Calderon's bill passed, Amazon to drop all California affiliates

Given the number of people this is affecting, I would have thought that Amazon would have caved by now. I realize that Amazon makes tons of money every year, but surely this is being reflected in their profits already.

Obviously, this isn't a problem that's going to just go away. It's only going to keep spreading, and Amazon needs to wake up to the fact.

Unless, of course, they don't mind eventually cutting off all of their U.S. affiliates.

STOP!

Many of the posts here reflect an incomplete view of the proposed California law.

With my apologies to others, who are apparently assuming the California bill is similar to those affiliate based bills in other statues - this is NOT an affiliate based law being proposed.

This is a NEW and NOVEL approach that SPECIFICALLY REJECTS TAXING AMAZON BECAUSE IT HAS AFFILIATES IN CALIFORNIA.

Here is the situation:

Amazon.com, Inc. is based in Seattle.

That corporation controls an umbrella of subsidiaries / wholly owned businesses.

Those other businesses include Amazon.com, LLC, which operates the online website.

They also include A9.com, which is a CALIFORNIA corporation, wholly owned by the corporation.

They include Lab 126, a CALIFORNIA business involved in creating the Kindle.

Bottom line: Amazon owns and controls business entities located in California, doing business in California, employing California residents, and so on.

What the Proposed Law Does

Assembly Bill 155 states that a corporation controlling a group of other companies in California, as Amazon does, is doing business in California and subject to paying sales tax on its sales here.


As stated in legislative analysis at:

AB 155 Assembly Bill - Bill Analysis

"This bill would establish a new and rather novel approach for reducing the use tax gap. Specifically, it would impose a use tax collection obligation on "out-of-state" retailers with in-state sister companies that provide services connected to the retailer's sales of TPP"

"this bill would not attribute nexus to remote vendors based on the activity of in-state affiliates. Indeed, this bill makes absolutely no reference to affiliates and would instead attribute nexus based on the activities of in-state sister companies."

Will Amazon drop California Affiliates?

As noted in the legislative analysis, on February 24th, Amazon wrote a letter saying it would drop all California affiliates if this bill passed.

2 important notes about that:

First, the draft bill at that time included a requirement that Amazon report all purchase information about California residents, or face fines:

"shall annually file with the board a report that sets forth the names and addresses of purchasers of the tangible personal property, the sales price of the property, the date of sale, and other relevant information as may be required by the board....

(3) Each person required to comply with paragraph (1) shall be subject to a penalty of ten dollars ($10) per violation for each name of a purchaser that was not included in the report for each annual period."

The language has now been entirely deleted.

Second, even if Amazon drops all of its California affiliates, under AB 155's novel approach it is still considered to be doing business in California because of the control group of California companies it owns.

Dropping affiliates does nothing for Amazon.

Selling and divesting itself of its California subsidiaries is what Amazon would need to do to avoid the law.

Amazon could of course still drop California affiliates as a matter of spite. But it would still owe the sales tax.

Hi,

Currently an average 70million US users of Amazon every month.

Is California in the top 10 list of Amazon users in the US?

From Google Insights-Search, here are the top 10 users:
1. Washington
2. Maine
3. Oregon
4. New Mexico
5. Montana <---
6. Alaska
7. Wyoming
8. New York
9. Massachusetts
10. Pennsylvania

Probably the value of Amazon products delivered to Calif is bigger than the rest.
The very $$$ reason to tax aff.

California, Texas and Florida seems to be having the greatest number of people
ordering lifestyle goods online. NOT BOOKS though.

Maybe check ComScore for better stats and make decisions from there.

I don't see it happening while we have our current governor in office. He is extremely pro-business and has been recruiting corporations to come and set up shop in Florida.

We are extremely anti-tax here, no state income tax and people balk every time there's an effort to raise taxes. Our county mayor was recalled because a lot of people are complaining about their property taxes,

Not saying it couldn't ever happen, but no likely now.

I don't agree with you. Why should Amazon pay tax in the state they
have no physical presence in? The nexus thing is totally unconstitutional
and similar case for mail orders was once already in the Supreme Court
where the judges ruled in favor of companies selling subscriptions in other
states.

The Supreme Court: Sales Taxes on Mail Orders &mdash; Infoplease.com

Amazon is right and they should do everything to protect their rights.
This affiliate tax is total bs in my opinion.

Amazon will most likely move out of USA taking jobs, and income tax
somewhere else. Simple!

Some states do not have a state sales tax. Who knows what they might consider, but if they've lasted without a sales tax this long, they might last a little longer, what with the increased income taxes from new people moving in and all.

I am really surprised this passed. Several states are considering repealing it (New York, Colorado, Maine, North Carolina and Rhode Island), because of the devastasting secondary economic consequences. They are not getting their expected windfall sales tax, but also the economy itself was negatively impacted by reduction of spending power in those states. In Texas, the Governor himself intervened when Amazon threatened to pull out and said "This is a big mistake". Their legislature is frantically rewriting the rules to keep Amazon from leaving. Don't know if the California legislature has any sense left, though.

I asked my lawyer about it and it's perfectly fine. Everything
is in my brother's name and he can just pay me for advertising
on my website. So I guess I will just include in my income tax
the amount I got paid for advertising.

There was no other choice for me. I won't simply drop Amazon's
affiliate program like that. If I have to move then I will do that too.

The beautiful thing about making money online is that I can pack
today and fly anywhere I want without hurting my business at all.

I don't agree. That was the common thinking about personal income tax and sales taxes for states, too - and it did not prove true.

There will be states that recognize the value in providing a haven for such businesses.

Thoroughly agree about Nevada and Florida - the economies of those states is in the tank and they will be looking for revenue.

Montana and a couple other states are not in financial crisis, are known for low taxes and independent lifestyles. Yes, the weather is cold in the winter - but as an IMer you can stay inside by the fire and work.

I don't think Sandoval will accept any new tax, but that really doesn't matter here in Nevada.

The Democrats have a majority, so even if Governor Sandoval veto's the bill, the

Democrats can override his authority and pass it. They did this last year to Gibbons and

raised the fees for recreational vehicles after Gibbons vetoed the bill.

I agree to hold off on incorporating in Nevada for now.