EcommerceBytes-NewsFlash, Number 2576 - June 30, 2011     2 of 5

Amazon Warns Affiliates in California Hours before Governor Signs Sales Tax Bill

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Amazon.com sent an email to affiliates in California on Wednesday warning them it would terminate their contracts if the state passes a bill that would require it to collect sales tax from California residents. Affiliates received the email hours before California Governor Jerry Brown signed the bill into law.

Amazon's letter said the bill "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."

Amazon.com said it oppose the 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."

Amazon said it would terminate contracts with all California residents that participate in the Amazon Associates Program as of the date that the California law becomes effective. The bill, found here, was passed into law on Wednesday and takes effect on Friday

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.

Amazon.com has terminated affiliate contracts in other states that have passed similar "nexus" legislation (including Arkansas, Illinois, and Connecticut).

In its email to California affiliates, Amazon said it was working on alternative ways to help California residents monetize their websites and wrote, "we will be sure to contact you when these become available."

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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