California Passes Online Sales Tax Bill, Amazon Not Pleased

Ryan Whitwam

Remember yesterday when we told you of the horrible dystopian future California faced as they considered forcing online retailers to collect state sales tax? Well, they’re going ahead with it, causing an outcry from Internet retail giants including Amazon and Overstock. The change goes into effect Friday .

In conjunction with the move, the state’s tax rate is going down 1-point to 7.75%. The California law takes advantage of the affiliate programs that many sites run where people can get commissions by referring buyers to a site. The law in California now considers those people employees of a sort. In response, Amazon and Overstock have cancelled their affiliate programs in the state.

By not collecting sales tax up front, online retailers have had quite a price advantage over brick and mortar stores. It looks like that era may be coming to an end, but Amazon isn’t going down without a fight. They’ll probably pull the affiliate program out of any state they have to.

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