Law & Disorder / Civilization & Discontents

Amazon to shut down California affiliates over new sales tax law

California has signed into law its own "Amazon Tax" that requires big online …

If things continue down their current path, Amazon's affiliate program will eventually go extinct in the US. Late Wednesday, California joined the growing list of states attempting to collect sales tax from online retailers like Amazon in an effort to help close the state's vast budget deficit. Amazon, in typical fashion, has aggressively pushed back, warning its California-based affiliates that they'll have their revenue streams cut off as of September 30 if the law ends up being enacted. (Update: Amazon has informed its California affiliates that it's shutting down the program immediately and not waiting until September.)

California's new law, signed by Governor Jerry Brown on Wednesday, requires online retailers to collect sales tax even if they have no physical presence in the state. How does that work when federal law states they have to have a brick-and-mortar store to qualify? Like the many other states before it, California counts Amazon affiliates who reside in California as a "physical presence." So, if Joe Blow runs a personal blog with affiliate links to Amazon products (you know, to make a few bucks on the side), he is effectively "selling" Amazon products and making money from them via his home in California.

Because of this "physical presence" technicality, the state wants Amazon to begin collecting sales tax from California residents, and subsequently pay it back to the state.




California's—and other states'—laws don't just affect Amazon either, despite the "Amazon Tax" moniker. Plenty of other sites offer similar affiliate programs ( and, to name a few) and will either have to rework the way they do things with California residents or cancel their affiliate programs as well.  eBay also claims to we worried about how the tax affects small businesses and individuals who are not actually involved with these large corporations. "We believe that putting a tax burden on small businesses and treating them the same as giant retailers is unfair," eBay senior director of government relations told Internet Retailer. "eBay is advocating a threshold that accurately defines a small business, so that the sellers that are getting started aren't held back from growing in across the US."

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