I just got the email today stating that Amazon Associates is no longer “doing business” with California. It appears that Governor Brown had signed into law a reform that forces online establishments to pay (and charge) sales tax on purchases.

Proponents say that the new law will create a more level playing field for smaller businesses and big-box retailers to compete with online businesses. Amazon and Overstock both feel the law is “unconstitutional” and counterproductive. In 1992, the Supreme Court ruled that states could not charge taxes on businesses that did not have a physical presence there, but California has just side-stepped that ruling by declaring that affiliates and other “partners” are in fact a physical presence. So what does this mean? Amazon will still be doing business in California in terms of sales (and charging sales tax now), but they will not be sharing any commissions with California-based affiliates. I can’t imagine how those people feel who rely 100% on those commission dollars each month!

Again, this is an effort to curb consumers from skipping out on paying sales tax by purchasing online. In other words (and my opinion), it takes the choice out of the customer’s hands. Most of us who shop online do it for convenience as well as lower prices. If California wasn’t such a very un-business friendly state, then maybe more businesses would want to take up residence here. The way I see it is California has made it near impossible to run a business in the state, so most large corporations leave. Then when they come back to sell products, California wants to charge them taxes just for doing business.

Here’s the email:

Hello,
Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

My two cents

Personally, I didn’t make too much money off the Associates program, but that’s not the point. The fact that I can’t participate anymore really annoys me. To think that there are 6 other states who have passed similar laws and have NOT achieved any of the promised changes should be proof enough that this won’t work here. So what if the state plans to rake in about $317 million more tax dollars…do you really think they’re going to spend it wisely? Probably not…just more raises and bonuses for the upper management and more insane benefits for state workers.

Oh well, only time will tell. I hope California is doing the right thing because we’re in such a financial sinkhole it’s depressing.