California Governor Jerry Brown signed legislation today requiring any on-line retailer with affiliates located in the state to collect the state’s sales tax on all purchases made by Californians whether or not made through those affiliates. Supporters figured the California market was too large for on-line retailers to disown their affiliates.
Amazon.com terminated the accounts of all 25,000 affiliate residents in the state today. Overstock.com terminated all of their affiliates in California as well. Amazon.com itself continues to have no physical presence in California, so the state isn’t likely to begin collecting sales tax on Amazon’s internet sales. 25,000 Californians lost an income source, however. That worked well, didn’t it?
FWIW, Associates aren’t the storefronts and other sellers seen on Amazon and other websites. Sales tax has always been collected on any sales by businesses and independent sellers physically located in California. Associates are more likely to be bloggers and others who don’t actually sell or stock anything. They earn referral fees (commissions) if someone clicks through from their website and makes a purchase from Amazon.com or any of its independent sellers. Commissions are reported to the state as taxable income.
Depending on one’s point of view, this is sad or humorous. This Los Angeles Times article seems clueless to me, but that seems to be the way things are at the state’s largest-yet-ever-shrinking newspaper.