California and Amazon Strike a Possible Sales Tax Deal
September 13, 2011 
0 Comments
After some back and forth fighting as in any legislative process, it appears that Amazon and California have struck a possible deal in regards to sales tax collection. California passed a law earlier this year that required all online retailers to collect sales tax if they had a presence in the state, including affiliates. This prompted Amazon and many other retailers to cut ties with their affiliates in effort to skirt the sales tax collection process. This new bill that was passed by California legislators allows Amazon and other retailers another year or so to conduct business without having to deal with sales tax collection. The bill will still have to be signed into law by the governor, but at least it appears it is a step forward.
As a previous online retailers, I know that California has one of the most insane tax collection processes and without something streamlined, it would probably put most companies out of business due to all of the extra work. I chose the same as Amazon in regards to cutting affiliates. It was easier on the business and a lot easier on me. As part of this bill, Amazon is required to lobby for a federal bill requiring sales tax collection for states as long as they are part of the Streamlined Sales Tax Project. This project makes it easier for companies to collect and remit sales tax. Amazon also indicated that it will continue with the building of distribution centers in California and hiring around 7,000 employees.
The good thing for affiliates is that if this bill is signed into law, they might be able to rejoin the Amazon affiliate program and start making money again. This could be big for many large affiliates that lost around 40% of their revenue when Amazon cut ties with them. This will also bring more money into California as when you make more money, you pay more taxes. While I applaud California working with Amazon, I think the solution to this stupid problem is to just create a streamlined online sales tax process that will easily allow retailers to collect and remit sales tax for each state without any added work. It could be a potential solution, but many times greed gets in the way of this process. If individual states want to get sales tax from online retailers, they might want to think about playing this game.
As I have stated before, this will bring in no more money for Illinois because now there will be no major affiliates in the state. Smaller retailers that don’t do $10,000 worth of sales will keep their affiliates because they won’t have to pay the tax. Most affiliates earn their money from programs like Amazon and Overstock and with them now gone, the affiliates lose income. Less income means less income tax that Illinois can collect. They will also not have the chance to collect the use tax because Amazon and Overstock will not have to collect it. Come on Illinois, use your brains for a change and realize that every state that has enacted this type of legislation has found that they are still losing money. Rhode Island did a study and found that they are now losing more money since enacting their sales tax law. Oops!
Amazon sent a letter to some government officials in California stating that they would cut ties with all affiliates if any of the proposed four laws were enacted. They estimate that the state would lose 50% of the estimated income if Amazon would cut the program. That is a large amount of money and this is only if Amazon cuts the ties. Usually other large retailers tend to follow Amazon and cut the affiliates as well. All I have to say is, California don’t be another dumbass state to think you are going to game the system. Amazon has more control over the money they dish out to affiliates than you do, and all they have to do is send a letter and then cut the affiliates. It’s time to get your governing head out of your governing ass and use common sense! Oh wait, did I just use the word common sense when speaking about government…..
Follow Us!