Yesterday, Governor Brown of California signed into law a bill that purports to apply California sales tax to online sales to California residents. Today Amazon.com saw its shares dip slightly — down by a nickel. However, it is not Amazon that stands to lose the most as a result of this taxation ploy. The real losers are the people who lost their jobs or their Amazon affiliate status as a result of this legislation.
In order to tax interstate commerce, a state has to establish a nexus with the transaction. A nexus could be having employees working in the state, or having distributors or sales representatives who conduct their business while residing in that state. The best way for Amazon to resist having its interstate commerce taxed by the state of California is to sever its ties with any businesses or individuals based in California.
Today, Hubpages, a California-based content farm, announced that they received this letter from Amazon:
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,
Amazon logo
The Amazon Associates Team
Is the new law going to help the State of California to generate more tax revenue? Or is it the other way around: will it rob California residents of an opportunity to make an income from internet sales?
© 2011 Aya Katz
Well, that sucks! Terrible times we live in!
Suzanne, yes, these don’t seem like the best of times. Many people are just scraping by and trying to supplement their earnings, and more avenues are being closed every day.