Amazon's doing the right thing here.<p>California has no way of charging them sales tax, nor should they, without a nexus. Imagine if you, living in CA, ordered something from a brick-and-mortar store in New York. If that store had to charge you sales tax and remit it to California, they'd simply say "no thanks" to your business. It's just not worth it for them to have to do all that work so you can get a $10 item (and so California can get their 82.5 cents).<p>Amazon shouldn't be treated any differently simply because they do a lot of business in the state. California knows this, so they come up with (well, Illinois came up with it) the idea that if some third party runs ads on their website for products on Amazon, that third party (an "affiliate") is actually an agent of Amazon. That's preposterous.<p>Amazon doesn't really have a choice, though. If they sue and lose, the entire affiliate program goes away. So they instead just drop the affiliates. They have to -- they're paying affiliates 6% of all qualified sales <i>and</i> paying the state 8.25%. And they are then open to audits and other nonsense from the state. It's just not worth the leads any more.
I wonder what authority CA claims over entities with no physical presence in the state. What I mean by that is this: if Amazon wants to ignore this, and still ships to CA residents, what recourse will the state have? If anything, wouldn't this all fall under the interstate commerce powers of the Federal government?
Damn. There goes my $300-$400 a month passive income... And I already report my use-tax to begin with. Guess it's time to start calling up friends out-of-state for their mailing address.
this is very anti-entrepreneurial. all the small business, affiliates (large and small) will now relocate to other states that are more friendly to their business.<p>All that this is business is going to accomplish is that it will collect less tax dollars, drive jobs and businesses out of state. Thank you to big box retailers like Best Buy and Staples for driving to have this bill passed.<p>Too bad California :(
Here is the law, marked up:<p><a href="http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_28_bill_20110615_amended_sen_v97.html" rel="nofollow">http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_2...</a><p>I read parts of this and noticed the following exception for small retailers (<$10,000 annually), which may or may not be applicable to Amazon Affiliates (could be interpreted either way, because "retailer" includes "an entity affiliated with a retailer within the meaning of Section 1504 of the Internal Revenue Code."):<p>"This bill would include in the definition of a retailer engaged in business in this state any retailer entering into agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by an Internet-based link or an Internet Web site, or otherwise, to the retailer, provided the total cumulative sales price from all sales by the retailer to purchasers in this state that are referred pursuant to these agreements is in excess of $10,000 within the preceding 12 months, and provided further that the retailer has cumulative sales of tangible personal property to purchasers in this state of over $500,000, within the preceding 12 months, except as specified. This bill would also provide that a retailer entering into specified agreements to purchase advertising is not a retailer engaged in business in this state and would define a retailer to include an entity affiliated with a retailer under federal income tax law, as specified. This bill would further provide that these provisions would not apply if the retailer can demonstrate that the referrals wold not satisfy specified United States constitutional requirements,as provided."
The battle over similar issues in Texas has also been fun:<p>• Amazon has a distribution center in Irving, Texas but argued its clever legal structure freed it from having to pay sales taxes.<p>• The Republican Comptroller Susan Combs insisted on payment of a past tax bill, based on these operations.<p>• Amazon said it'd thus need to close the facility, and Republican Governor Rick Perry announced his opposition to the Comptroller's decision.<p>• The Republican-dominated legislature then passed a bill, similar to this California bill, further establishing Amazon's sales tax obligations, for not just the distribution center but the affiliates.<p>• Perry vetoed it.<p>• Amazon's hometown newspaper, the Seattle Times, then editorialized that it should stop dodging state sales taxes nationwide.<p>• The Texas legislature started working on a veto-proof way to obligate Amazon, perhaps by attaching the obligation to a larger budget bill.<p>• Amazon offered the legislature a bigger new distribution center, with 5000 (and then 6000) new jobs, in return for a full legislative exemption from sales taxes for the next few years.<p>The part-time legislature, which usually only meets every other year and (with no state income tax) takes sales taxes very seriously, has so far declined Amazon's offers.<p>Some of the coverage:<p><a href="http://www.techflash.com/seattle/2011/02/texas-governor-backs-amazon-seattle.html" rel="nofollow">http://www.techflash.com/seattle/2011/02/texas-governor-back...</a><p><a href="http://www.statesman.com/news/texas-politics/amazon-sweetens-job-offer-texas-lawmakers-dont-bite-1558831.html" rel="nofollow">http://www.statesman.com/news/texas-politics/amazon-sweetens...</a>
The core problem, from an outsiders' perspective, appears to be jurisdictional fragmentation. Amazon, not unreasonably, want to be able to regard the USA as a single market, yet this gives them 50 different sets of legislation and 50 tax codes under which to operate.<p>However politically unpopular this idea might be (it's certainly not popular in Britain with the EU, which itself started as a common market and legislation / regulation area) the most business friendly idea seems to be centralisation. Remove competency for this sort of issue from the individual states, create common legal frameworks, allow a one-size-fits-all management model rather than having to individually cater for the requirements of Wyoming, Vermont, Alaska, North and South Dakota, Delaware and Montana. Seven jurisdictions, seven legal codes, seven sets of tax law. Yet only one has enough population that it would even qualify for the top ten <i>cities</i> by population and even combined they would only be twenty-second in population ranking. They're not major markets and a legal framework designed like this is unduly expensive.
I'm curious, how is Amazon selling things online different from software companies offering software and services online ? Does this law pave way in future to tax these kind of services too ? Or is it that software companies already pay a sales tax for Software...
Frankly, I wish Amazon would just give up the fight and go ahead and charge sales tax for all 50 states. They're the only retailer that I do any business with that doesn't charge sales tax and, because it's a PITA to remember to save every single receipt from them for tax purposes I don't do so and, therefore, I end up paying stupid use taxes which probably end up costing me more than what it would've cost me if Amazon had just collected the sales tax in the first place.
Amazon has it's search engine A9 based in Palo Alto, CA.
Amazon refers to A9 as "our search engine" in its own documentation: <a href="http://www.amazon.com/gp/xs/sharethepi.html" rel="nofollow">http://www.amazon.com/gp/xs/sharethepi.html</a><p>How can it then claim that it has no offices in California?
Why does legislation have to be some confusing. So I get that certain parts of the law have been signed, but what about the affiliate tax? Is that now the law. The article says<p>"Brown announced signing eight separate pieces of that package Wednesday, though not the main spending plan itself.<p>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."<p>The use of "would seek to force" seems to suggest this part hasn't passed yet. So the real question is did it pass or not?
It's amazing how 90% of the people here are so incredibly ignorant that they don't know that states don't have jurisdiction over the activities of their residents and non residents in other states. This community is not very smart.