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Amazon Shuts Down Associates Affiliate Program In California

     
7:35 pm on Jun 29, 2011 (gmt 0)

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Yesterday California enacted a new law that imposes the collection of taxes from consumers on sales by online retailers. Today we got the "Notice of Contract Termination Due to Potential New California Law" email.

Another one bites the dust.
4:13 pm on June 30, 2011 (gmt 0)

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Don't have to read all of Danny's comments but AMZN is right here. Either go for a federal solution or every small county and city that can will require Amazon and small merchants to do bookkeeping for thousands and thousands of tax jurisdictions.
4:25 pm on June 30, 2011 (gmt 0)

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Don't have to read all of Danny's comments but AMZN is right here. Either go for a federal solution or every small county and city that can will require Amazon and small merchants to do bookkeeping for thousands and thousands of tax jurisdictions.


There are already services like AvaTax and other sources that supply the proper local tax information in real-time or sell a database to import, and even do the reporting for you.

This is not rocket science.

Amazon could do it, anyone could do it, it's easily available.

Instead, Amazon wants to kick and scream like a baby.

Not that I don't blame them and agree the tax mess needs to be fixed, but a Fed tax won't make the states happy, half of CA is around 10% now, think they want a 5% Fed tax?

Nope.
4:51 pm on June 30, 2011 (gmt 0)

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andyll wrote: "several states that have done this are republican."


Not true at all. These are the states where Amazon suspended the affiliate program.

California:
Governor - Democrat
State House - Democrat Majority

Connecticut
Governor - Democrat
State House - Democrat Majority

Arkansas
Governor - Democrat
State House - Democrat Majority

Illinois
Governor - Democrat
State House - Democrat Majority

Colorado
Governor - Democrat
State House - Democrat Majority

Hawaii
Governor - Democrat
State House - Democrat Majority

North Carolina
Governor - Democrat
State House - Democrat Majority

I could go on but you get the point. Anti-business, high tax, high unemployment states.

I will laugh my ass off once these folks see their Adsense income targeted next.

[edited by: frontpage at 5:01 pm (utc) on Jun 30, 2011]

4:56 pm on June 30, 2011 (gmt 0)

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The traditional principle for taxation was based on Physical Presence. If the retailer did not have a physical presence then states could not collect the sales tax. This law changes all that. This is not an existing tax. It is a NEW tax, a tax on the regular person, you and me.


MB - this is just 100% untrue in California. This just changes the burden. California residents have always been required to pay use tax on items purchased out of state, but 99% never do unless it's a vehicle that has to get registered.

The reporting burden was on the consumer. Now it's on the merchant.

The current rules that depend on the consumer for reporting effectively are anti-business and anti-local because they unfairly penalize small and large local merchants with a physical presence.

My issue is that I think a state-by-state solution is ridiculous and we just need a national solution. The law proposed in the US Senate a year or so back was actually sensible, but didn't pass. It required online retailers to collect sales tax on items shipped to states that signed on to an agreement to simplify tax structures and keep free and up-to-date online databases of their tax zones.

It was an effort to compromise and rationalize the system and base it on the residence of the buyer, not the affiliate.

Of course, it was roundly attacked on WebmasterWorld as being socialist, anti-business and a "new tax". :-(
5:30 pm on June 30, 2011 (gmt 0)

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I will laugh my ass off once these folks see their Adsense income targeted next.


There's something sick in that comment.
5:35 pm on June 30, 2011 (gmt 0)

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"...where Texas State Comptroller Susan Combs charged Amazon $269 million in unpaid sales taxes..."

Its in todays news, lots of references.

Makes the "this is a democratic-party issue" look pretty silly.
6:47 pm on June 30, 2011 (gmt 0)

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Please, discuss this issue, not the politics, this isn't a political forum.

The issue is how it effects webmasters, affiliates and ecommerce sites, not the political party*ies( problem causing it.

Back on topic please.

TIA.
6:57 pm on June 30, 2011 (gmt 0)

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Every webmaster and/or affiliate with half a brain had to know this was being attempted. It's not like it hasn't been in the news for what, a couple of YEARS?

If the webmaster and/or affiliate didn't plan for the likelihood of the law being passed too bad for them.

Maybe next time they'll pay attention and plan ahead.
7:33 pm on June 30, 2011 (gmt 0)

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I agree with ken_b. That's the main reason why we haven't done any new development with Amazon. I would have loved to play with some of the new stuff they had, but just couldn't justify the resources with the expectation that this day would finally come.

I'm a little surprised that Barnes & Noble isn't being more proactive in trying to attract the terminate Amazon affiliates.
7:53 pm on June 30, 2011 (gmt 0)

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Sorry, iB, you are right. I regret getting political.

I have a suggestion for those who are seeking relief, based in that I went through this in my state.

This whole issue was initiated by the brick & mortars who saw online sales as having an unfair no-sales-tax advantage. They lobbied heavily in state legislatures for what everyone is calling the Amazon Law, even though it applies to many more affiliate programs. As we all now know, their efforts at putting on the pressure were sometimes successful.

Lobbyists (sic?) are expensive. So I believe, in an effort to get the most return for the investment, the b&m's put their dollars where they had the most to gain; i.e., the biggest retail areas; i.e., where they had the most stores.

So you get the A-Law in Illinois, but not in South Dakota. Same goes for Connecticut, but not Maine. And California, but not in Utah.

My suggestion is: if you are going to establish a legal/corporate residence in a new state (where there are no A-Laws) don't jump from one big metro area into another one. I would bet that those are on the target list for the next round of lobbying. Move instead, if you can, to a state that is mostly Agricultural or wilderness. Those are the poorest targets for future lobby $$ to pressure the state governments.

It is neither difficult or expensive to pursue this course of action.

Of course, a copy-cat craze could take hold and cut accross the whole country. Then all bets are off.
8:41 pm on June 30, 2011 (gmt 0)

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Of course, a copy-cat craze could take hold and cut accross the whole country. Then all bets are off.

Nah, you will find one state to hold out. My guess is Delaware, home to many corps with a mailbox.

Plus they are many states with no sales tax.
11:07 pm on June 30, 2011 (gmt 0)

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dibbern2, the Texas issue is different in that Combs is going after them for having a physical presence in the form of a subsidiary company that operates a shipping fascility. She's not going after them based on affiliate presence.
11:27 pm on June 30, 2011 (gmt 0)

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The vultures are now circulating. Just got an email from buy.com urging me to join their affiliate program.
12:09 am on July 1, 2011 (gmt 0)

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Zappos just followed Amazon, we're canceled.
1:08 am on July 1, 2011 (gmt 0)

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Guys, what's plan B? This may be moving to other states, you know.
Open a Nevada llc, s-corp?
Delaware?
Get an address there?
8:13 am on July 1, 2011 (gmt 0)

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Multiple discussions:

[webmasterworld.com...]
10:54 am on July 1, 2011 (gmt 0)

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I believe Amazon is cutting off its nose to spite its face. My affliliation has been canceled, which is no big deal since the Goo already pretty much destroyed that a few years back.
11:41 am on July 1, 2011 (gmt 0)

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I'd be curious to see some numbers from Amazon and Overstock on how many affiliates and dollars this represents. Have they published it anywhere?
4:01 pm on July 1, 2011 (gmt 0)

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Not that I don't blame them and agree the tax mess needs to be fixed, but a Fed tax won't make the states happy, half of CA is around 10% now, think they want a 5% Fed tax?


historically, they're collecting 10% of sales from companies in CA who ship to people in CA...

fed tax would be 5% of every order shipped into CA - shipped from CA AND from any other state.

think you need to reassess the math in play here. whether its 5% or something even close, the basis the % applies to is not on the same order of magnitude.

state coffers would benefit enormously from SST.
4:42 pm on July 1, 2011 (gmt 0)

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Assuming a national sales tax would apply to all purchases, not just Internet sales (otherwise, that will create all sorts of loopholes and eventually states would create their own local taxes to tack on top of the Federal tax, just like they do for gasoline), then that means CA would lose 5% (well, closer to 3% from July 1) on EVERY sale made in state as well.

I don't have stats, but I assume 3% of all in-state sales far, far exceeds 5% of CA-related Internet sales.
7:38 pm on July 1, 2011 (gmt 0)

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B&H Photo of NY just shut their affs program in CA, here we go...
7:56 pm on July 1, 2011 (gmt 0)

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Apparently the only vendors not shutting CA affiliates down are the ones that already have a presence in California and have their tax structures already in place.
3:26 am on July 2, 2011 (gmt 0)

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Instead, Amazon wants to kick and scream like a baby.

Not that I don't blame them and agree the tax mess needs to be fixed, but a Fed tax won't make the states happy, half of CA is around 10% now, think they want a 5% Fed tax?


In fairness, they should be kicking and screaming like a baby. The Supreme Court made a rather clear decision on this in the 90's and laws like these are just a means of circumventing them. This is just a crappy loophole states are trying to throw in which I think will inevitably fail in the higher courts.

The other frustrating aspect of this is how everyone wants to make online sales tax Amazon's problem. Yes some of these bills are aimed at the larger retailers, but once online taxes are collected, there is no doubt in my mind it will trickle down to smaller ones. It's ridiculous to force my company in Illinois to collect sales tax for a state I don't operate in at all.
5:18 am on July 2, 2011 (gmt 0)

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Illinois to collect sales tax for a state I don't operate in at all.

If you don't sell to CA customers (nor operate as a CA affiliate) then there's no problem. If you do SELL outside of your state, then every state that collects sales tax or use tax MIGHT view that as operating in their state. What's wrong here (and has been from the get go) is the CUSTOMERS not reporting their purchases to their resident state and paying either the sales tax or use tax for that item(s). And it is a loophole which consumers and on-line retailers have taken advantage of for many years.
12:46 pm on July 2, 2011 (gmt 0)

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It's not a loophole for retailers, it's a Supreme Court decision that decided that shipping products to another state does not constitute operating in the state.
4:08 pm on July 5, 2011 (gmt 0)

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And it is a loophole which consumers and on-line retailers have taken advantage of for many years.
It's the same "loophole" that mail order/catalog sales have been following for many decades before the Internet even came into existence.
1:11 am on July 6, 2011 (gmt 0)

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I've received a couple emails from affiliate vendors reminding me they *are not* abandoning California publishers and that they are enthused to fill the vacuum left by Amazon, Overstock, etc.
4:50 pm on July 13, 2011 (gmt 0)

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Now we know how Amazon is hoping to help Californians keep monetizing their sites, as they said in their cancellation notice to affiliates:

[latimes.com...]

The company said Monday that it would seek to qualify a referendum for the state ballot that would allow voters to overturn the new law.
4:51 am on July 18, 2011 (gmt 0)

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You do know that you can still do amazon.ca, amazon.co.uk, amazon.it, amazon.fr and amazon.de right? They don't care if you live in the US and are banned from the US affiliate program. (I checked this with them directly you can email them too if you want).

:)
3:46 pm on July 18, 2011 (gmt 0)

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But how many U.S. customers are going to want to order from amazon.fr and pay international shipping?
This 61 message thread spans 3 pages: 61