Amazon Shuts Down Associates Affiliate Program In California

[travelin cat]

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.

[LifeinAsia]

Yep. Just got my letters from Amazon and Overstock.

[travelin cat]

I'm waiting for all of the others to come in. Just a matter of time.

[travelin cat]

Apparently it's not a done deal yet. From the email:

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.

[diberry]

For some reason my email came through completely blank - the subject line is there, but nothing in the body. I'm glad to see what Travelin Cat quotes, because I can't find anything online suggesting Brown has actually signed the bill, and it's been a hot topic on the net.

Can someone post the notice here in its entirety? I don't know why mine is blank.

[frontpage]

Another anti-business Nanny state strikes again. All these states that are killing the affiliate business have one thing in common.

[diberry]

Ok, never mind, I found the notice here:

[geekwire.com...]

It sounds to me like Amazon's firing one across the bow to let Brown know they ARE prepared to drop us if he signs the bill. This could end up being a good thing for affiliates. It just depends whether Brown is savvy enough to recognize that even though he supports the idea of the bill, this bill isn't the right way to go about it.

:(

[LifeinAsia]

I've just about given up any hope that Brown will veto the budget. He's been patting himself and the legislators on the back for working together and doing such a fine job to craft such a wonderful budget. He'd lose too much face and political clout if he vetoed it now.

[frontpage]

It's a great thing for affiliates in free states. Less competition for Amazon links in the SEO.

[diberry]

@LifeInAsia, that's what I'm afraid of, too. But the Franchise Tax Board released a report predicting that CA won't make anything and may lose money (income tax) if this bill passes. There are ways for him to work around the politics of it, especially given that voters don't favor the bill.

But it would take courage, and politicians typically aren't big risk-takers.

[travelin cat]

It's official now:

Beginning Friday, Amazon.com Inc. and other large out-of-state retailers will be required to collect sales taxes on purchases that their California customers make on the Internet.

The new tax collection requirement — part of budget-related legislation that was signed into law by Gov. Jerry Brown Wednesday — is expected to raise an estimated $317 million a year in new state and local government revenue.

[latimes.com...]

[mysteree]

From Amazon (but this law applies to any online retailers who do not collect CA tax):

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.

[diberry]

How can they claim it's expected to raise any revenue with a straight face? Is everyone just that completely uninformed?

Have all the termination notices said this?

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.

Wonder what they're working on?

[martinibuster]

I just started taking down all of my Amazon affiliate ads.

is expected to raise an estimated $317 million a year in new state and local government revenue.

Another tax on the little guy. Next election I am voting Republican if that means it will get him out of office.

[tangor]

estimated $317 million a year in new state and local government revenue

These tax estimates always amuse me... in this case %tax of 0 sales will equal... duh: $0revenue.

The ONLY taxes that work are property (including cars), entertainment (stadiums, theaters), and sin taxes as these are things most people will NOT give up and can be accurately levied. Kill an Amazon affiliate and ALL RELATED revenue disappears which, in California, is the State Income Tax the now non-affiliated affiliate no longer HAS to report.

[koan]

Wow California is huge and is probably host for countless affiliates, I'm surprised there isn't a bigger outcry on the web.

Next election I am voting Republican if that means it will get him out of office.

Don't cut off your nose to spite your face ;)

[gusp]

I am a California resident and just got terminated from Amazon and three other companies that run their affiliate programs through Commission Junction. I am holding my breath that my BIG money making affiliate advertiser doesn't follow suit. If they do I just lost my six figure income derived totally from affiliate sales. I don't know what to do at this point. Selling my home and moving to another state hoping they don't try to implement the new affiliate nexus tax is not doable. Is creating a Nevada corporation, getting a PO box in Nevada and hiring an answering service in Nevada the solution? I don't know.

[mysteree]

you can check your big advertiser site to see if they calculate CA tax at checkout. (walk through a purchase simulation) if so, you should be fine.

[andyll]

Another tax on the little guy.

It's not 'another tax' it trying to collect an existing tax.

Another tax on the little guy. Next election I am voting Republican if that means it will get him out of office.

several states that have done this are republican.

The push for these laws is coming from the big retailers.

[Sgt_Kickaxe]

I just started taking down all of my Amazon affiliate ads.

it's expected to raise an estimated $317 million a year in new state and local government revenue.


Another tax on the little guy. Next election I am voting Republican if that means it will get him out of office.

That's exactly what it is and that's exactly what you can do about it.

If California can't manage it's debt you can also consider moving to a state that can. I'm all for carrying my share of the load however I believe that existing taxes can and should be put to better use so when I see NEW taxes I remember it come voting time. You should too. Existing taxes are known and you can plan for them, NEW taxes are what makes people poor (and in this case fired).

[martinibuster]

It's not 'another tax' it trying to collect an existing tax.

No.

Mail order has always been exempt from state sales tax when the seller did not have a physical presence in the state in which the sale was made. The idea is that you can't tax a sale that happened in another state. Mail order shopping (and ecommerce) allows you to purchase a product that is for sale in another state.

Now here is what you are missing, which makes this "another tax" as opposed to an existing one. 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.

Therefore, this is "another tax" because it is taxing a transaction that was formerly exempt.

The media is presenting this as the Amazon Tax. That is a misleading description of the tax. Nothing could be further from reality. This is not a tax on Amazon. It's a tax on the average citizen.

[edited by: martinibuster at 9:56 am (utc) on Jun 30, 2011]

[Sgt_Kickaxe]

Double no. This is most assuredly a NEW tax.

The move does not impact California e-commerce sites or California manufacturers, just website publishers who post advertisements and coupons for the retailer on their websites. Before June 29th the tax did not exist.

The media is presenting this as the Amazon Tax.

It affects all California publishers, it's aimed directly at them, in reality it has nothing to do with Amazon but only Amazon is reacting so quickly. Other affiliate programs will foot the bill, for now.

Jerry Brown and his Democrats made it law, remember that next election.

[martinibuster]

and that's exactly what you can do about it.

Just for the record, California's budget problems are the direct result of a Republican tax revolt in 1978, called Proposition 13 [en.wikipedia.org], which cut the amount of tax revenue collected from senior citizens who held on to their property and shifted some of the burden over to new home owners. The net result was lower tax revenue. The authors of Proposition 13 were both Republicans. They meant well (and I can't blame them for trying) but the result has been catastrophic for California.

The three subsequent Republican governors dealt with the financial crisis by issuing bonds, i.e. taking out loans. Ironically, this happened on Brown's watch, at around the beginning of his second term in office. The three Republican governors that followed have been taking out loans to make ends meet and here we are in 2011, suffering because of irresponsible Republican fiscal mismanagement. Jerry Brown is the first governor to seriously tackle the budget crisis since the passage of Prop 13 (when he was governor), but he does not really have a choice. Is going into MORE debt still feasible? Not in 2011.

Nevertheless, I still feel that Governor Brown made a mistake to balance the budget on the backs of the common citizen. Even our last (Republican) governor declined to pass this law. I will vote Republican in the next election to get Jerry Brown out of office, despite the history of financial mismanagement by the three previous Republican governors and the fact that the entire blame for California's budget problems are a direct result of California Republicans.

[woop01]

Oh goodie.

It's the republicans fault.

No, it's the democrats fault.

Nope, look further back, it's the republicans.

But, look before that, it's the democrats.

It's a POLITICIAN issue.

[Webwork]

Mail order has always been exempt from state sales tax

Not quite true.

The purchase of goods, once they are brought into the State, IS subject to the OBLIGATION to PAY THE SALES TAX on the goods, by the LOCAL STATE RESIDENT. In other words, you/I are duty bound - by local tax laws - to report the purchase and pay the sales tax.

So, in MOST STATES (to the best of my knowledge) this is NOT "creating a new tax" but, instead, is creating the method to enforce the collection of the taxes ALREAD DUE once the goods - purchased by a local resident - are delivered in the State.

These nexus-laws don't represent a new tax. Instead they represent an effort to transform the "unlimited tax dodges" - facilitated by the rise on online commerce - into "taxes due by local residents . . and now collected".

Every entity whose "best solution" to the tax collection issue is to shoot the affiliates should forever after be shunned by affiliates. And guess what? Once there IS a national enforcement program just how eager do you think entities like Amazon are going to be to "pay affiliate commissions" anyway?

I say shame on every online entity that can envision and implement a 1000 ways to automate everything - in the name of efficiency and driving profits - but just can't find the ability to calculate the tax due and automate the collection of taxes in 50 States and a few dozen cities.

[edited by: Webwork at 1:27 pm (utc) on Jun 30, 2011]

[incrediBILL]

According to the TV news Amazon shut down over 10K affiliates. The state also just lost that state income tax from affiliates as well. Take the new sales tax minus 10K income taxes, do a little math - probably not the millions they were after but it is a setback.

Wonder if the Governor, in his not-so-infinite wisdom, took into consideration that he probably just turned more than a few people destitute that relied on that income. Maybe those 10K affiliates will end up on the public payroll, nothing like a little welfare to gobble up a new sales tax, eh?

Not that we have to worry about such things during a high period of unemployment or anything.

One step forward, two steps back, do not pass GO, go directly to CHANCE.

[walkman]

Stupid, god knows how many in Silicon Valley alone were effected.

[walkman]

Wonder if the Governor, in his not-so-infinite wisdom, took into consideration that he probably just turned more than a few people destitute that relied on that income. Maybe those 10K affiliates will end up on the public payroll, nothing like a little welfare to gobble up a new sales tax, eh?

TrollBot:
Do not depend on affiliate income
Do not depend on Google traffic
Do not depend on Google Adsense
Do not depend on ...

:)

This is so freaking stupid especially for California. Did they even ask around how many start-ups will have to fold or move now? I think Texas and NC took or are taking the Amazon deal (investment for a 5 year delay) so many will have to incorporate there. Screw CA and others, people need to make a living and they are closing those few possible venues left. Next year they will probably tax sites hosted within the state or something, it's not like this or any other tax will solve their problems. Mo money, more expenses, more $200K a year and pensions at 50 years old...for lifeguards. [cnbc.com...]

[travelin cat]

Here's an open letter from Danny Sullivan to Jeff Bezos:

I deeply appreciate that after so many years of supporting your company, and earning my 4.5% cut over those years (as I figured today, looking at my stats), that you’ve decided that I should be a pawn in your fight with my state. That type of loyalty really makes me want to support you in the future, should you restore your program. It also encourages me to want to continue shopping with you.

[daggle.com...]

[LifeinAsia]

The current budget situation can be blamed on BOTH Reps and Dems- it is a matter of overspending year after year after year and creating unrealistic budgets with smoke and mirrors and continually pushing payments into the next fiscal year so that the current year "balances."

Yes, Prop 13 can shoulder some of the blame. But Prop 13 has been around for decades- during that entire time the politicians continued on a spending spree, even though they knew revenue would be limited because of it.

The Democrats want to keep raising taxes. Well, if they keep killing income sources and forcing taxpayers out of the state to more business-friendly ones, it's still going to be a net loss. Higher taxes/regulation forces more businesses out of state. That means less corporate income tax, fewer individual taxpayers (from the employees that follow the company out of state), and more on the unemployment dole (those former employees who don't follow the company out of state and can't find another job locally). Also, because of fewer businesses and employees and more unemployed, that's even LESS money to spend at local businesses- so the effect hits other businesses as well.

At some point they are going to be past the tipping point where the business environment is so bad that the state will never recover. Hopefully, we haven't gotten to that point yet!