Digital News Report – On June 29, Amazon, canceled thousands of affiliate advertisers in California from their marketing program. They did this in response to California Governor Jerry Brown signing legislation ABx1 28 that would require sales tax to be collected from these transactions that would have been tied to these affiliates living in the state of California.
Affiliates make a commission on a sale if the item was purchased through their advertisement placement. Why cancel the affiliates? The reason is that the new legislation requires online retailers to collect sales tax only if they have some physical relationship of doing business in the state. That could include having a warehouse, an office, employees, and in this case affiliates. A presence in California, can also include those who develop products that the retailers sell.
The ABx1 28 was introduced by Assemblymember Bob Blumenfield (D-San Fernando Valley), which outlined clearly how out-of-state companies that operate partly in California, will be obligated to collect sales tax from California residents.
Overstock has also cut ties with their California affiliates since the sales tax legislation. Back in May, Overstock filed a lawsuit saying that the New York Internet tax laws were unconstitutional. In May, the company also has dropped affiliates from their marketing program in Connecticut for the same reasons. In April the company severed ties with affiliates in Arkansas.
By: Tim Edwards