Amazon Ditching Calif. Affiliates Over Tax Tiff

Retailer opposes new law that would require it to collect sales tax
By Matt Cantor,  Newser Staff
Posted Jun 30, 2011 1:44 PM CDT
Sales Tax Law Prompts to Drop Its California Affiliates Inc. CEO and founder Jeff Bezos speaks during the company's shareholders meeting in Seattle.   (AP Photo/Ted S. Warren, File)

(Newser) – California wants Amazon to collect sales tax, so Amazon is packing up its toys and ditching all its affiliates in the state. The law, part of a budget package signed yesterday by Gov. Jerry Brown, says that online retailers must collect state sales tax if they’ve got affiliates in California. Amazon, which is based in Seattle, calls the move “unconstitutional” and “counterproductive,” the AP reports. California is the latest of several states that have passed such laws, looking for new ways to fill depleted state coffers.

The Amazon affiliates in question are companies and individuals whose websites send visitors to Amazon and get a cut of sales in return. A 1992 Supreme Court ruling bars states from requiring businesses to collect sales taxes unless the business is physically present in that state. Now, states are looking for a way to boost sales-tax revenue without violating the ruling; to that end, new laws seek to expand what counts as “physical presence.” Such efforts have already prompted Amazon to cut ties with Connecticut, Illinois, and Arkansas affiliates. (Read more Amazon stories.)

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