Affiliate Marketing & Programs

Amazon vs. the California Affiliate Nexus Tax


Amazon vs. the California Affiliate Nexus Tax - affiliateprograms.comIn a post published yesterday, I mentioned the Performance Marketing Association and its response to the California legislation that imposes a state tax upon e-commerce retailers who have affiliates based in the state which prompted Amazon to cancel the affiliate contracts of approximately 25,000 California-based affiliate marketers.

The PMA is an affiliate industry trade group that represents affiliate and performance marketers. They’ve announced they would support, along with Amazon, a voter initiative that would prevent this law from going into place.

According to Amazon, the California Attorney General’s office has approved its petition for a referendum that would give voters a chance to overturn this new law.

In order to bring this issue to a vote, Amazon will have to gather more than 500,000 signatures by late September. Experts say it’s very likely Amazon will be able to gather these signatures.

While it’s natural to expect the PMA to fight against the tax, the PMA has identified a curious villain in this battle — brick-and-mortar behemoths WalMart, who is funding a group called the Alliance for Main Street Fairness.

It’s also interesting that this alliance has hired Terry Nelson, a controversial Republican party operative who was fired by WalMart five years ago for his role in “Working Families for WalMart.” While this group appeared to be a grassroots advocacy group, it was actually a public relations initiative, funded by WalMart, meant to counter the influence of groups that supported unions and opposed WalMart.

There are also claims that the State of California’s numbers are misleading. Although California estimates that the tax could collect an additional $200 million each year, affiliate advocates claim that that estimate does not take into account lost tax revenue from California’s affiliate marketers.

All of this promises to be an extended, and interesting, battle for Seattle’s Amazon, which seems to be preparing itself for a state-by-state battle about e-commerce and the ability of states to tax transactions that occur outside of their boundaries.

California is only the latest victim in the affiliate tax wars: Amazon previously cut affiliate ties with Texas, Colorado, Connecticut, Arkansas, Illinois, Hawaii, Rhode Island, and North Carolina. And while New York has passed a similar tax, Amazon has not severed ties with its affiliates in that state.

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