Based on the letter I received from Amazon.com and the information I’ve read on the Performance Marketing Association website,
this is going to happen – and happen soon This has happened.
Etax laws, or so-called nexus laws state that if a business operates in a state then they must collect sales tax in that state. Operations include affiliates, so to avoid collecting taxes companies such as Amazon.com and Overstock.com cancel their affiliate programs in nexus law states.
California is about to pass AB 153, AB 155 and SB 234, which are our own version of Nexus or eTax laws, and will result in Amazon and dozens of other merchants terminating their affiliate programs in California.
This is pretty awful for you if you make your living from Amazon affiliate sales, as your only recourse is to move to a state (or country) that doesn’t have these laws.
Personally I know of several people that make thousands of dollars a month from Amazon.com sales – and even a couple that make over $10,000 a month – and I’d think that moving is their only choice. Very not cool for them!
Do The Laws Help State Revenue?
The worst part is that these laws are a complete failure. Not only that but it’s very likely that these laws are unconstitutional and may be reversed after a lengthy trial. Of course that doesn’t help affiliates in the meantime.
Of course lawmakers are completely out of touch with the impacts of these Nexus laws (perhaps out of touch in general?) and clearly don’t understand what they’re voting on – or the huge impact that this will have on thousands of people.
In their mind the law will result in more tax revenue – because it says that it will. The problem is that it A. When Amazon.com cancels their affiliate program they still avoid paying taxes, and B. By putting thousands of affiliates in the state out of business overnight, the state actually loses revenue!
Here’s the copy of the email I received from Amazon.com today:
For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.
We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.
As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, 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 on or before the termination date 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 their 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. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.
The Amazon Associates Team
Pretty rough letter! Amazon.com could be a bit nicer about it in my opinion, but it is what it is.
Oh, and for those who think this may not pass – According to the Performance Marketing Association, the Nexus laws in California will definitely pass.
What Can We Do About It?
#1 – If you’re a California resident then please contact your local State representative. You can find your representative by clicking here.
Tell them that you strongly oppose Nexus and eTax laws, and explain that they hurt your business, and hurt business in California in general.
#2 – I’d also recommend that you Join the Performance Marketing Association, as they’re fighting the good fight against Nexus laws, and your membership will help.
#3 – Finally, you can move to a state (or country) that is unlikely to pass Nexus laws of their own. I’m guessing that many of Amazon’s larger affiliates will be forced to make this choice – and I hope that it works out for them.
I know that if I were earning $10K+ every month from Amazon sales, I’d rather move than give that up!
It stinks that this is going down this way. As I don’t currently make a ton of money from Amazon, I’m not sure what I’m going to do with this info.
I’ve considered changing my state of residence away from California anyway – as I don’t actually live there right now. Of course it’s a huge hassle to establish residency in some states – but perhaps Nevada or Wyoming would rather get my tax dollars?
Update – This Has Happened as Predicted
Quick update – got my letter from Amazon late last night that this has been signed, and as such my account has been closed.
It will be interesting to see what Amazon does as more and more states enact Nexus laws. Perhaps Amazon figures it’s big enough to do without affiliates at this point, and the Nexus laws are a good excuse to clean house?
Here’s hoping that a legitimate Amazon.com competitor shows up that still shows affiliates love – Nexus state or not.
I’d be interested to hear from anyone who’s been impacted by the new Law. How much where you making from the Amazon affiliate program, and what are you planning to do now?
Update – Amazon California Affiliates have been Reactivated!
I got a very pleasant surprise early October – Amazon worked out a deal and reactivated California affiliates for 1 year while they work out the whole tax thing.
Good news for California Amazon affiliates – and good news for me. I’ll get back to posting make money on Amazon.com posts shortly.
I hope they work this out and keep the Amazon affiliate program open for all, as it really is one of the best affiliate programs on the web.