Amazon Cuts Off California- Click here http://bit.ly/qO58Wd for full article

Amazon Cuts Off California- Click here http://bit.ly/qO58Wd for full article

Sale or no sale

Amazon became a $30 billion dollar company by making decisions that challenged the status quo. It made another such decision recently when it decided to part ways with California. In a startling display of single-mindedness, Amazon announced last month that it will no longer work with online affiliates based in California because the state has enacted a new law that requires online retailers to collect sales tax.

The Seattle-based website emailed affiliates in California, both individuals and companies, and warned them that ties may be cut if Gov. Jerry Brown signed the law. In late June he did.

The bill is simple. Anyone who runs a website that refers visitors to Amazon, thus receiving a percentage of any subsequent sales, will be forced to pay a sales tax on each transaction.

Same goals, different paths

Amazon and California find themselves butting heads because they have the same goal: to make more money. Amazon has jettisoned its business from the Golden State in order to avoid sales tax. California has enforced the law in an attempt to bring more revenue into the struggling state.

It is estimated that the new law will bring in $200 million dollars annually, a welcomed lump of change. And California isn’t the only state doing it. Arkansas, Illinois and Connecticut all passed similar bills.

And Amazon left all three states.

Fighting words

This is not a new battle. It dates back to 1992, when the U.S. Supreme Court made a ruling that prohibited states from enforcing sales taxes on a business unless that company had a physical location in the state, like a store.

States are doing everything they can to skip around the Supreme Court ruling. They have to if they want to stop the financial hemorrhaging they are experiencing.

States across the country are brainstorming new ways to increase revenue in this time economic uncertainty. One of the best ways is to stretch the definition of “physical location.” By manipulating the law, states can deputize online retailers as tax collectors, forcing them to monitor each of their affiliates.

Terminated

A similar law was passed two years ago, but then-Gov. Arnold Schwarzenegger threw it out. It seems Amazon desperately needs more business-loving, government-weary politicians if it wants these new laws terminated.