Amazon files for referendum on California affiliate nexus legislation

ANOTHER UPDATE (7/12/2011 @ 2 PM EDT): Internet Retailer just published a detailed article about this too.

UPDATE (7/11/2011 @ 10 PM EDT): The Financial Times and The Wall Street Journal just ran an article about this too.

Last Friday, July 8, Amazon filed a petition for a referendum on California’s recently passed affiliate nexus legislation, which requires online companies with California affiliates to collect California sales tax. The referendum would put the decision on whether to enact the legislation in the hands of California voters.

This AP article has more, although details are yet to come.

To be clear: The referendum would not give voters the opportunity to determine whether or not sales tax is due on online purchases. Sales tax has always been due on online purchases and it still is; the California legislation simply changed how it is collected. Before, consumers were responsible for sending the tax due directly to the state. With the legislation, online retailers themselves—at least, those with California affiliates—are responsible for collecting and remitting the tax.

As we’ve always said, federal legislation is the better solution—it allows states to collect existing sales tax without hurting affiliates or targeting online retailers that use affiliates. When Congress finally acts to pass federal legislation, state legislation won’t be necessary, and online retailers will be free to resume their affiliate relationships without fear of a discriminatory tax collection law singling them out.

Amazon supports federal legislation, as do we. We hope that it will be enacted soon, ending the feud over California’s legislation.

8 Responses to Amazon files for referendum on California affiliate nexus legislation

  1. Kumar says:

    This is a cynical exercise by Amazon to get free advertising as the goto destination for “sales-tax-free” shopping.

    In a sensible world one would think all this hullabaloo would raise the profile of this festering issue for Washington to stop dragging its feet on the Mainstreet Fairness legislation, but then again that is expecting a lot from our grid-locked, polarized and dysfunctional politics.

    • says:

      Mr. Kumar,
      As always, thank you for your considered contribution to this dialog. We sincerely hope you are underestimating our delegates within the beltway. We know more than a handful of them follow this blog. Hopefully they will disprove your slightly cynical perspective and participate (or even cosponsor) the much anticipated Main Street Fairness Act to correct this matter once and for all..

  2. […] Los Angeles Times article examines the Amazon proposed referendum on California’s affiliate nexus legislation and what it calls the “escalating rivalry between Amazon and bricks-and-mortar retailers, […]

  3. Couponsophy says:

    I do hope the referendum passes, but the situation seems to be a complete mess all around.

    One point, though: even if Amazon (or other webstores) don’t charge sales tax, they do charge shoppers for shipping. Especially for smaller purchases, shipping can be more than sales tax would be. For this reason it’s hard for me to buy the argument that brick-and-mortar stores are at a disadvantage because online stores don’t pay sales taxes.

    • FedTax says:

      Dear Couponsophy,
      First thank you for your comment – and your point regarding shipping is one we have definitely heard before. The thing is, shipping charges are not interchangeable with sales tax – no matter how much you pay for shipping, that money does not come back to your local community to fund the priorities you voted for.
      Remember, sales tax is not paid by the seller, it is paid by the buyer – and the amount due is based upon your destination, typically where you vote.
      Moreover, sales tax is already due on internet transactions, and when a retailer refuses to collect the tax, you are not relieved of the obligation to pay the tax – but you are expected to self report and remit – which most people never do. This is why it is such a problem.
      Thank you again, and we welcome any other questions you may have.

  4. […] and human services advocates” to launch the website opposing Amazon’s ballot referendum against California’s online sales tax collection legislation. The website urges people to cancel their Amazon accounts in protest of Amazon’s actions: […]

  5. […] on July 1. Amazon immediately dropped its affiliates in California, and on July 8 the company filed a petition to put a referendum to repeal the law on the ballot, for California voters to decide on. The […]

  6. […] blogged about Amazon’s objection to California’s affiliate nexus law, which required online retailers with affiliates in the […]

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