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.