Amazon.com abruptly ended its Associates Program for California residents Wednesday, cutting off roughly 10,000 individuals and small businesses, including this one, from a vital source of income with less than a day’s notice. Like a handful of states, California is trying to force Amazon to collect sales tax.
Full disclosure: Truthdig is among the businesses affected by Amazon’s decision. It will impact this site financially. In fairness, we are reprinting the two letters Amazon sent us below.
Amazon’s Associates Program pays sites a small percentage for referring traffic to the online retailer. As an example, when you click on a book in the Truthdig bazaar, it sends you to Amazon. If you buy the book there, Amazon pays Truthdig a referral fee (as little as 4 percent).
The California law, signed by Gov. Jerry Brown on Wednesday, requires online retailers to collect a discounted sales tax from California customers. In a letter to its California Associates, Amazon said, “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 is not going to turn away California’s 37 million customers because the state is asking it to collect sales tax. By dumping its California Associates, Amazon may hope to create a base of 10,000 angry constituents to put pressure on the Legislature to repeal the online tax. —PZS
Los Angeles Times:
It’s odd that a company would voluntarily dilute its business in the most populous state in the country simply because it’s being asked to collect what is lawfully owed,” Mark Hedlund, a spokesman for California Senate President Pro Tem Darrell Steinberg, told CNN Money.
According to two experts contacted by the Wall Street Journal, the California law is a likely candidate for a court challenge. California lawmakers maintain that it is designed to help level the playing field for brick-and-mortar retailers in the state.
Below are the two letters Amazon sent us Wednesday, along with the date and time each was received.
On Wed, Jun 29, 2011 at 12:24 PM, Amazon.com Associates Program wrote:
Hello,
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.
You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.
To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.
We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.
Regards,
The Amazon Associates Team
Wed, Jun 29, 2011 at 9:43 PM
Hello,
Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those 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 before today will be processed and paid in full in accordance with the regular payment schedule.
You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.
To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.
We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.
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By LA Esq., July 4, 2011 at 11:24 am Link to this comment
(Unregistered commenter)
Obviously, not one person posting here to the effect that there is no tax owed on internet sales knows anything about sales tax law. Saying that there is no tax owed on interstate sales is incorrect. The only question is who collects and remits. California and every other sales tax state has a use tax law that requires residents to pay the tax on items they buy without sales tax in the form of a use tax. Same rates. The only difference is that use tax is self-reported while sales tax is collected at the time of sale and remitted by the merchant. What Amazon wants to do is avoid collecting and remitting the taxes because its planners are aware that virtually no one self-reports use tax, which gives it a nearly 10% price advantage over in-state merchants. Its posturing is nothing more than a cynical effort at misdirecting the argument.
Sales taxes are popular with governments precisely because they are regressive, and because they take nickels and dimes day by day instead of big sums out of paychecks.
By A. Benway, July 2, 2011 at 6:12 am Link to this comment
(Unregistered commenter)
It’s well established law that states cannot tax imports,exports,or interstate commerce. Amazon, though a deplorable operation in many ways, is correct according to law. Yet California needs tax money - so tax already! Tax the “folks” who have real money - the rich. How about a progressive and steep income tax!
By jltnol, July 2, 2011 at 5:21 am Link to this comment
(Unregistered commenter)
Sorry…. but I think CA is doing the right thing.
There ARE sites that DO charge state taxes, including apple.com, so really… how
hard can it be?
In the end, perhaps Congress should address this, but I personally think that all
online sales should at least pay state taxes….. I don’t think they should be forced
to pay local city sales taxes… but state taxes… absolutely.
Like I said, lots of places do it already so no technical reason why Amazon can’t do
it as well.
Take a long look at California everybody. The same conservative policies that were begun in CA in the late 60’s are now being implemented in nearly every state.
Think California looks like a shithole now? They are just about ten years ahead of the rest of us. Just watch as more taxes are cut, corporate taxes are all but eliminated, and Ronny Ray-guns dream comes true and america begins to resemble the crooked and cruel monarchies that our ancestors came to this land to escape.
The State of California is about (you get it by now)..
Of those three it’s clear that if the beautiful state of California is to continue it’s preeminence in lifestyle, education, quality of life and more then Amazon and by extension Truthdig (and many more ‘takers’) need to give up some small thing or percentage.
That would be an obvious truth! .. if everyone wasn’t in ‘me first’ mode.
People should read the Constitution. States are not supposed to be allowed to tax non-residents living outside the state. They have FOUGHT that Constitutional restriction ever since mail-order countered sales tax.
If I buy something in NY and they don’t have a business presence in NJ, there’s no reason THEY or I should pay NJ sales tax on it. People buy across state lines all the time, for lower prices and lower taxes. Only the Federal Government can regulate interstate commerce.
And that’s why charging sales tax on mail order products that aren’t actually sold in California is unConstitutional.
By Mike Strong, June 30, 2011 at 4:08 pm Link to this comment
(Unregistered commenter)
I had Amazon on my site for several years and finally got ticked and took them off. I found that I had generated revenue for them but never enough for them in any one month to ever pay me. If you don’t generate enough money each month they set you back to zeros on your account.
Very UN-like the Google text ads which I keep on the site. Google sends me a check when the amount from click-throughs gets above one hundred dollars. So every six or seven months or so I get a check for a shade more than $100. Amazon just keeps the tiny bits for themselves when they don’t add up to a payout (for me) minimum in a month. That allows Amazon to keep skimming off small contributors to their sales.
Amazon is like corporations which close profitable acquired small businesses just because they are not profitable enough. Google doesn’t exactly keep me in Ferarri’s but they do keep accumulating the tiny amounts until the amount reaches the payout minimum. Google doesn’t steal from the little people (i.e. me) each month, unlike Amazon.
By Seth King, June 30, 2011 at 4:06 pm Link to this comment
(Unregistered commenter)
I currently live in California. I also run a blog that generates part of its revenue from the Amazon affiliates program.
I strongly applaud Amazon for doing this. California is a dying state. It is dying because the looters and moochers far outnumber the producers and the government is a reflection of that.
It just so happens to be that my wife and I are actually moving to the freest state in the nation in less than three weeks, New Hampshire. We’re leaving California because it is a welfare and police state and it is rapidly turning into a shit hole.
The looters and moochers of California are quickly driving the producers out of the state. Soon all that will be left are the dirtbags who think they deserve something for nothing. They’ll get something alright, their comeuppance!
By cynholt, June 30, 2011 at 2:31 pm Link to this comment
(Unregistered commenter)
This goes to show that Amazon out-competes its competitors not because it provides a superior service to its customers, but because it has a tax advantage over its competitors. Amazon is clearly profiting from a tax system that’s rigged in its favor. So if Amazon lose its ability to make money when the playing field is leveled with regards taxes, then it should no longer be regarded as a moneymaker in the eyes of Wall Street.
Good job amazon, I never had much time for the conglomerate until I read this post.
Indirect taxes like sales taxes are the most pernicious form of government revenue raising that unduly target the less monied while leaving the rich unencumbered by taxes approacing the level of cost that has been put upon the state by a rich individual’s greedy asset gathering.
Amazon is resisting this because as a trans national capitalist it is under pressure from governments all over the world in countries who have previously fallen for the IMF line on shifting their revenue base away from a straight income tax to an indirect consumption tax.
Real world retailers are in alliance with government to use consumption and sales taxes as a way of ensuring that web retailers are reined in. It won’t work net retailing is too convenient for the consumer, but we will be stuck with a mess.
Amazon would have to get across the 50 sales tax codes of amerikan states plus the 150+ GST codes of non-amerikan nations. Think about that!
There is no logical basis for amazon to collect taxes in California or anywhere else. The cost to the state of a purchase by a state resident from a foreign net retailer is minuscule.
This form of taxation is unwieldy and not cost effective as well as being subject to avoidance and evasion.
Those are exactly the reasons govts were persuaded to move from direct income tax to indirect sales taxes, now the introduction of net retailing has shifted the paradigm, citizens should join with net retailers and demand a return to traditional direct revenue collection.
I also sell stuff on Amazon and I have climbed as high as i could in their company asking for them to put a tax methodology when I sell from my state to my state. They laughed and said that was my problem not theirs. If I wanted to tax them, I should charge them more money and pay the tax myself. I since fired off a formal complaint to the franchise tax board and I suppose they are starting to get this piece of shit company to act within the law. I even told Amazon software people to contact my webhosting people and they would show Amazon how to put a tax method into their shopping cart.
Screw Amazon!!
I too got the letters for my tiny little blog, which unlike Truthdig has never generated one red cent to me.
So what will Amazon do when other states follow California’s lead, since most of them are broke and really need the money,will Amazon cut them off one at a time, until no one’s left?
It is a great example of cutting their nose off to spite their face, and showing their concern for the fiscal plight the cities and states are in, which is no concern, just as long as Jeff Bezos can get his money!
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By LA Esq., July 4, 2011 at 11:24 am Link to this comment
(Unregistered commenter)
Obviously, not one person posting here to the effect that there is no tax owed on internet sales knows anything about sales tax law. Saying that there is no tax owed on interstate sales is incorrect. The only question is who collects and remits. California and every other sales tax state has a use tax law that requires residents to pay the tax on items they buy without sales tax in the form of a use tax. Same rates. The only difference is that use tax is self-reported while sales tax is collected at the time of sale and remitted by the merchant. What Amazon wants to do is avoid collecting and remitting the taxes because its planners are aware that virtually no one self-reports use tax, which gives it a nearly 10% price advantage over in-state merchants. Its posturing is nothing more than a cynical effort at misdirecting the argument.
Report thisBy Anarcissie, July 2, 2011 at 5:09 pm Link to this comment
Sales taxes are popular with governments precisely because they are regressive, and because they take nickels and dimes day by day instead of big sums out of paychecks.
Report thisBy A. Benway, July 2, 2011 at 6:12 am Link to this comment
(Unregistered commenter)
It’s well established law that states cannot tax imports,exports,or interstate commerce. Amazon, though a deplorable operation in many ways, is correct according to law. Yet California needs tax money - so tax already! Tax the “folks” who have real money - the rich. How about a progressive and steep income tax!
Report thisBy jltnol, July 2, 2011 at 5:21 am Link to this comment
(Unregistered commenter)
Sorry…. but I think CA is doing the right thing.
There ARE sites that DO charge state taxes, including apple.com, so really… how
hard can it be?
In the end, perhaps Congress should address this, but I personally think that all
online sales should at least pay state taxes….. I don’t think they should be forced
to pay local city sales taxes… but state taxes… absolutely.
Like I said, lots of places do it already so no technical reason why Amazon can’t do
Report thisit as well.
By Anarcissie, July 1, 2011 at 8:32 pm Link to this comment
What civilization?
Report thisBy Big B, July 1, 2011 at 1:03 pm Link to this comment
Take a long look at California everybody. The same conservative policies that were begun in CA in the late 60’s are now being implemented in nearly every state.
Think California looks like a shithole now? They are just about ten years ahead of the rest of us. Just watch as more taxes are cut, corporate taxes are all but eliminated, and Ronny Ray-guns dream comes true and america begins to resemble the crooked and cruel monarchies that our ancestors came to this land to escape.
Taxes are the price we pay for civilization.
Report thisBy SoTexGuy, July 1, 2011 at 9:16 am Link to this comment
Bottom line:
Amazon is about Amazon.
Truthdig is about Truthdig.
The State of California is about (you get it by now)..
Of those three it’s clear that if the beautiful state of California is to continue it’s preeminence in lifestyle, education, quality of life and more then Amazon and by extension Truthdig (and many more ‘takers’) need to give up some small thing or percentage.
That would be an obvious truth! .. if everyone wasn’t in ‘me first’ mode.
Adios!
Report thisBy Anarcissie, July 1, 2011 at 9:09 am Link to this comment
ITW—Better watch out around here. Proggies generally think taxes of any kind are sacred.
Report thisBy Inherit The Wind, June 30, 2011 at 4:08 pm Link to this comment
People should read the Constitution. States are not supposed to be allowed to tax non-residents living outside the state. They have FOUGHT that Constitutional restriction ever since mail-order countered sales tax.
If I buy something in NY and they don’t have a business presence in NJ, there’s no reason THEY or I should pay NJ sales tax on it. People buy across state lines all the time, for lower prices and lower taxes. Only the Federal Government can regulate interstate commerce.
And that’s why charging sales tax on mail order products that aren’t actually sold in California is unConstitutional.
Report thisBy Mike Strong, June 30, 2011 at 4:08 pm Link to this comment
(Unregistered commenter)
I had Amazon on my site for several years and finally got ticked and took them off. I found that I had generated revenue for them but never enough for them in any one month to ever pay me. If you don’t generate enough money each month they set you back to zeros on your account.
Very UN-like the Google text ads which I keep on the site. Google sends me a check when the amount from click-throughs gets above one hundred dollars. So every six or seven months or so I get a check for a shade more than $100. Amazon just keeps the tiny bits for themselves when they don’t add up to a payout (for me) minimum in a month. That allows Amazon to keep skimming off small contributors to their sales.
Amazon is like corporations which close profitable acquired small businesses just because they are not profitable enough. Google doesn’t exactly keep me in Ferarri’s but they do keep accumulating the tiny amounts until the amount reaches the payout minimum. Google doesn’t steal from the little people (i.e. me) each month, unlike Amazon.
Report thisBy Seth King, June 30, 2011 at 4:06 pm Link to this comment
(Unregistered commenter)
I currently live in California. I also run a blog that generates part of its revenue from the Amazon affiliates program.
I strongly applaud Amazon for doing this. California is a dying state. It is dying because the looters and moochers far outnumber the producers and the government is a reflection of that.
It just so happens to be that my wife and I are actually moving to the freest state in the nation in less than three weeks, New Hampshire. We’re leaving California because it is a welfare and police state and it is rapidly turning into a shit hole.
The looters and moochers of California are quickly driving the producers out of the state. Soon all that will be left are the dirtbags who think they deserve something for nothing. They’ll get something alright, their comeuppance!
Report thisBy cynholt, June 30, 2011 at 2:31 pm Link to this comment
(Unregistered commenter)
This goes to show that Amazon out-competes its competitors not because it provides a superior service to its customers, but because it has a tax advantage over its competitors. Amazon is clearly profiting from a tax system that’s rigged in its favor. So if Amazon lose its ability to make money when the playing field is leveled with regards taxes, then it should no longer be regarded as a moneymaker in the eyes of Wall Street.
Report thisBy UreKismet, June 30, 2011 at 2:21 pm Link to this comment
Good job amazon, I never had much time for the conglomerate until I read this post.
Report thisIndirect taxes like sales taxes are the most pernicious form of government revenue raising that unduly target the less monied while leaving the rich unencumbered by taxes approacing the level of cost that has been put upon the state by a rich individual’s greedy asset gathering.
Amazon is resisting this because as a trans national capitalist it is under pressure from governments all over the world in countries who have previously fallen for the IMF line on shifting their revenue base away from a straight income tax to an indirect consumption tax.
Real world retailers are in alliance with government to use consumption and sales taxes as a way of ensuring that web retailers are reined in. It won’t work net retailing is too convenient for the consumer, but we will be stuck with a mess.
Amazon would have to get across the 50 sales tax codes of amerikan states plus the 150+ GST codes of non-amerikan nations. Think about that!
There is no logical basis for amazon to collect taxes in California or anywhere else. The cost to the state of a purchase by a state resident from a foreign net retailer is minuscule.
This form of taxation is unwieldy and not cost effective as well as being subject to avoidance and evasion.
Those are exactly the reasons govts were persuaded to move from direct income tax to indirect sales taxes, now the introduction of net retailing has shifted the paradigm, citizens should join with net retailers and demand a return to traditional direct revenue collection.
By tomstedham, June 30, 2011 at 2:11 pm Link to this comment
I’m with Amazon on this one.
Report thisBy Amex, June 30, 2011 at 1:53 pm Link to this comment
(Unregistered commenter)
I also sell stuff on Amazon and I have climbed as high as i could in their company asking for them to put a tax methodology when I sell from my state to my state. They laughed and said that was my problem not theirs. If I wanted to tax them, I should charge them more money and pay the tax myself. I since fired off a formal complaint to the franchise tax board and I suppose they are starting to get this piece of shit company to act within the law. I even told Amazon software people to contact my webhosting people and they would show Amazon how to put a tax method into their shopping cart.
Report thisScrew Amazon!!
By morongobill, June 30, 2011 at 12:20 pm Link to this comment
I too got the letters for my tiny little blog, which unlike Truthdig has never generated one red cent to me.
So what will Amazon do when other states follow California’s lead, since most of them are broke and really need the money,will Amazon cut them off one at a time, until no one’s left?
It is a great example of cutting their nose off to spite their face, and showing their concern for the fiscal plight the cities and states are in, which is no concern, just as long as Jeff Bezos can get his money!
Report thisBy bobi6, June 30, 2011 at 12:15 pm Link to this comment
(Unregistered commenter)
Bye Bye, Amazon. Retailing on the internet has become too troublesome
lately anyway.
CA is closing the loophole you enjoyed for years at the expense of CA
Report thisservices to CA residents. Bye again.