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Oh, Look, Now California Has an Amazon Sales Tax, Too

Updated: Apr 13

I’m just back from a trip to Lake Tahoe (lovely, thanks for asking) and look what happened during my brief tenure in the Golden State. Tell us more, Los Angeles Times:

Beginning Friday, a new state law will require large out-of-state retailers to collect sales taxes on purchases that their California customers make on the Internet — a prospect eased only slightly by a 1-percentage-point drop in the tax that also takes effect at the same time.Getting the taxes, which consumers typically don’t pay to the state if online merchants don’t charge them, is “a common-sense idea,” said Gov. Jerry Brown, who signed the legislation into law Wednesday.The new tax collection requirement — part of budget-related legislation — is expected to raise an estimated $317 million a year in new state and local government revenue.

Of course, that “estimated $317 million” in new revenue is contingent upon online retailers targeted by the legislation continuing to do business in the state. Hey, guess what happened?

Amazon and online retailer Inc. told thousands of California Internet marketing affiliates that they will stop paying commissions for referrals of so-called click-through customers.That’s because the new requirement applies only to online sellers based out of state that have some connection to California, such as workers, warehouses or offices here.Both Amazon in Seattle and Overstock in Salt Lake City have told affiliates that they would have to move to another state if they wanted to continue earning commissions for referring customers.“We oppose this bill because it is unconstitutional and counterproductive,” Amazon wrote its California business partners Wednesday. Amazon has not indicated what further actions it might take to challenge the California law.Many of about 25,000 affiliates in California, especially larger ones with dozens of employees, are likely to leave the state, said Rebecca Madigan, executive director of trade group Performance Marketing Assn. The affiliates combined paid $152 million in state income taxes last year, she pointed out.

California joins Arkansas, Connecticut, Illinois, New York, North Carolina and Rhode Island in enacting laws intended to require online retailers to collect sales tax from customers. We’ve covered Arkansas’ ill-considered Amazon nexus law, and the negative effect it’s having on small affiliating marketing businesses in the state, extensively. And I’ll keep doing it, dammit!

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