Recently the state of California (Gov Jerry Brown) signed the Affiliate Nexus Tax Law into effect. Basically it forces out-of-state retailers to pay taxes on sales within the state.
Amazon.com and their affiliate program seem to be quite threatened by it to the point that Amazon has sent letters to its affiliates in California (and other states that passed similar laws) that they will be removed from the program.
Here what the LA Times had to say about it in their article:
“The online sales tax law, AB 28 1x, would seek to force online retailers who have no physical presence in California, such as Amazon.com, to collect the same levies as bricks-and-mortar stores. Lawmakers calculated it would net the state $200 million.”
From my understanding of the whole thing, it seems like this will thin the margins for retailers using affiliates in states that have passed these laws. In Amazons case they are just choosing to avoid paying the taxes by not having any affiliates in that state.
Amazon’s Jeff Bezos is obviously pretty upset with the whole measure and is fighting it pretty hard. Last month at a Shopping Summit he stated:
“In the U.S., the Constitution prohibits states from interfering in interstate commerce, and there was a Supreme Court case decades ago that clarified that mail-order companies, because the Internet didn’t exist then, would not be required to collect sales tax in states where they didn’t have what’s called a nexus.”
More reading about the California’s new tax law:
- California passes amazon tax law
- Amazon drops california in growing e-commerce affiliate tax law war
- Amazon Associates program in California to be terminated
- Affiliate Nexus law on threshold
Thoughts? Do you agree with Jeff Bezos that this law is unconstitutional?