Amazon was quick to fight back after California passed what many are calling the Amazon tax. If you haven’t been keeping pace, this is a measure that forces online entities like Amazon and Overstock.com to collect sales taxes from affiliates residing in those states where such laws exist, as those affiliates are counted as physical outposts of the larger brand–much like branches of a department store like Wal-Mart would. And if you’re scratching your head and thinking this is just a little unfair, you’re not alone. When a similar law passed in New York, Amazon was quick to cry “Unconstitutional!” But it looks like they might be able to make a change in California, where the corp wants to turn the vote over to the people.
This process, the referendum, could be a turning point. As Mike Allen noted in Feedfront, business based in states that enact the so-called “Amazon tax” can end up facing two drastic options: Remain in-state and risk the cut in revenue or move to nearby states with more lenient tax laws. Back in January, Chicagoist’s Prescott Carlson noted, “What that means is that if out-of-state online retailers continue business as usual, the total increase in use tax collected will be zero. Also, those affiliate dollars earned are taxable, so the state loses out on that income tax as well, resulting in a net loss in revenue. “
Furthermore, it looks like the pretenses that versions of the Amazon tax are being enacted–12 states have passed it into law–are being sold on are less than honest. Rebecca Madigan, President of the Performance Marketing Association, writes:
The Affiliate Nexus Tax law was passed under a shadow of misinformation and powerful lobbying by aggressive retailers who used this legislation for competitive gains. The public needs to learn the truth and decide with their votes.
With details of the referendum due next week, sign up for updates from the PMA now to stay current on this issue. While a referendum on the Amazon tax in California doesn’t equal a victory, it is an effective way to gauge what small businesses–those inside the affiliate community and out–think about the Amazon tax as a whole.
Back in June, the PMA sued the state of Illinois over the passage of a similar tax law.