Governor Jerry Brown of California has signed his budget into law, which includes the affiliate nexus tax.
With the stroke of his pen, Governor Brown just put legions of entrepreneurs and their employees out of business.
The affiliate nexus portion of the budget forces out-of-state retailers to collect California state sales tax for Internet sales, based on the view that affiliate marketers constitute a tax nexus for the retailers.
The immediate reaction by countless online retailers, in what promises to be a huge list, is that they will remove the affiliates of California from their affiliate programs, so they still do not assume a tax nexus.
Simple summary for California politicians: no additional tax revenue will be collected.
Amazon already informed their affiliates that they’re out on the street.
And with scores of affiliate marketers fired by these retailers, California is going to lose a big chunk of income and income tax.
Congratulations to the CA lawmakers and Governor Brown: you’ve managed to deepen your huge deficits through some misguided bureaucracy.
Back in the spring, the state of Illinois passed a similar law, which forced super affiliate FatWallet.com to move from Illinois to Wisconsin, so they could remain in business.
How many companies in California will now be leaving the state like FatWallet for places that are not hostile to economic growth and job creation?
More details on the California affiliate nexus tax from the Performance Marketing Association.
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This could be a possible solution to those who have been affected, at least until this ridiculous bill is reversed or you’re able to move to another state.
http://internetbusinesstactics.com/the-nexus-amazon-tax-solution/
Oh year, that’s one thing that transcends all political parties – scumbag guys.
Unfamiliar with the acronym, I typed “RINO” into Google and the first result says “Republican in Name Only”. Makes sense. A few spots below that were four results from Google Images, the first of which was one rhino mounting another. Given the recent drama around the former governor, that also makes sense.
All other things aside, Schwarzenegger was a RINO.
It’s not about the governors. Governors don’t write laws. Look to the lawmakers in each state, find out who voted for what. Lots of Democrats are to blame. Some Republicans, too.
1. Republican governor, 8 years leading up to this. Could have prevented a *lot* of things from happening.
2. Mississippi is one of the most conservative states in the US and they are near the bottom of the list for everything from education to quality of life. Let’s not pretend like a state’s political color has anything to do with whether or not it’s a great place to live.
3. This affiliate tax issue is not a party issue because while Democrats are largely responsible, the bills are all getting plenty of Republican votes.
folks should have gotten out some history books before voting Jerry Brown into office… again.
For those who were using the affiliate program in California, just open a PO Box or sign up for a remote address (like from the UPS Store) in Nevada. Then you can reapply for the affiliate program. And Nevada has been very business frendly for the past 50 + years.
That’s California for you, the most liberal state in the US! How is that working out for them now?
This has been a huge hit to me. I make a lot of money from Amazon and this has had a huge impact on my income and now I must seek out other options. I’ve also had at least ten other affiliates close my accounts. Another hit for California residents… unbelievable!
Not to bring this debate towards politics but if you look at the party these governors come from that are signing these new tax laws perhaps we should think about who we’re electing into office…
Jerry Brown – California – Democrat
Pat Quinn – Illinois – Democrat
Bill Ritter – Colorado – Democrat
Dan Malloy – Connecticut – Democrat
Beverly Perdue – North Carolina – Democrat
Neil Abercrombie – Hawaii – Democrat
The nexus law totally sucks but I just thought it was worth pointing out that every single state that passed this law had a Democrat governor. Yes, state legislation plays a role in these laws coming into fruition, but the governor also has the option to veto these bills…
(Information collected via Wikipedia / Google searches so if it’s off a bit don’t shoot me)
According to counsel for my NC-based company that is a Delaware corp and is an affiliate, we are definitely not in the clear. The reason we were told is that by having a hub in NC, we were subject to the NC affiliate tax laws.
In any event, I strongly recommend that you consult a tax attorney and not just hope you’re in the clear.
Thanks for the reply!
So far, so good with my Wyoming LLC. We faced this many months ago in Colorado. Fortunately I already had a Wyoming LLC. Opened my Amazon affiliate account after the law changed and it’s been open for over a year. Check my recent blog post about it.
Though, of course, I’m not a lawyer. http://dangerbrown.com/amazon-drops-all-ca-affiliates-what-to-do-if-you-are-affected/
Maybe try a service like http://www.skimlinks.com ? Was referred to me by a friend today… I didn’t make much of programs like Amazon. I made more off of other blogger affiliate products, but still.
Do you have any case studies that detail how Amazon put these companies out of business?
Don’t get me wrong – I have no love for Amazon, but they are a very convenient scapegoat for companies that are declining.
One of the biggest puppet masters behind the Main Street Fairness initiative that has put tons of money behind the effort to pass these laws is Wal-Mart.
No shortage of irony there that Wal-Mart has people on their payroll convincing the Mom & Pops that Amazon has put them out of business.
If I owned one of the many stores in California that got driven out of business by Amazon and other online retailers having a 8-10% price advantage over me just by not collecting sales tax, I’d be cheering the law and telling all the people whining about how this law is unfair to suck my hairy knuckles.
Amazon would rather cut you loose and ruin your businesses than lose its unfair advantage over in-state businesses that have to collect sales tax. And you blame the state for threatening to take it away. Boo hoo, or should I say baa baa. Amazon’s screwing you, not the state. Every time the state tries to even the playing field, the party with the unfair advantage threatens to economically harm people, and those people automatically blame the state for making the economic giant mad.
I wish I could be a giant corporation. I could come to your house and start stabbing you with a pin. But every time I stabbed you, I gave you a dollar. Then when the cops came and demanded I stop stabbing you, you’d accuse them of trying to ruin your business. It would be the most entertaining dang thing…
It’s still up in the air in Texas – Amazon has been tricky for sure with their establishing separate companies for distributions centers and such, but states haven’t figured out a way to hit them there.
Amazon already has a semi-nexus in California as it is, owning companies that have offices in L.A. It was probably a matter of time before California followed Texas’s lead and went after them.
That’s a question best asked to your accountant or lawyer.
If you have an LLC set up in a tax friendly state like Nevada, but live in a different state, lets say Cali are you in the clear?
Sorry to hear that, Marian.
Are the things you were promoting available through other affiliate programs?
I’ve just got my notice from Amazon and Oriental Trading. You know it wasn’t a lot of money each month, but every little bit helped me at least. Not one of my better days.
Reminds me of many years ago when the socialist (Labour) government (pre Thatcher) in the UK applied a huge tax increase to boat owners. Following weekend, papers posted pictures of the armada of boats heading out of British based ports across the channel to new berths in France and other places in Europe thus not only defeating the tax revenue objective but actually reducing what tax revenue had been previously collected.
Good move Mr. Brown and Co.
I am so not looking forward to when they start doing stuff like this up here in Canada.
Hey Shawn – thanks for the tipoff. I posted on my blog here
http://www.affiliate-software-review.com/asrblog/california:-the-new-greece-for-affiliates
…w/ a link back, and a call to support the PMA in the fight against this madness.
Cheers.
It’s based on out-of-state advertisers. I don’t believe CA or any previous states with similar legislation included AdSense.
Yeah that’s a smart idea for California – they’re trying to simple get their hand on the millions of dollars affiliates and the programs produce. I’m sure they won’t be the last state and others will follow, however, again politicians have a knack to kill any economy if they have a chance, if they keep up they’ll kill affiliate marketing too —-> plus lose millions of dollars in taxable individual income — Way to go there folks,,,, Jackies!!!!!
How will this affect Google itself?
They have their own affiliates (Google Affiliate Network) AND AdSense publishers AND advertisers spending on ads that show in California AND they are based in California last time I checked their address…
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