Amazon to cut off California-based Web affiliates

Jun 30, 2011

(AP) -- Amazon.com Inc. said Wednesday that it will stop working with online affiliates based in California since the state passed a new rule that forces online retailers to collect sales tax there.

In an email Wednesday to California-based affiliates - individuals or companies who run websites that refer visitors to Amazon and then get a cut of any resulting sales - the Seattle-based company said it would cut ties with those who reside in the nation's most populous state if the law became effective. Gov. Jerry Brown signed the law Wednesday as part of a larger state budget package.

The rule requires online retailers such as Amazon to collect sales taxes if they have in-state affiliates.

In its email, Amazon called the bill "unconstitutional" and "counterproductive."

Passage of the law, which is projected to net $200 million annually, adds California to a growing list of states that have enacted such legislation in hopes of bringing in more tax revenue.

Billions of dollars are at as a growing number of states look for ways to generate more revenue without violating a 1992 U.S. that prohibits a state from forcing businesses to collect unless the business has a physical presence, such as a store, in that state. When consumers order from out-of-state retailers, they're supposed to pay the tax that is due, but they rarely do and it's difficult to enforce.

States are trying to get around the Supreme Court restriction by passing laws that broaden the definition of a physical presence. Online retailers, meanwhile, are resisting being deputized as tax collectors.

California will become the latest state in which Amazon has parted ways with members of its Amazon Associates Program. Already it has said goodbye to affiliates in states including Arkansas, Connecticut and Illinois due to the passage of similar online laws. Smaller Overstock.com Inc. has shuttered its affiliate programs in several states due to the laws as well.

California passed such a law in 2009, but then-Gov. Arnold Schwarzenegger vetoed it.

Explore further: Airbnb to expand tax collection efforts

5 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

States push harder for online sales tax collection

Mar 21, 2011

(AP) -- Tax-free shopping is under threat for many online shoppers as states facing widening budget gaps increasingly pressure Amazon.com Inc. and other Internet retailers to start collecting sales taxes from their residents.

Amazon reacts to new Colo tax, costing affiliates

Mar 15, 2010

(AP) -- Kristie McNealy blogs from her suburban Denver home about raising four children and health issues. Her husband, Rob, a floor installer, runs another Web site offering product reviews and advice on ...

Judge: Free speech protects Amazon buyers' data

Oct 26, 2010

(AP) -- Lists that identify the books, music and movies individual customers bought from online retailer Amazon.com Inc. are protected from North Carolina tax collectors, a federal judge has ruled.

Web retailers, states tussle over tax rules

Jul 02, 2009

(AP) -- In a big break for online shoppers, Web retailers generally don't have to charge sales taxes in states where they lack a store or some other physical presence.

Cash-hungry states eye online retail for tax revenue

Jul 22, 2010

Web-savvy shoppers can often save big buying online instead of at the local mall. But a chunk of the savings comes at the expense of state and local governments, in the form of sales taxes that are never paid on many Web ...

Recommended for you

Airbnb to expand tax collection efforts

6 hours ago

Online lodging operator Airbnb is expanding its efforts to collect local taxes, responding to complaints that it competes unfairly with the hotel sector.

Jay Z to acquire Wimp music service

8 hours ago

US rap star Jay Z will make a $56-million foray into the music streaming business by taking over the Norwegian service Wimp, its shareholders confirmed Friday.

How can Google snap its stock out of its stupor?

14 hours ago

Google has turned into a stock market laggard as the shift to mobile devices has lowered the Internet search leader's digital ad prices and the company's expensive investments in far-out technology has trimmed ...

Amazon surprises with profit despite fierce spending

Jan 29, 2015

Amazon surprised the market Thursday with a quarterly profit far better than anticipated for the online giant known for pouring money into projects such as original video programs and delivery drones.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

dogbert
1 / 5 (1) Jun 30, 2011
Good for Amazon. States which create a hostile environment for businesses should see a loss of business in their state.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.