James Delahunty
29 Jun 2011 23:43
Web sales tax in California may force Amazon to dump affiliates.
The gigantic e-commerce entity has over 10,000 affiliates in the wealthiest state of the union, and it warned them on Wednesday that it may have to sever ties with them if the state forces Amazon to collect web sales taxes.
Amazon affiliates are paid a fee when they direct traffic to the Amazon.com website and generate sales. They are in the middle of a stand off between Amazon (and other e-commerce sites) and California legislators who say Amazon has a duty to collect sales taxes when affiliates operate within the state.
California's state legislature passed a bill on Tuesday that establishes such a tax, and Governor Jerry Brown signed it on Wednesday.
Traditional retailers such as Sears and Best Buy have voiced concerns in the past that online outlets have an advantage by avoiding sales taxes in states where they have no corporate presence. Amazon claims that such tax laws will kill jobs and lead to income losses for affiliates and the states.
"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," Amazon said in an email sent to Californian affiliates Wednesday.
"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."