It’s a sad day for online shoppers throughout the Golden State as today is the first day that Amazon.com and other large, out-of-state retailers must collect sales taxes on purchases that Californian shoppers make over the Internet. Governor Jerry Brown signed the legislation into law on Wednesday and admits that getting the taxes that consumers don’t typically pay when buying out-of-state and online is a common sense idea. If all ends well, the new tax collection requirement is expected to raise nearly $317 million annually in new state and local government revenue.
Gov. Brown’s passing of the sales tax bill is aimed at tying up the loophole that allowed Amazon and other out-of-state retailers from collecting sales taxes for California.
The Los Angeles Times is also reporting that Amazon and Overstock.com told thousands of its California Internet marketing affiliates that they will stop paying commissions for referrals of its click-through customers. The new law applies only to online sellers who have facilities outside of the state and have some connection to the state in the form of workers, offices or warehouses. Apparently, Seattle-based Amazon and Salt Lake City-based Overstock have told their affiliates that they would have to move to another state if they wanted to continue earning commissions for referring customers.
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"We oppose this bill because it is unconstitutional and counterproductive," Amazon wrote its California business partners Wednesday. Affiliates in California are likely to leave the state making for an interesting economic impact and an already overwhelming unemployment line.
In a sort of balancing act, the state will drop its basic sales tax rate to 7.75 percent today, which was 8.75 percent before the law came to fruition.