Amazon Officially Terminates California Based Affiliates

Early today Amazon was making headlines when the company went public with their fight against a new California law that would reqire the payment and collect of sale taxes for any sale originating from sites and affiliates based in California. The company sent out emails informing affiliates that if the law is inacted it would be forced to terminate contracts with those affiliates that are within the state.

Tonight unfortunately, Governor Brown has signed into law the so-called budget trailer bill, ABx1 28, authored by Assemblymember Bob Blumenfield (D-San Fernando Valley). As a result of this, Amazon has sent out notices that contracts with all California residents participating in the Amazon Associates Program are terminated effective immediately, June 29, 2011.

Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. The company did say however that qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

Below we've attached the full text of the email we recieved earlier today.

Hello,
Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned before today will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect your ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,
The Amazon Associates Team

Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state," according to the California Board of Equalization's Web page. That includes Web sites like Amazon, Google and others which under the new law would lose that profit to the state

My thoughts:

Otiginally I didn't understand the law specifically imposes the collection of taxes from consumers on sales by online retailers - including those referred by California-based marketing affiliates like even if those retailers have no physical presence in the state. I thought Amazon was taking a harsh stance punishing affiliate marketers because they didn't want to pay for goods sold in the state. I thought this only affected sellers with storefronts, selling physcial goods.

Personally I see no correlation between where a site, or affiliate is based with taxing those links. My personal address should have no bearing, I pay taxes on any affiliate money made and don't sell a physical good. I could understand if we are talking the transfer of actual goods, like a drop shipping store front or something similar but taxing an affiliate link seems like a stretch.

The really bad part of this is that this will not only affect sites like Amazon but almost any affiliate site. That means this could affectively put an end to any California based affiliates.