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Amazon will end affiliate program in California if new law passes

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Re: Amazon will end affiliate program in California if new law passes

#21

Post by pavel_lishin »

btilly wrote: post #11

Some important background on this. At issue here is sales tax. By state law, the tax is owed by the citizens to the state no matter where they make the purchase. To make enforcement easier, the tax is supposed to be collected by businesses. In theory the tax is owed regardless, but as a practical matter when businesses do not collect the tax, customers don't volunteer the information and the state loses revenue. This…

I love it when everyone works together to make a lose/lose/lose situation happen.

Re: Amazon will end affiliate program in California if new law passes

#23

Post by pavel_lishin »

btilly wrote: post #15
sabat wrote: post #7

Lawyer types: if one were to, say, incorporate in Delaware, and then rejoin the Amazon program from a Delaware address (presuming that's possible) -- would that be legal?

I am not a lawyer, and this is not legal advice. As long as Amazon didn't know you were a California resident, you'd probably get away with it. However you'd be opening Amazon up to the possibility of a lawsuit from California. If they figure that out, they will not be happy with you.

Wouldn't creating a Delaware corp for all of this be massive overkill? Anything purchased through the corporation for an employee's (your) use would then be taxed, too, right? This sounds like a pretty significant hassle, and really only a good idea for someone who makes a lot of money from their Affiliate stuff.

Re: Amazon will end affiliate program in California if new law passes

#24

Post by jbooth »

btilly wrote: post #11

Some important background on this. At issue here is sales tax. By state law, the tax is owed by the citizens to the state no matter where they make the purchase. To make enforcement easier, the tax is supposed to be collected by businesses. In theory the tax is owed regardless, but as a practical matter when businesses do not collect the tax, customers don't volunteer the information and the state loses revenue. This…

I don't think it's at all unreasonable for states to want to enforce the tax that's already on the books and supposed to be already reported/collected, as you state.

The problem is the hangup with the commerce clause. Catalog companies didn't threaten to make a significant % of all sales into postal sales, the internet does. I'd hope that we could find a way to straighten things out where the state can still assess the sales tax the way it's written legally without bringing all of these other issues about affiliates into it.

I don't really see where states can go on this, the current strategy seems to be "try and force congressional or SC action", good luck with that. Maybe they just fold on sales tax altogether and shift that burden to income tax.

Re: Amazon will end affiliate program in California if new law passes

#25

Post by throw_away »

jbooth wrote: post #19
gte910h wrote: post #14

Earlier quoted context omitted.

Or do the obscenely complex logic for each of the tens of thousands of jurisdictions each year required to calculate sales tax.

50 jurisdictions, actually. Less considering that some states don't have sales tax and still more aren't going this route.

actually there are far more than 50, as many counties and municipalities have their own sales tax rates on top of their state's rate. not only that, but it is far more complex than just one fixnum per jurisdiction as each is able to establish rules on what is taxed and what is not. the prime example is food, where the local laws on what counts as non-taxed food always seem a bit byzantine.

Re: Amazon will end affiliate program in California if new law passes

#26

Post by T-hawk »

jbooth wrote: post #19
gte910h wrote: post #14

Earlier quoted context omitted.

Or do the obscenely complex logic for each of the tens of thousands of jurisdictions each year required to calculate sales tax.

50 jurisdictions, actually. Less considering that some states don't have sales tax and still more aren't going this route.

More than 50 since many counties and cities impose their own sales taxes, on top of whatever the state levy is.

There's also the complication of what items are taxable where. Clothing, for example, has seen a recent trend of exemption from sales tax in some jurisdictions. There's also sales tax holidays, where a state or county suspends its sales tax on some categories for a week or whatever to spur consumer spending. Finally, there will be weird corner cases like what happens if an item is bought, then returned at a later date after a change in the sales tax levy?

It all becomes very complicated to track and implement for an online system. An entity the scale of Amazon could certainly do it if they want, but it may not be cost-effective.

Re: Amazon will end affiliate program in California if new law passes

#27

Post by InclinedPlane »

ddlatham wrote: post #16
btilly wrote: post #11

Some important background on this. At issue here is sales tax. By state law, the tax is owed by the citizens to the state no matter where they make the purchase. To make enforcement easier, the tax is supposed to be collected by businesses. In theory the tax is owed regardless, but as a practical matter when businesses do not collect the tax, customers don't volunteer the information and the state loses revenue. This…

How many affiliates are they willing to terminate? All of them (besides the 5 states it already collects for http://www.amazon.com/gp/help/customer/display.html?nodeId=4... ) ?

Sales tax tends to be 5-10%, affiliate kickbacks tend to be less than that, which means that the increased revenue from affiliate links is in the same ballpark. It would be bad enough if these laws forced amazon to pay sales tax on purchases where the affiliate lived in the same state as the purchaser. Instead these laws force amazon to pay sales tax on all sales where the purchaser lives in a state where there is a significant number of affiliates. The former would not make business sense (raising prices for a much less significant benefit to affiliates) the latter makes even less sense economically.

This isn't Amazon trying to skirt paying sales tax, it's merely amazon making a level headed business decision in the face of irrational and grasping legislation.

Re: Amazon will end affiliate program in California if new law passes

#28

Post by leot »

btilly wrote: post #12
leot wrote: post #4

They're clearly doing this because they know the affiliate marketers will complain a lot , and not because there's much of a direct relationship financially.

Not at all. They are doing this because they don't want to get into an unnecessary legal fight which could go either way.

The rule seems to apply to Amazon principally because it has distribution centers in CA.

Re: Amazon will end affiliate program in California if new law passes

#29

Post by hvs »

jbooth wrote: post #19
gte910h wrote: post #14

Earlier quoted context omitted.

Or do the obscenely complex logic for each of the tens of thousands of jurisdictions each year required to calculate sales tax.

50 jurisdictions, actually. Less considering that some states don't have sales tax and still more aren't going this route.

Chicago has local sales taxes in addition to the state-wide sales taxes. Sales tax is a complicated mess and that's why Amazon doesn't want to get involved. A consistent sales tax across all states (something Amazon is in favor of) would go a long way to make everyone happy (except maybe consumers).
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