol is and always has been free. We don't hide our articles behind a paywall, or restrict the number of articles you can read in a month if you don't give us money. That said, it does cost us money to run the site, so if something you read here was helpful or useful, won't you consider donating something to help keep the Internet Patrol free?
Click for amount options
Other Amount:
What info did you find here today?:

3 thoughts on “California Newest State Dumped by Amazon After Passing Affiliate Sales Tax

  1. California is trying to get the consumers to pay tax.
    We are broke.
    I dont think I fully understand the legislation, because it seems to me associates of Amazon are E-stores. What prevents them from just putting up a out of state bank account and website. No physical address needed.

  2. Might have been simpler for California to merely declare that “affiliate fees incomes earned” are to be declared on income taxes, and taxed that way. Simpler than through a sales tax.

    And doing both methods of taxing would be double taxation – so should be avoided.

    Even the Mighty Amazon cannot totally avoid Income Tax!

    (Although like all poor, struggling, small businesses, they try to avoid any tax. Maybe someday, when Amazon becomes a real company, and actually earns a profit, they may yet pay some income taxes.)

    What? You do not like my tongue in my cheek? Forgive my bad manners, then. Please!?

  3. Unfortunately there are enough California citizens who would take the state’s side vs Amazon. The otherwise brilliant Danny Sullivan for instance, who wrote yesterday in an open letter to Bezos saying that Bezos was using his affiliates as “pawns” and that it was only fair to pay state sales tax if big box retailers paid them (Sullivan didn’t see shipping charges as being the equalizer).

    Sure, a majority see that Amazon needs to keep asking affiliates to move to a different state until we have a few states with lots of IT types and entrepreneurs that have a government that “gets it”.

    I’d like to see a lot more companies head to Nevada. Those who make a living as affiliates can move there. Las Vegas needs a shot in the arm anyway.

Leave a Reply

Your email address will not be published. Required fields are marked *