Amazon.com Ditches California

You may have heard something about the tax situation in the budget.  There aren’t any real increases, as you know, no Republicans voted for it.  But there are a few things that do attempt to increase revenue.  Most publicly, there is the so-called “Amazon tax”, which isn’t really a tax at all.  All it does is instead of depending on Californians to keep track of their purchasers from major online retailers and then pay use tax, and puts it on said major online retailers.

You’ve been paying your use tax dutifully every year, right? Right?  Well, if that was the case, then Amazon wouldn’t be going to lengths that it has gone to avoid charging sales taxes to California residents.  Because here’s the news on that front, they’ve decided to terminate their affiliate program in California due to the new requirement to collect sales taxes:

For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com , Endless.com , MYHABIT.COM or SmallParts.com . Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.

Of course, they have no proof that job losses are arising from anything but their own obsitancy from paying their fair share.  They use government services heavily, after all, their packages go across interstate highways and city roads maintained by the government, and that whole internet thing? Yeah, that was originally a project of the government.  But they don’t give a crap about any of that.  They are about one entity and one entity alone, and that’s Amazon.com.  

They like that they get this unfair advantage on price.  Sure, big box retailers aren’t exactly notorious good actors, but at least they pay their freaking taxes.  Amazon complains that it is just too hard for them, or they can’t process it.  Frankly, that’s BS.  They manage to maintain a catalog of millions of products, I’m pretty sure they can handle the few lines of code and a few checks for sales tax.

So, with that, as a former “affiliate” of Amazon, I have now switched to Barnes & Noble, who pay their taxes.  You can find that link in the upper right corner.  Furthermore, there are these other institutions.  You can walk in to them, and actually see the products IRL.  Crazy, but true.  Please, consider supporting your local businesses first before you give the money to an unsupportive partner like Amazon.  

11 thoughts on “Amazon.com Ditches California”

  1. I have never fully understood the way these associates work.  So you will get a contribution on anything that we buy at BN during a visit there if we have clicked through calitics?

  2. I’ve got no opinion about the affiliate program, which I was part of and which I made nothing much from.  Sales taxes however are paid by people, not by Amazon. You can cut it anyway you want but it’s more money I would have to pay, except that apparently Amazon is refusing to collect these sales taxes. And what would it do to the used book market, which I use? We’ll see.

    The registration fee is also something I will have to pay. For this, we’ve got a huge cut to our university, which has been dealing with cut after cut for years. Countless hours have been wasted over those years trying to figure out how to make these cuts.  I work there part time, my partner full time.  Our incomes are threatened by this Democratic passed budget.  

    In all the other cuts, we’re the ones whose services are being cut–us and people in the economic direction we’re heading– not the rich constituents of Republicans.  I didn’t vote for Jerry Brown for this. There’s nothing progressive about any of this.  

  3. stores, which would mean they already have the sales tax code in hand.

    It’s just the price advantage they want.

    BTW, franchise tax board is sending out notices to all California businesses to file a use tax return. You can file for $0, but someone has to sign their name to it.

  4. “their packages go across interstate highways and city roads maintained by the government, and that whole internet thing? Yeah, that was originally a project of the government”

    Roads and highways are maintained by the gasoline tax.  The backbone service providers, ICANN and the telecos provide Amazon the paths for the data they pay to maintain their servers.  The state of CA already taxes the shipping partners and the internet providers which allow Amazon to function.

    So considering the settled law of the constitution says that out of state goods cannot be taxed whats your legal argument?  I don’t necessarily think that the current system is fair but this attempt by the legislature is a failure and they have cost affiliates income with this law, it was a completely foreseeable occurrence.

    “Please, consider supporting your local businesses first before you give the money to an unsupportive partner like Amazon.”

    This statement if naive at best.  Retail sales have entered a new paradigm certain items will forever more be purchased cheaper and processed more efficiently through the web.  It is what it is dude…

    Those CA businesses who feel that discouraged should sell to other high tax states.  Turn the tables.   BTW I don’t think any of them would be supportive of collecting taxes for New York based businesses

  5. While we expect little of sense from a governing body with single-digit approval rates, the attempt to force a tax on an out-of-state retailer (which CA can’t do without forcing nexus on them), shows a complete lack of sophistication and foresight.

    It’s clear that Amazon will (and now is) going to do whatever it takes to keep internet commerce tax-free.  It’s their core competitive advantage, and drives down prices for consumers everywhere.

    This new law is actually doing to reduce income for the state.  Here is how:  first, Amazon will cancel all affiliate agreements and take whatever steps necessary to remove nexus from CA.  Most of those affiliate programs are virtual (online) and easily relocated to out-of-state ownership.  Some major affiliates may chose to move the entire firm out of state, others can just move the site to a partner in another state who gets the commission and pays a web-management fee back to the owner in CA.  This is a 100% legal approach that puts the affiliate transaction outside of the reach of the State of California.

    So under the current system, CA may not get a sales tax on the sale — but the CA affiliates (1) pay income tax on the affiliate payments and (2) use that money in the local CA economy.  This bill thus causes no net gain in sales tax revenue and creates a corresponding loss in other accounts.

    Since the state seems to know no bounds on how to suck money from its residents, I next expect to see a personal use tax enforcement.  That will, however, raise enough ire that it will be a huge political risk that not even the jellyfish we have running this state will be willing to take (thankfully).

  6. I am an avid reader, and have been an Amazon customer since day one.  I still have the insulated glasses and the refrigerator magnets they used to send us for being good customers.

    But I support this tax.  I’m a Californian; I love this state, but I don’t want local business driven out of business, or drastically reducing their stock to things that can’t be easily purchased over the Internet.  I don’t want to be FORCED to Internet shop!

    Anyone who wants to do business in our state needs to play by our rules: when capitalism and democracy conflict, democracy should win.

    Furthermore, the Internet has become a thieves paradise.  Amazon IS a good and reliable online merchant.  There still are a few, but I for one am pretty sick of being ripped off by the hoards of unscrupulous operators out there who KNOW they are beyond our reach.

    Do your community a favor – do your neighbors a favor!  Shop your local merchants.  Find the ones that are honest and reliable and patronize them.  It helps put your neighbors to work and it puts money in the State coffers.  What’s wrong with that?

  7. Is their ending this relationship with affiliates simply a way of punishing the state, or is there some clear relationship between the affiliate program and this tax?

    It looks to me like an act of pique (or legalized economic extortion.)  In that case, I hope that B&N makes a big play for Californian business.  They’ll get mine.  There are probably a lot of bummed “affiliates” who would like to sign up.

  8. For some things like PC supplies, Like reservoirs, cpu water blocks, radiators, etc. It’s online or forget It, as the market for these parts is too small and is made up of enthusiasts, none except Newegg are within CA and they don’t sell what I’m currently after, If Ya tried buying this sort of stuff at small mom and pop shops it would be special order and there is no refund there, if they don’t give Ya the brush off in the 1st place that is. As to Amazon, Their a Merchant? There are a lot of small independent retailers on the Amazon website, So doesn’t that make Amazon a Web host and not a Merchant? Most online retailers are small and aren’t in CA, If one Merchant is within CA then there is sales tax to be paid and yeah I’ve paid It, when I’ve run across a Merchant on Amazon who is within California. So this law is effectively toothless, counter productive and quite possibly very unconstitutional and in violation of the , I’ll bet Republicans said so too and if they did, good for them, As they’d be right. Also paying sales taxes to the FTB is too burdensome to someone like Me as I’d have to keep all My receipts and file a tax return, which the SSA says I can’t do since I get SSID as I’m a disabled person and that’s all I have to say, $200 Million in revenue? Sounds like someone was smokin something as I’d be amazed if they collect more than dust on this, plus lose income tax money to boot. Amazon could just relocate to Oregon… But then Oregon has no sales/use tax…

    Amazon.com v. Interstate Sales Tax: Everyone Loses

    The following is from SF Gate:

    The process will take some time, board officials said – they’ve been given a meager $1,000 out of the general fund to get the law up and running – but suggest companies start collecting now to meet their October bill.

    “Any retailer that falls under the new criteria should begin collecting the (sales) tax as of July 1,” spokeswoman Anita Gore said.

    According to the law, an out-of-state online retailer with any kind of “nexus” in the state – a physical or corporate presence, not just a brick-and-mortar retail outlet – is liable. With one exception: retailers who have sold no more than $500,000 worth of goods in California in the previous 12 months. (Full text of the law, ABX1 28, at sfg.ly/kkSCkM.)

    The concession was aimed primarily at San Jose’s eBay, a strong opponent of all such online tax proposals, saying they hurt the company’s “business model,” which relies on individuals and small businesses selling stuff on their auction site. Ebay initially pushed for an exemption of $2 million.

    Any out of state retailer can if they have no physical presence or corporate presence ignore this loony law, but then last I looked Amazon has never sold Me anything, but smaller places have, So I not only question this law as to its being effective, But also as to being an usurpation of power that California is not entitled to, As in the power of the US Congress, the California Legislature ought to know its place, as California is not a country, Only the US Congress has the power, But Congress has not wanted to create a nationwide VAT tax…

    The California Legislature is full of it, $200 Million? I doubt even 2 cents will be collected, I’d like to see them do it, But It just won’t happen, Even hackers know not to hack Amazon, their too well built. I bought several items today, Some from Amazon hosted out of state retailers and one from a Florida company, But then like I said I have no other choice, I paid no sales/use tax and considering what California did to My SSI/SSP income. To quote Bender they can KMSMA… ;p

  9. Working to keep Carl Karcher not to relocate to Texas for their corporate campus, or Intel to build chip plants in Victorville or Bakersfield instead of Oregon or Utah?

    If we can bring these jobs in California then we don’t have to worry about squeezing dried lemons for revenue.

    However we need to think of ways of making the use tax easier to remember to keep track of, so i decided to ask mint.com to add that as a feature. Even though I am low income I still need to pay my use tax because people worse off than me are suffering.

    The problem is will Newegg collect use taxes for Nevada? If states have a use tax then it should be harmonized. So there would be no advantage. When my sister ordered from newegg when she lived in Nevada to go to UNLV Newegg charged no Nevada sales tax. Then Nevada can collect from California shoppers as well.  

Comments are closed.