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Summary:

Amazon CEO Jeff Bezos was not bluffing. On Wednesday evening, Amazon followed through with its threat to terminate its associates program in California after Governor Jerry Brown signed into law a bill that will impose state sales taxes on online purchases made by California residents.

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Amazon CEO Jeff Bezos was not bluffing.

Updated. On Wednesday evening, Amazon terminated its associates program in California after Governor Jerry Brown signed into law a bill that will impose state sales taxes on online purchases made by California residents. Earlier that day, Amazon had sent an email to its California-based marketing affiliates warning it would shut down its associates program in the state if the bill was passed.

California is not the only state in which Amazon has battled over sales taxes. Over the past two years, Amazon has terminated its associate programs in such states as Arkansas, Colorado, Connecticut, Illinois, North Carolina and Rhode Island and Texas over similar sales tax impositions.

Amazon has vowed to continue dropping states that pass similar sales tax laws from its affiliate program — and with the company’s latest moves out of Texas and California, CEO Jeff Bezos has shown he will not back down, even in some of the nation’s largest marketplaces. There is an old saying: “As California goes, so goes the nation.” If that bears out to be true, the Amazon associates program could soon be a thing of the past altogether.

Here is the text of the email Amazon sent to its California-based affiliates:

Hello,

Unfortunately, Governor Brown has signed into law the bill that we emailed you about earlier today. As a result of this, contracts with all California residents participating in the Amazon Associates Program are terminated effective today, June 29, 2011. Those California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM orSmallParts.com. Please be assured that all qualifying advertising fees earned before today 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 your 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. As mentioned before, we are continuing to work on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

Ed: Amazon’s sales tax issues with Texas are complicated, and according to news reports, still unsettled.

  1. Texas is still in the program. The fight was over a warehouse in Texas and it has been resolved.

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    1. Colleen Taylor Thursday, June 30, 2011

      Thanks for the comment, Maria. We’ve made a correction on the Texas situation.

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  2. It seems that eventually Amazon will have to give in and start collecting sales tax in California and other states that are demanding it (NY, CT, TX, etc).

    Of course, consumers won’t be happy about paying sales tax, and many are already discovering ways to avoid doing so. For example, many consumers in California and New York already use a package forwarding service from Oregon (where there is no state sales tax) to shop tax-free online, even though their states collect sales tax on online purchases. (You just order with an Oregon address, then have your packages forwarded to your own state, tax-free). See http://bit.ly/mRILaE

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  3. Can someone please explain me the issue clearly?
    I understand that whether there is affiliates or associates or not in California, Amazon will have to charge SalesTax for California resident. What does dropping the affiliates program give them? Do they think they can avoid paying the tax if they do not have any affiliates? Or is Amazon retaliating against all Californians for a decision from their government?

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  4. I don’t get the problem here. Just collect sales taxes. They do provide a great deal of value to the states and you’re the biggest internet merchant … in short, stop being such a d1ck.

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  5. I was never a big Amazon affiliate.

    Their affiliate program wasn’t one of my favorites, however for affiliate marketers this is a lesson in diversity. Don’t put all your eggs in one basket.

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