No More Amazon Affiliation

[Staff]

Thanks to the shortsightedness of our elected leaders in Sacramento, Amazon has terminated FBTB's affiliate relationship due to California legislature attempting to collect tax on online sales. Warning: Political rant ensuing.

Here's the situation as best I understand it: Federal tax law requires that online stores must collect sales tax if the merchant operates in a particular state. Since Amazon does not operate in the state of California, it does not have to collect nor pay state sales tax. California legislature, in an attempt to close a deficit in the budget, proposed a work around to the Federal law by taxing sales made through affiliate partners for such merchants as Amazon and Overstock.

In response, Amazon has terminated all partnerships with California-based affiliates. What this means is that Amazon will still be able to sell goods to California residents, and not have to collect nor pay sales tax to the state. Also, any future income tax that California residents would have paid is now gone since we are no longer earning any income from Amazon.

Personally, I think this online sales tax maneuvar was a desperate attempt to make a passable budget and close out whatever deficit had to be addressed. It's extremely shortsighted on the part of the legislation to assume that Amazon and Overstock (and possible other affiliate marketing programs) would comply with this work around. Instead, Amazon essentially terminates the partnerships thereby no longer being required to comply.

Now I could sit here and blame Amazon for doing what they're doing; their reasons are their own. I don't fully understand the implications of having to pay sales tax, collect sales tax, and track which affiliates are in California and what sales they generated, etc. In fact, I am a little upset. But what upsets me more is the fact that the state is trying to circumvent a Federal law with one of their own that won't raise the revenue they predict and instead will cost the state in lost income tax.

Amazon is FBTB's number one affiliate partner in terms of revenue. It has allowed me to raise my daughter and keep my family afloat for a number of years. It pays for the awesome prizes I provide for contests, completely financed Bothcon, and pays for our annual trip to New York for Toy Fair and San Diego for Comic Con. The loss of income will definitely take some adjustments to get used to. I can only hope that through either our court system, petition, voter intervention, or some other method, that the law will be overturned sooner rather than later.
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Permalink: http://www.fbtb.net/2011/06/30/no-more-amazon-affiliation/

[CloneEmperor]

This sucks. I purchase from Amazon quite regularly, and it was nice to know that I was helping out one of my favorite sites (even if I did forget on occasion to go through the affiliate link). I hope this is resolved in a beneficial way.

[RfAurora]

It sucks big time. Illinois recently passed a similar law, so most of the other sites I used to use are gone too.

[bigospedros]

Whilst this clearly sucks, I'm surprised at how much money is was raising for the site in the first place ...

I can well imagine how you're feeling on this ... the whole world is having to adjust to governments not being able to manage their money and joe public is the one that's suffering

[Sydag]

Indeed, this sucks. I wanted to say something that shows my support, but actually, I'm speechless. Bad news, I really hope you'll find a way.

[hye]

(1) It's not like Amazon hasn't done this in other states, so CA legislature is just oblivious to the consequences.
(2) Seems like a fixed rate like North Carolina (0.0675 % of taxable income) would be an easy fix for CA residents that would probably bring in quite a bit of money without too much pain. (but perhaps unlikely to push through the legislature)

[buriedbybricks]

Sorry to hear this. If there is a petition on-line or if you start one, please let us know. Though I will likely not be able to sign since i'm not a resident, I do have several friends and contacts in CA who I'm sure would circulate it.
Hope there is a quick turn around on this.

[Feralcom]

This Tax thing is getting out of hand.

In Memphis, I am unable to take advantage of many poplar internet shops because they operate a storage facility here. There are no store fronts, I can't pick-up my order and you bet I still pay the shipping on top of the sales tax.

Why?

Big-Box stores like Wal-Mart, Best Buy, etc have been pushing for the tax collections because they claim the internet shops have to much of an advantage over them because they don't have to collect sales tax (funny, I have never seen a Wal-Mart close shop). Its not a hard sale to government officials who love to spend more than they take in.

Sorry to hear the bad news.

[deco_droid]

oh darn, maybe you can make up the shortfall by selling endless variations of the mighty m-wing

oh, and as far as the tax thing is concerned, border states like CA need to be able to secure their border with mexico to keep illegals from sapping citizens' tax dollars through hospitals, social services, etc without getting sued by the federal government. california cost of living is always going to be higher, but i'm sure that would save a couple billion or so.

end rant...

[GIR3691]

In their ever-increasing desperation, all levels of government are trying out crazy schemes to bring in a few extra bucks here and there. Here in CT they tried a gas tax increase right when gas had hit $4.50 a gallon. It's not like an increase like that would hurt everyday folks and raise prices of everything else! Our gas tax never got off the ground, but the governor promised equivalent tax increases elsewhere to make up for it.

I really want to know how so many idiots got elected. We don't need lawyers in office, we need economists. The people we have running things have no idea how to balance a budget or control spending. Instead of bringing their spending under control, their plans all seem to revolve around making additional revenue fast with no passing thoughts about the individuals it might be hurting. Everyone else is practicing fiscal responsibility in these tough economic times, it would be nice if the people we trust to run our government would have the decency to do the same. It's simple economics! Don't spend money you don't have!

It sucks that this heavily affects both the site and you personally, Ace. Hope this legislation gets reversed soon, but with it being California, we can only hope.

[deco_droid]

hey, you could always relocate to nevada! i hear it's a buyer's market!!!

[ikarus]

just voicing my thoughs and please keep in mind I'm from Europe and don't know the intricacies of US law:
couldn't you set up a foundation/or LLC in another state that operates FBTB and you as an employee?

[jedi99998]

I’m really sorry to hear this. FBTB is one of my favorite sites on the whole web and I check it multiple times a day. When I found out a year ago that benefits FBTB when I visited and purchased on sites like Amazon and TRU through clicking the banners on the site, I started doing that all the time.

It’s totally believable to hear “the government screwed something up” and it’s also easy to think the big-box stores tried to gain an upper-hand in the marketplace.

However, neither is quite the case here.

Amazon and other sites like eBay have avoided collecting sales taxes for years.

And to clarify, it’s not a matter of PAYING taxes – it’s a matter of COLLECTING taxes.

When I go out in August and buy the 7964 Republic Frigate, shouldn’t the sales tax be the same whether I go out, whether it’s Toys R Us, Wal-Mart, Target, the LEGO store, Amazon, eBay, or a regular toy and hobby shop?

If it’s the same product in every case, why should the sales tax be collected sometimes and other times not…

And honestly, when I choose which retailer to buy it from, I’m not going to decide based on the sales tax – I’m deciding based on who offers me the best deal.

Toys R Us might have their BOGO sale (although probably not applicable to SW as usual), Wal-Mart or Target might have their typical markdowns (though also their every-so-often ‘sale price’ that is more than MSRP), the LEGO store will offer me benefits through my VIP card, and Amazon and eBay can keep their prices down because they lack almost all the real-world expenses any of those brick-and-mortar stores have. The one who really seems screwed in their ability to offer us the best deals is the regular mom & pop stores – the few that are left for that matter…

All those retailers compete with each other. True, some don’t have physical stores or employees needing healthcare, and others don’t have to incur costs like shipping & handling. However, they all compete and we as consumers (generally) win.

I’m not against one group having an advantage over the other – if anything I’m for it because it usually means better deals for us. However, ducking sales taxes by essentially claiming you’re not a “real” business is a jerkish move. It’s no different than the tax evasion you’d expect on Wall Street.

I heard about Amazon pulling their affiliations first on FBTB, but now I’m seeing it all over the news.

This seems more like retaliation aimed at pissing off consumers, businesses, sites, and politicians.

Collecting sales taxes will no doubt cost them some current profits. But you can’t honestly believe that the reason sites like Amazon and eBay flourished was simply because they were essentially evading taxes?

I’m sure they were making millions through their affiliate programs. I find it ironic that Amazon will drop their affiliates in CA because of the issue in Sacramento – aren’t they going to lose more potential revenue that they were getting through the affiliates, versus the cost of now collecting taxes.
It’s not like Amazon has to PAY the taxes… they need to COLLECT it, no different than the LEGO store, Target, or the local toy store.

I think we deserve a system that’s fair and competitive – and in my honest opinion, that will be best for us as consumers. But it’s sad to see that really great sites like FBTB are now getting dragged into this mess and being used as pawns by Amazons – simply because Amazon is now needs to collect taxes just like everyone else.

[MisterFubar]

Vote from the rooftops.

[StoutFiles]

just voicing my thoughs and please keep in mind I'm from Europe and don't know the intricacies of US law:
couldn't you set up a foundation/or LLC in another state that operates FBTB and you as an employee?

Nope. Nor can he get a P.O. Box in another state.

I feel bad it's come to this, but states want thir tax dollars and heavily favor brick/mortar stores that pay taxes and employ people. Small Internet businesses will be trampled before this is all over. Now, at some point a middle man, such as a credit card company will handle tax laws for the buyer/seller exchange...for a fee, of course. Who knows how that much will cost, but it's still a ways away.

For now, I wouldn't hold my breath waiting for this bill to be repealed. Many states have already passed it and it's going to stay, for better or for worse.

[etcknight]

*Nods head and agrees* I've been ashamed to call myself a Californian since before Arnold was governor. Seriously - we are the "Golden State", we have IBM, Microsoft, Lucas Ranch, Hollywood, one of the largest concentration of millionaires . . . and somehow we can't find enough money to run the state?! WTF. Seriously. The politicians need to get it together.

[akunthita]

just voicing my thoughs and please keep in mind I'm from Europe and don't know the intricacies of US law:
couldn't you set up a foundation/or LLC in another state that operates FBTB and you as an employee?

Nope. Nor can he get a P.O. Box in another state.

I feel bad it's come to this, but states want thir tax dollars and heavily favor brick/mortar stores that pay taxes and employ people. Small Internet businesses will be trampled before this is all over. Now, at some point a middle man, such as a credit card company will handle tax laws for the buyer/seller exchange...for a fee, of course. Who knows how that much will cost, but it's still a ways away.

For now, I wouldn't hold my breath waiting for this bill to be repealed. Many states have already passed it and it's going to stay, for better or for worse.

This was my first thought too, just set up in an other state. You mention that he cannot do that. But why not? As far as I know he could establish a business presence anywhere! We run a real-estate business in Florida, under an LLC in Nevada. It is really not hard to set up.

Or just find an individual in a different state who would take care of the Amazon Affiliation for FBTB. My first choice would be Nevada, as it is unlikely that such stupid law will be passed there. And there are still many other states who don't have this law, although if they get desparate enough for money they may establish it as well.

The point is that there are definitely options. It may just require some research, consultation and creativity.

[crazybirdman]

How do they not see that this will decrease revenue, not increase it? It's already expensive enough as it is to do business in CA, why push more people away?

[Bellicose]

This is symptomatic of California's two main failures - one, the state offers too many services and therefore feels entitled to more than a lot of your money in order to fund those services, and two the state feels that it's king bantha poodoo and since it's special the usual state rules don't apply. Seriously, my wife ran into this over such a simple thing as driver's licensing, she had a commercial license originally obtained in California (and which are not easy to get), transferred to Montana and Hawaii, and now that we reside in California again the local DMV would not honor it stating "our CDLs are better than other states, so we'd only honor half of your rating. If you wish to keep your full rating go bring the vehicle in question and re-qualify." All this for a Commercial license originally obtained and issued in...California!!! But since it has now passed on with other states it no longer counts

EDIT - I didn't say 'bantha poodoo'...but won't try to circumvent the filter.

[Feralcom]

I’m not against one group having an advantage over the other – if anything I’m for it because it usually means better deals for us. However, ducking sales taxes by essentially claiming you’re not a “real” business is a jerkish move. It’s no different than the tax evasion you’d expect on Wall Street.

Its not evasion, its a founding American principle - "No taxation without representation".

I live in Memphis, TN. I pay state and city taxes and have claim to the services those taxes go to. If I do not like the way those taxes are spent (or how high they are) I can vote for someone to change them. I could be a seller or a consumer, I pay either way.

However, I have no say so in another state. I do not make use of their public services nor do I have the right to vote for their officials. Therefore, I should be exempt from paying their taxes.

No, instead my money goes to a state like Nevada where they do not tax outside sales (why I buy from an art gallery in Las Vegas all the time). California gets nothing. Thats no money for the shop, its employes or their bills. Everyone in California losses except for the politician who got bankrolled by the Big-Box store lobbyist to push the law in their favor.