Amazon Fights Back in California

California governor, Jerry Brown, signed a law last month that would force Amazon to collect and pay sales tax on sales it makes to California residents. The reasoning behind the law was since Amazon had Associates (affiliate marketers) in California they had a nexus that required them to collect and pay sales tax.  Amazon retaliated by firing all 25,000 affiliates in the state. So California not only will not collect approximately $200 million in sales tax —they also lose the income tax paid by the affiliates.

Amazon.com will ask California voters to repeal a new law requiring websites that forward shoppers to it to collect sales tax, a spokeswoman for the state’s attorney general said on Monday. The attorney general’s office received a petition authored by amazon last Friday. The Attorney General’s office  will prepare a title and summary for the initiative, which would require nearly 434,000 voters’ signatures to qualify for the ballot. Once Amazon secures the signatures, the measure will go on the ballot in the next election.  If the measure passes, it will reverse the law that allows California to force online sellers to collect and pay sales tax.  When it goes on the ballot expect brick and mortar merchants and large chains to spend millions of dollars to defeat the initiative.

State governments all over the country are seeking new sources of revenue and have large online merchants in their sites. These efforts are being supported by massive and costly lobbying efforts by brick and mortar stores including giants such as Loews, Home Depot, Wal-Mart and Macy’s.

Website operators who had partnered with online retailers and earned a share of sales from customers forwarded to them said the tax would kill their businesses. Other online stores with affiliates including Overstock.com also canceled their affiliates in California.

The other states affected by similar laws include Illinois, North Carolina, Arkansas, Rhode Island and Colorado.  If you live in one of those states, you can still be an affiliate by securing a mailing address in another state.  Many affiliates have signed up with mailbox operators such as The UPS Store and Mailbox Etc. in non-sales tax states such as Oregon and New Hampshire. Once you have a mailing address apply for a new affiliate account using a different email address and the new mailing address.  Do not link your bank account. Just take your payments by check and have Amazon (or Overstock.com) mail the check and then have it forwarded to you by the mailbox operator.

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2 Comments

  1. Will it work if I use a friend’s address in another state and have her forward the checks to me?

    1. Author

      Hi Sonya – Yes that works fine and lots of affiliates are doing that.

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