California Law Will Tax eCommerce
Until now, Amazon and other mostly digital businesses have had clear tax advantages over brick-and-mortar rivals. But with vast implications for the future of ecommerce, cash-strapped states are trying to level the playing field.On Friday, Los Angeles Times reports, "a new state law will require large out-of-state retailers like Amazon to collect sales taxes on purchases that their California customers make online." In response, Amazon and rival etailer Overstock.com plans to cease paying commissions to California Internet marketing affiliates 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," the L.A. Times explains. The move has Web affiliates fuming. Respected tech watcher Danny Sullivan, for one, is hoping someone hits Amazon with a class action lawsuit "They probably won't win, but you deserve a little hassle, too," Sullivan wrote in an open letter to Amazon CEO Jeff Bezos.
Meanwhile, The Next Web suggests that Sullivan and all California residents should consider blaming the state's Governor Jerry Brown. "If the governor was attempting to call Amazon's bluff, it didn't work," it writes. "In grabbing for sales tax, the state has, it seems, eliminated a chunk of income tax."
Bigger picture, as BoingBoing notes, "The move follows similar shutdowns in other states, most recently Arkansas and Connecticut, where similar laws have been enacted." Yet, "California ... is by far the largest U.S. state and represents an enormous revenue source for Amazon and associates."
"States are scrambling for cash, so it's no surprise they see a pot of gold in e-commerce sales," writes ZDNet. "Brick and mortar sites - such as Wal-Mart - that have failed to grasp the opportunities Amazon created with programs (like Affiliates) are out for blood."