On Wednesday, California governor Jerry Brown signed a law that requires online retailers to collect sales tax from CA residents even if the companies have no brick-and-mortar presence in the state. It’s another example of the so-called “Amazon Tax,” which circumvents the brick-and-mortar statute of federal law by declaring CA-based affiliates–say, a personal blog linking out to Amazon or Drugstore.com products for a small slice of any sale action–as a physical presence.
Amazon had the same response as when similar laws were enacted in Arkansas, Connecticut, Illinois, New York, North Carolina and Rhode Island: Shut down its Amazon Associates program in California post-haste. No affiliate program, no physical presence, no tax to be paid.
Despite the nickname given to these type of tax laws, Amazon is hardly the only company affected. Drugstore.com and Overstock.com both run affiliate programs in the Golden State. And even though the legislation is growing in popularity–Arizona, Hawaii, Louisiana, Massachusetts, Minnesota, Mississippi, Missouri, New Mexico, Tennessee, Texas, and Vermont are all considering similar laws–it hasn’t necessarily proven financially beneficial. General Treasurer of Rhode Island Frank Caprio recently called for the law to be “repealed immediately,” saying the affiliate tax “has hurt Rhode Island businesses and stifled their growth, as they’ve been shut out of some of the world’s largest marketplaces.”
Read more at Ars Technica.