Amazon May Cut Ties with CA Affiliates

Company says proposed tax-collection laws would do little good.

by staff writer
- Mar 04, 2011

Amazon may stop working with thousands of affiliates in California in response to several state initiatives that would require online retailers to collect sales taxes from California buyers, the company announced recently.

More than 10,000 California affiliates would be affected if Amazon leaves California, the company notes in a letter to California Senator George Runner. Bills AB 153, AB 155, SB 234 and SB 665 would require out-of-state retailers to collect sales tax from California buyers, something Amazon doesn't currently do. North Carolina, Rhode Island and Colorado enacted similar legislation, and Amazon ended business with affiliates there.

Last month, Amazon closed its distribution center in Texas after receiving a letter from state officials asking the retailer to pay $269 million in uncollected sales tax for the years 2005 to 2009.

Similar legislation in other states has led to job and income loss and little, if any, new tax revenue

Supporters of the California bills say these would give the state much-needed revenue and would level the playing field between online stores that aren't collecting sales taxes and brick-and-mortar shops that are.

However, Amazon claims these bills won't do much good.

"Amazon respectfully opposes the new tax collection schemes proposed in AB 153, AB 155, SB 234 and SB 665, because they are either facially unconstitutional or would construct Trojan horses for functionally identical unconstitutional regulation," Amazon states. "Similar legislation in other states has, counterproductively, led to job and income loss and little, if any, new tax revenue."

A new resolution called "Supporting the Prevention of Internet Entrepreneurs and Small Businesses" is currently being considered in Congress and could help online retailers like Amazon in the sales-tax collection debate. The resolution opposes legislation that would give states the power to impose new tax collecting requirements, which are deemed unfair or burdensome.

Tod Cohen, eBay's vice president of global government relations, says the resolution "sends a clear signal that Congress will protect Internet-enabled small businesses from new unfair tax collection schemes."

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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