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Amazon's doing the right thing here. California has no way of charging them sales tax, nor should they, without a nexus. Imagine if you, living in CA, ordered

Amazon's doing the right thing here. California has no way of charging them sales tax, nor should they, without a nexus. Imagine if you, living in CA, ordered something from a brick-and-mortar store in New York. If that store had to charge you sales tax and remit it to California, they'd simply say "no thanks" to your business. It's just not worth it for them to have to do all that work so you can get a $10 item (and so California can get their 82.5 cents). Amazon shouldn't be treated any differently simply because they do a lot of business in the state. California knows this, so they come up with (well, Illinois came up with it) the idea that if some third party runs ads on their website for products on Amazon, that third party (an "affiliate") is actually an agent of Amazon. That's preposterous. Amazon doesn't really have a choice, though. If they sue and lose, the entire affiliate program goes away. So they instead just drop the affiliates. They have to -- they're paying affiliates 6% of all qualified sales and paying the state 8.25%. And they are then open to audits and other nonsense from the state. It's just not worth the leads any more.

leot 15y ago
You can't be serious. It's not really the affiliates that make the difference here -- it's all of Amazon's operations in CA. We're all futurists here except when that means losing affiliate revenue and/or no longer having a tax dodge. It's just a matter of time before there's uniformity between the online and brick and mortar worlds, and Amazon is simply seeking delay. Per Sinclair "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
- gergles 15y ago
  What operations in CA? (Almost) Everything I purchase from Amazon comes from Nevada. And no, Lab126/A9/their other affiliates don't count, as they are not the company selling you the product.
  - leot 15y ago
    No, you're right, they're the shell companies designed to avoid asking customers to pay CA sales tax. Virtual presence is fun until it means you have to start competing on a level playing field. The affiliate program might be the strongest legal argument for in-state presence, but it's far from the only one. Apart from the subsidiaries, there's also the more than $3 billion they get from CA residents. I think everyone here should have to disclose competing interests on this topic: full disclosure: I work for a company (part time) that makes most of its money from Amazon affiliate revenue (but I personally am not taking Amazon's threats very seriously).
    - meow 15y ago
      They can't be compared to shell companies which in general are fully owned. You can probably compare them to advertising agencies.
- DanLivesHere 15y ago
  You're focusing way too much on the outcome here and not at all on the process. If you want Amazon to be taxed (which I'm fine with), it should be done federally or consistent with how every other company is treated. Amazon is being singled out here because they're so big. There are two possible paths here: (1) Amazon continues to be singled out and/or (2) Other companies also get dinged (wrongly) in this way. Option (2) is really, really bad, especially for small businesses and startups. You don't want to all of a sudden have a successful brick and mortar spice business in New Hampshire and find out, holy cow, you're in arrears for lack of tax payments in California! That'd be a business-killer. The process matters.

leot 15y ago

You can't be serious. It's not really the affiliates that make the difference here -- it's all of Amazon's operations in CA. We're all futurists here except when that means losing affiliate revenue and/or no longer having a tax dodge. It's just a matter of time before there's uniformity between the online and brick and mortar worlds, and Amazon is simply seeking delay. Per Sinclair "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

gergles 15y ago
What operations in CA? (Almost) Everything I purchase from Amazon comes from Nevada. And no, Lab126/A9/their other affiliates don't count, as they are not the company selling you the product.
- leot 15y ago
  No, you're right, they're the shell companies designed to avoid asking customers to pay CA sales tax. Virtual presence is fun until it means you have to start competing on a level playing field. The affiliate program might be the strongest legal argument for in-state presence, but it's far from the only one. Apart from the subsidiaries, there's also the more than $3 billion they get from CA residents. I think everyone here should have to disclose competing interests on this topic: full disclosure: I work for a company (part time) that makes most of its money from Amazon affiliate revenue (but I personally am not taking Amazon's threats very seriously).
  - meow 15y ago
    They can't be compared to shell companies which in general are fully owned. You can probably compare them to advertising agencies.
DanLivesHere 15y ago
You're focusing way too much on the outcome here and not at all on the process. If you want Amazon to be taxed (which I'm fine with), it should be done federally or consistent with how every other company is treated. Amazon is being singled out here because they're so big. There are two possible paths here: (1) Amazon continues to be singled out and/or (2) Other companies also get dinged (wrongly) in this way. Option (2) is really, really bad, especially for small businesses and startups. You don't want to all of a sudden have a successful brick and mortar spice business in New Hampshire and find out, holy cow, you're in arrears for lack of tax payments in California! That'd be a business-killer. The process matters.