As it has done in other states where online sales tax was imposed, Amazon has dropped its approximately 10,000 California affiliates in protest of the state’s passage of AB 28X at the end of last month. According to CNN Money, Governor Jerry Brown signed the bill into law as part of the state’s plan to reduce its budget gap. Shortly thereafter, Amazon announced it was terminating its relationship with thousands of California affiliates claiming the bill is “unconstitutional and counterproductive.”
AB 28X requires remote retailers with “nexus” in the state to collect and remit sales tax for orders made by California residents. Previously, online companies such as Amazon did not have to collect state sales tax unless they had a nexus, or physical presence, in that state. By signing the bill into law, however, Governor Brown approved the idea that affiliates count as a nexus.
When The Sheet covered this topic back in May (https://thesheetnews.com/archives/8784), local business owners tended to lean in favor of the bill as it is expected to close the price gap between buying local versus buying online.
According to an email from Oren Teicher of the American Booksellers Association (ABA), even after Amazon dumped its affiliates “the Board of Equalization declared that the online retailer still had nexus in California, on July 7 the online retailer formally filed a request with the California Attorney General’s office for a voter referendum to overturn the sales tax fairness law, AB 28X.” If the referendum were approved, Amazon would need to collect 504,000 signatures by October for the item to appear on a June 2012 ballot, according to news.bookweb.org.
In response to the request for the referendum, the ABA issued the following statement: “Having long behaved as if tax laws don’t apply to them, Amazon.com has now announced its intention to spend millions of dollars in an effort to get a tax-evasion referendum on the ballot in California. California has made clear that it’s not the role of government to pick favorites among retail businesses. The time has come for Amazon.com to collect and remit the required sales tax … just as 164,000 California retailers do every day.”
Booky Joint owner Dave Leonard added, “I would be very surprised if you could find any retailer who would support Amazon in its fight to evade taxation and maintain its unfair advantage over bricks and mortar stores. Bookstores are the most obvious casualties of Amazon’s tax avoidance business plan but there are many other businesses that are adversely affected.”