Watch out California affiliates! There is a proposed bill to charge online sales tax in California modeled closely after the infamous New York “Amazon” tax. If it goes through not only will it hurt lots of California affiliates, but if it passes it makes it much more likely other states will follow suit.
UPDATE: 3/20 – Help us Lobby Against CA AB 178 – Affiliate Sales Tax
Melanie Seery broke the story and talks about the impact this could have on affiliates and merchants. California Affiliates Get Ready
Assembly woman Nancy Skinner has proposed Assembly Bill 178 and claims it will raise about $55 million per year for California. According to a story on the California State Assembly Democratic Caucus web site “Her bill is modeled closely on a law enacted in New York, which defines an Internet retailer’s affiliates within the state as a “physical presence” or “nexus” — the U.S. Supreme Court’s standard on whether a state’s sales taxes apply.”
However an apposing view that supports our cause was also raised in that article by State Taxation attorney Fred Nicely. He stated:
Skinner’s bill “represents poor tax policy” and is unconstitutional. He also rejected that remote sellers’ affiliates equate to a physical presence; such an interpretation invites costly lawsuits and distracts the state from collecting other taxes, while costing state jobs by inspiring remote sellers to send their advertising dollars and Web-hosting contracts elsewhere, he said.
The actual bill text is here: BILL NUMBER: AB 178
Related story ABC News: Avoiding sales tax online? Not for long
An important quote from the end of that story: “This proposal changes the way sales tax is collected, not the actual tax rate itself. That means only a simple majority is needed to pass it.”
I am still researching and just found out about this so am simply passing on what I’ve found so far. I’m not one of those people that’s well versed on how the government works, so I’m not certain about the timing or what other steps need to happen before they can potentially pass this bill.
There is no time to waste. We need to reach out to anyone we know at the government level and let them know what happened in New York, so they realize this could cause some Californians to lose income or even lose their small businesses. Quote Fred Nicely’s comments as they carry weight and point out additional reasons this bill should not be passed.
If you haven’t yet, be sure to read Melanie’s blog too.
UPDATE: 3/10 – Lisa Riolo is helping to organize some efforts to protest the passing of the bill. If you are in affiliate industry & want to help fight against CA AB178 tax bill please twitter: @lisariolo to get on coalition list(s).
UPDATE: 3/12 – Melanie reports this bill is set to go to committee on April 13th and has recommendations about what to do. California Bill 178 Update
UPDATE: 3/20 – Please be sure to read Help us Lobby Against CA AB 178 – Affiliate Sales Tax*Advertising Disclosure Policy*