California budget crisis nearly puts Overstock.com affiliate advertisers out of business (Los Angeles: sales)

[ei1980]

We got to thank for our "full of ideas" legislators in Sacramento for this.
At a time when the economy is struggling and people are losing jobs, they trying to get rid of business avenues for californians.
California budget crisis nearly puts Overstock.com affiliate advertisers out of business | EconPost (http://www.econpost.com/us/california-budget-crisis-nearly-puts-overstockcom-affiliate-advertisers-out-business - broken link)

[FresnoFacts]

It is not just California, from the article:
"Overstock also sent similar notices to affiliate advertisers in Hawaii, North Carolina and Rhode Island, which planned to enact similar legislation."

[Ultrarunner]

This is the change I've come to expect...

People are loosing their livelihood all around and businesses closing.

Is it any coincidence that the cost of goverment continues to grow...

[BennyPhoenix]

It's stupid because it doesn't stop people from buying online and not paying sales tax anyway. It just means some people will be making less money,and therefore paying less income tax.

[FresnoFacts]

The proposed law was about collecting sales tax on internet sales. It is not about increasing income taxes, this article was poorly written.

Here is a better summary:
California has considered a law requiring nationwide online retailers to calculate, collect and remit sales taxes that buyers are supposed to pay but rarely do.
The Internet isn't tax-free - Los Angeles Times

The laws considered in California and other states are about making online retailers collect sales tax at the time of purchase.

Most states are working on laws that say if a company has affiliates in a state, then the company must also collect sales tax from residents of the state.

An affiliate provides a link on their website to purchase the item elsewhere, say at Overstock or Amazon. The affiliate collects a small commission for each sale through their link and the other company ships it.

The basic question is whether the affiliate website is a commissioned sales rep or simply someplace that these companies advertise.

If an affiliate represents the company then states argue that the company has a presence within the state and should collect sales tax just like having a physical store.

Overstock, Amazon and others do not want to collect the sales taxes. They say since they are not physically located in a state they should not be forced to collect taxes in that state.

To avoid the new laws, Overstock and Amazon decided they would simply drop the affiliated websites in that state. No affiliates in a state then no need to collect sales tax.

New York passed a similiar sales tax collection law last year. Amazon and Overstock fought it in court and lost, but the case is now on appeal.