Blog Post

Next up in Amazon’s tax war: California

Amazon (s AMZN) is prepared to take its sales tax war to one of the biggest arenas of all: California.

In an email sent Wednesday, Amazon warned that it will shut down its Amazon Associates Program for California-based participants if the state passes a proposed bill that would impose new taxes on online retail sales.

As online shopping has ticked up, more and more states have begun passing laws that require online retailers to charge sales taxes.  Amazon has been battling with state legislatures over whether or not its transactions should include the same sales taxes required of brick-and-mortar retailers. Amazon has already terminated its affiliate programs in such states as Arkansas, Colorado, Connecticut, Illinois, North Carolina, Rhode Island and Texas due to the battle over sales tax.

The warning to California is in line with Amazon CEO Jeff Bezos’ reported remarks at a ShopSmart Shopping Summit held in New York in May: “We will continue to drop states who pass those affiliate laws from the affiliate program.”

If nothing else, Amazon’s showdown in California proves Bezos is a man of his word. But California is well-known to be a major — and uniquely important — economy in and of itself. Time will tell whether the decision to go to the mat with the Golden State will turn out in Amazon’s favor.

Here is the email sent by Amazon to its California associates program affiliates:


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,, MYHABIT.COM or 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,, MYHABIT.COM or

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

Photo courtesy of Flickr user Ken Lund.

24 Responses to “Next up in Amazon’s tax war: California”

  1. andrewhclark

    Why do these Democrats in the state legislature never seem to understand that taxes – especially obvious ones like this – have repercussions, particularly in a recession. And they STILL won’t touch pension reform. They can cut and tax all they want, until they do something with that, every fiscal year will be exactly the same. (check out my coverage here at

  2. As an author of technical textbooks, and an educator in California, helping students acquire classroom texts at the best possible price is of great benefit to the student.

    Students will always search out a best price and adding additional tax on textbooks is only hurting those who are trying so hard to achieve their educational goals.

  3. They should pay tax I work in a Bestbuy in home theater and we are getting crushed buy customers who want us to match no sales price on a 2000 dollar tv u are talking 200 bucks savings the worse part is amazon sends us there customers milk us for our information and buy it from them I don’t think it will kill them but will even the playing field amazon just in the state of California has skimped our state from 9 billion dollars buy not charging tax support your local stores provides jobs for your kids wich get taxed to help our state

    • cakes

      I’m not a fan of the Amazon tax because it is ultimately not a tax on Amazon but a tax on consumers. But Edgar you raise a very good point. Taxes probably do level the playing field some. Amazon may still have more competitive prices despite the tax because they don’t have the overhead of a big box store. But the tax thing does seem more like a penalty on in-state retailers than a new tax would be a penalty on out of state retailers. I suppose I’d feel better about it if the state proved itself a better manager and executor of its resources.

    • Mark Rodriguez

      Edgar, cease price matching non-local businesses or risk loosing your job. The price match guarantee offered at best buy is for local business ONLY. Being that amazon is not located in California, it is considered non local and therefore should not be deemed applicable under the price match guarantee program offered at your retail store.

  4. About ten hours after I received the letter noted above, the other shoe dropped, “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,, MYHABIT.COM or 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….”

    • Mark Rodriguez

      i am sorry and hope you could find other means of making an income. These politicians obviously don’t care about us and would rather earn a buck then to spare a few jobs especially while we are in a depression.

  5. Joseph B.

    “The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.”


    The system set up by Amazon was perfectly legal. It allows them a competitive advantage that other retailers don’t have, and that’s no fault of Amazon. Companies are free to develop their own business plans, incorporating in states that give every possible edge, structuring themselves for maximum viability and profit. Those who choose a different path are free to do so, for whatever reason they desire. It is not Amazon’s responsibility to do anything which will increase it’s tax exposure or put itself at some other competitive disadvantage.

    This really is a federal issue, regulated by the federal interstate commerce rules. There are no tariffs between the 50 states. It’s truly a wide open free trade zone, and to exist in a free market, the consumer definitely comes out the clear winner when states are forced to compete for your business. Decisions state legislatures make that limit the competitiveness of companies within its borders have consequences. When people cry unfair about it, maybe they should complain to their representatives about making the playing field fairer by increasing their own chances of being competitive, rather than try for bring down someone else’s operation.

    But that won’t happen because there’s no advantage to politicians giving up potential sources of tax revenue. This would curtail their ability to pay off campaign contributors and special interest groups with that very same money. The people (Californians in particular) have long forgotten that money belongs to them, not the government. Until they get tired of it, they will continue to pay more and more, and get nothing in return.

    “Anyone may arrange his affairs so that his shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”


  6. Jeremiah Owen

    Maybe the state should level the playing field by not charging sales tax. Why should the government get a portion of every dollar I spend when it does nothing in return. Don’t give the infrastructure BS either if you have driven anywhere in CA in the last say 20 years I think you can agree they sure aren’t using sales tax for that.

    • It will indeed be fairer if all retailers are not taxed, not just Amazon. Now the only thing left to do is to connect the rest of the dots to come up with a balance budget with stable tax base. Then I am all with you.

      • Joseph B.

        The tax base is already under great strain as more and more of the tax burden is placed on less people with the means to pay for it. With the recent dismal economic news and unemployment numbers soaring (and I’m talking real unemployment, including those who aren’t counted anymore because they just gave up or are underemployed), the number of have-nots are high and likely rising, and the state expects the haves to pick up the slack (and then some). Only government can raise the “price” of it’s services in a recession in the name of fairness and “helping the little guy” and pull the wool over the eyes of people who don’t know any better.

        My employees and small business suffer this recession everyday. If I raise rates because it’s “only fair” we need to pay more of our share, we’ll be out of business very quickly and join the ranks of have-nots. Not exactly good for the tax base.

        Any way you look at this, the grand illusion is that this is a tax on Amazon. Really its a tax increase on every citizen of the state that wasn’t there before. They will have to pay it and it will have yet another negative impact on their quality of life.

        We’ve all had to tighten our belts. Government refuses to do the same, partly because it’s constituents demand more while special interests demand their payoffs. When it doesn’t get what it wants, the tantrum follows by cutting things taxpayers notice like roads, law enforcement, education, infrastructure… the very things people actually want government to do, in the hope that taxpayers will be in an uproar about it and “increase revenue” (code for raising taxes). And here we are today…

      • Mark Rodriguez

        @tung, because amazon is not a retailer like b&n or a mom and pop book store in that they do not have a store which we can visit in california, they should not have to pay state taxes like all other retailers. The buyer knows that if he/she buys from out of state they will save money on no taxes, however, they will not have the luxury of having the item that same day. Normally competition would be fair enough for both local and online markets however, because most are struggling to make ends meet everyone is scraping the pan to try and save every penny possible. Now the big retailers are crying to the state because people would rather wait a bit and save then to go to their stores and pay for their unfriendly service.

  7. Much of the merch ordered from Amazon is ordered because of two factors: no shipping charges and no sales tax. States do NOT need to take MORE of my money when I buy goods. The state already gets a large amount on April 15. The states believe they should have a piece of every penny I spend. I don’t think so.

  8. @ Tung, dude, maybe those B&M stores should up their resources so that they wouldn’t fail! And this bill would make many Californians angry including me! Amazon is shutting down their associates program in California if this bill passes, a sad day were it to come true.

  9. It is long overdue for Amazon to come to the level playing field. It is pathetic for me to bypass California online retailer like newegg, and instead to pick Amazon to ship good over a longer distance because of their price advantage. Amazon is not a retail giant towering over everyone. Borders is now bankrupt. B&N has a market cap about 1% of Amazon’s. Time to update the tax code for the 21st century and not to give them an unfair advantage.

    • Joseph B.

      Then don’t bypass Newegg. If you feel it’s your patriotic duty to pay more and support a California company, then do so. Nobody is stopping you from easing a guilty conscience if you are suffering from one.

      For the record, I order thousands of dollars worth of items from both Amazon and Newegg. May the best competitors continue to win our business.

      • Are you suggesting voluntary taxation? Be taxed if it please you? Is that suppose to be a joke?

        “May the best competitors continue to win our business.”

        Agree. May the best continue to compete fairly to win our business.

    • adrian

      And all the big companies (walmart, target, borders, b&n) with more money and more power put all the moms and pops businesses out of business. Hows that for level? Nobody stopped walmart from opening 5 stores in a 15 mile radius.

      Amazon tax isn’t going to help anyone.

      • Let’s do a quick check. Here are the market cap of some major retailers in billions.

        Walmart – 184
        Amazon – 92
        Target – 32
        Best Buy – 12
        Sears – 8
        Toy R’s Us – Acquired for 7B
        Barnes & Noble – 1
        Borders – bankrupt

        Obviously Amazon is much bigger than everyone except Walmart.

        Now there are also all the California mom and pops, independent stores and online retailers. Amazon has a built in 8% price advantage over all of them. How is that fair?

    • Wai Tip Tung how much taxes do you pay. Stop acting like you pay any taxes. Amazon should not have to pay any taxes. The law is the law and just because the State Legislature says they have to pay don’t mean anything. Oh yes it does it means lots more people in this state out of work. Maybe that would make you happy you moron. Jerry Brown is a moron just like you. Well I guess California will fall more into the ocean day by day. And shut up you idiot Tang.

    • Jonny Tran

      Actually Wai, as a law of California when you purchased good out of California and brought it back to be use in the state (either through internet or drive to another state) you should report the “use tax” to the board of equalization and send in the check when you file your taxes. That is the LAW. So it shouldn’t matter if Amazon collecting the tax for you. It is YOU who is breaking the law by not reporting the “use tax”. I can reported you to the board of equalization for tax evasion.