Amazon Buys One More Year for California Affiliates

Peter Hamilton

I’m not sure how up-to-date you are on the California Nexus Tax debacle, but this update certainly made me double take.  If you’ll remember on June 29th of this year, California passed legislation that required the online retailer and affiliate giant to collect sales tax from customers in California due to the presence of affiliates.  In other words, passing a nexus tax on affiliates.  Well, on Friday the California legislature temporarily repealed their decision, postponing the the date of affiliate nexus tax by one year.  Whaaa?  That’s right.  The affiliate nexus tax in California will go back into effect on September 15, 2012.
Somehow Amazon was able to broker some sort of deal with California (wish I had that kind of pull), in which Amazon agreed to lobby for a federal solution or else begin collecting sales tax if it is not in place by the deadline next year.  This law will go into immediate effect upon the signature of Governor Brown.Is it just me or do lobbyists just push paper around legislatures until they get what they want and then we roll the dice to see if Governor Brown will sign it?  And people think I’m from the land of wild west politics (born and raised in Abilene, TX).
The day the new legislation passed, the Performance Marketing Association (PMA) put out a fast press release, broadcasting the event and making some very strong statements.“To be clear, this is not an equitable solution for all businesses in the sate,” said Rebecca Madigan, Executive Director of the PMA.  “It is, in fact, very disappointing to the 25,000 small online businesses whose incomes were devastated when the affiliate nexus tax first passed in June.”

I have to completely agree that this legislation plays favorites in a way that makes me sick.  I’ve already seen so many businesses destroyed and blog posts written about people leaving their life long homes to find a better situation.  The absolute most epic post was from an Amazon affiliate in California named Jessica Gottlieb which includes the actual letter she received from Amazon, ending her affiliate relationship with them.

If I’m not mistaken, the reason this legislation passed was because the California legislature believed it was completely unfair that Amazon and other businesses with California affiliates be exempt from collecting sales tax.  So what message are we sending now by postponing the ruling?  We’re telling all those businesses who we crushed only a couple months ago that though we didn’t care about what you had to say previously, this massive company has convinced us to give you another year.

And where does it leave us?

Now there is an extremely difficult deadline for implementing a federal sales tax solution and in the mean time, affiliate businesses have no idea what to expect.  Think about it.  If you lived in California, would you stick around to find out?  Probably not.  Either way, affiliate based businesses are devastated, and this repeal only buys the right amount of time for a major company like Amazon to ease into an alternative solution.  Everyday advertisers and affiliates have no way to invest in affiliate business in California with any degree of certainty that they won’t be shut down again one year from today.

What a mess…

Peter Hamilton

A digital marketer by background, Peter is the former CEO of TUNE, the enterprise platform for partner marketing. In 2018, he sold TUNE’s mobile measurement product to Branch, unifying measurement and user experience. He led TUNE’s efforts to bring better management technology and automation to marketing partnerships, across affiliates, influencers, networks, and business development relationships. Follow @peterhamilton

2 responses to “Amazon Buys One More Year for California Affiliates”

  1. Kevin says:

    Couldn’t agree with you more Peter. You’re not the only one who was made sick by this fiasco. It is disheartening that in such a fragile economy small businesses were just casually speared by a state legislature that is transparently desperate for cash and a big company that is all too willing to play along.

    • There are lots of things about California government that perplex me, but this certainly hit a little closer to home. I almost hope Amazon is able to get a federal solution in place so at least we know what to expect, but then what keeps states from taking it even further?

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