As per the new Californian sales tax law, having affiliates in the state is equivalent to having one's own presence in the territory. This is not well accepted by Amazon.com. Opposing the sales tax law, Amazon has sent out a letter to affiliates, as per which it will end contracts with all California residents participating in the Amazon Associates Program as soon as the sales tax law is in effect. Amazon says the bill passing the sales tax law is not only unconstitutional but also counterproductive.
However, Rob Enderle, principal analyst at the Enderle Group, says the California tax law is unavoidable especially when the state requires the money. It is true that the US Supreme Court has passed the sales tax law preventing states from collecting tax from companies without a physical presence in the state, but California has skirted it by changing its definition of physical presence to cover companies with affiliates in its territory. Therefore, Amazon has little choice but to pay up.

This entry was posted on Tuesday, July 5th, 2011 at 11:12 pm and is filed under Tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.