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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

#31

Post by jbooth »

throw_away wrote: post #25
jbooth wrote: post #19

Earlier quoted context omitted.

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.

Thanks, you're completely right.

I'd still note that every single national retailer manages to do it ok.

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

#33

Post by walexander »

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 guess there is a significant risk of the result being found in the States' favor so that they don't directly challenge the law.

IANAL, but it seems like the Supreme Court would very likely rule in their favor though. Quill v N Dakota is a very similar ruling and when looking through the notes I found this:

"As we noted in Heublein, Inc. v. South Carolina Tax Comm'n, 409 U.S. 275, 280 (1972), in enacting § 381, "Congress attempted to allay the apprehension of businessmen that `mere solicitation' would subject them to state taxation. . . . Section 381 was designed to define clearly a lower limit for the exercise of [the State's power to tax]. Clarity that would remove uncertainty was Congress' primary goal.""

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

#34

Post by hvs »

jbooth wrote: post #24
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 t…

They could sign on to the Streamlined Sales Tax Project that Amazon is in favor of (as well as 44 states and D.C.)

http://en.wikipedia.org/wiki/Streamlined_Sales_Tax_Project

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

#35

Post by T-hawk »

pavel_lishin wrote: post #21
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.

Yup. Politicians and governments are, by and large, oblivious to the fact that laws induce behavioral changes. Like extending unemployment benefits to 99 weeks, then somehow being surprised when the rate increases of people staying on unemployment rather than finding jobs. Or creating a tax credit for low-income families who have children, then being surprised when the low-income birth rate increases. In the politician's world, if a $100 million business exists and a tax rate of 7% is imposed, that is obviously $7 million in revenue, because no company would ever think to try to work around the tax structure or would lose business to competitors not subject to that tax.

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

#36

Post by _delirium »

pavel_lishin wrote: post #21
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.

It might be a win for non-Amazon retailers, if the removal of Amazon's affiliate program reduced the total % of internet book-related links that go to Amazon versus other booksellers (keeping that % up is of course one reason Amazon has the program in the first place).

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

#37

Post by Symmetry »

rishi wrote: post #2

Are they doing this for tax reasons?

As an example of how complicated this can get:

Many states and municipalities tax "cookies" differently than other food items. For a long time Fig Newton used "A cookie is just a cookie, but a Newton is fruit and cake" as their most prominent add copy, and while some people have referred to Fig Newtons as cookies, the people who produce them don't. Would you like to be the person in charge of figuring out, for every jurisdiction in the US where its relevant, whether or not a Fig Newton is a cookie based on relevant law and precedent? There isn't a consistent answer that applies everywhere. And that's just one product among the many, many that Amazon sells.

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

#38

Post by dailyrorschach »

Can I add/posit that, perhaps the reason Amazon is also taking this pretty passively other then just shutting down and waiting to see if the law changes - is that the affiliate marketing programs are perhaps just not that valuable to them any more with their market position?

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

#39

Post by scarmig »

gte910h wrote: post #14
btilly wrote: post #12

Earlier quoted context omitted.

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

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

And yet somehow companies like WalMart and Target manage this terrific feat.

It'd be better if there were a unified system of national sales tax. But for a company Amazon's size, it's a laughable idea that it's somehow impossible to do this magnificent feat of implementing a lookup table.* The hard part is keeping things up to date, but a good faith effort to do the previous would get Amazon pretty far.

*I worked for a company that is a thousandth Amazon's size in revenues, but it managed to do it for the whole state of California. It genuinely can get complicated--zip codes can cross county lines, for instance--but again, far from impossible, and when this becomes widespread third party solutions will pop up a lot more.

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

#40

Post by btilly »

gte910h wrote: post #14
btilly wrote: post #12

Earlier quoted context omitted.

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

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

Not true! Amazon already has all of that obscenely complex logic coded up!

Amazon allows third party vendors to sell through Amazon. Amazon knows for each vendor of what states they are resident in, and properly collects sales tax in that company's behalf where that is required.

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