Amazon: Notice of Contract Termination Due to Potential New California Law

Perm url with updates: http://xahlee.org/w/amazon_close_ca_affiliate.html

Amazon Closes CA Affiliate Program

Xah Lee, 2011-06-29

Amazon Might Stop Affiliate Program in California

For those of you who run websites and uses Amazon's affiliate program to monetize your writing, this is of interest.

Got this email from Amazon today. Here's a excerpt, highlighting by me:

For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by California-based marketing affiliates like you - even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. …

So, which law is this? And who's behind it? Here's some article about it.

Mercury News has the best detail: Online retailers strike back at new tax (2011-06-29) By Dana Hull. @ Source www.mercurynews.com

Key summary:

  • California is starving for money, and think that this is a way to make money, by requiring online retailers to charge tax.
  • This law seems to be nicknamed Amazon Tax. Because Amazon is the top player affected by this.
  • By Federal Law, state cannot require retailer to charge tax if the retailer doesn't have a physical store in the state. (so, this proposed law seems unlawful!)
  • Amazon doesn't really have to cut affiliate program off due to this law, but if have affiliate in CA, they must start to charge taxes.
  • Amazon has already stopped its affiliate program in 3 other states that enacted similar law. (Illinois, Arkansas, Connecticut)
  • California law requires residents to pay taxes on all online purchase. But if it isn't done by merchant, guess how many actually do it?
  • Whether CA will actually get more money by this law is debatable. There are arguments on both sides. If the law gets signed, then the tens of thousands small business using Amazon or other affiliate program may cease operation or move out of state, meaning less income tax for CA.

I haven't looked into what happend to other states that passed this law.

So what do i think? I don't really know. The laws and society is so complex today. I just know that this means pain for me. I'll lose about $20/month that i make from Amazon's affiliate program. LOL.

2011-06-29 Update: the governor Brown has signed into law the bill. Email from Amazon:

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.

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