California Nexus Law – What is the impact on online business?

The passing of the CA Nexus Law i.e. Amazon Law is just another example of how far our legislators have their heads in the sand. The point of passing this law was to keep Sales Tax Revenues in the state by requiring online Merchants to collect Sales Tax when a referred sale occurs by an affiliate in the State of California.

This law was directed towards Amazon with the calculation that $200 million in sales tax revenue would be collected from Amazon affiliates. What wasn’t taken into consideration were two things…

1. Amazon dropped ALL of their affiliate base in the state of CA within days of the decision… putting thousands of small businesses OUT of business (increasing unemployment rates & increasing costs to the state).

2. 20,000+ Affiliate Companies like myself have been dropped from Merchants like Zappos.com, ShoeBuy.com, 6pm, etc. who no longer want to deal with CA publishers because of the hassles associated with collecting sales tax when a sale is referred by a publisher in the state of CA.

The passing of this bill will most definitely lower state revenue and increase unemployment rates. Any savvy affiliate company will simply move their corporation to Nexus free states like Nevada or other states that understand the importance of not biting the hand that feeds them.

A corporation pays corporate state tax on the amount of profit in a company at the end of their fiscal year. Well, if you lower profits of CA corporations by passing a law that causes merchants to fire us, the state loses BILLIONS of dollars in revenue in corporate state tax from companies that no longer have profit… not to mention the financial burden the state will  incur from increased unemployment costs.

So Jobs were lost, Merchants canned Publishers to avoid nexus which will increase unemployment & Publishers moved to nexus free states lowering CA state revenue on year end profits. Nice job Governor Brown.

2 Responses to “California Nexus Law – What is the impact on online business?”


  1. 1 Dennis July 22, 2011 at 7:51 pm

    Ouch… I’m 62 years old.. laid-off at age 59 after serving 20+ years with a company.. I barely survived as a 99er, and finally found hope with this online marketing, using amazon affiliate program as my main product resource… This nexus law really hurts…
    Plus..I just don’t get it… I feel it is fair for Californians to pay taxes when purchasing a product online and Amazon does collect sales taxes based on purchaser’s state sales tax laws.. but this law sounds like they expect Amazon ask a customer in Washington to pay sales tax for both Washington and California… that just seems ridiculous. But what do you expect… California is in such a hole they are trying to dream up new revenue resources… I’m surprised they haven’t tried to start a sales tax on labor or services…

  2. 2 inkgrabber July 26, 2011 at 4:37 am

    Although losing your job after 20 years is a shocker.. it’s a positive thing. It shows us that we can’t depend on others for stability and allows you to stretch your mind and excel in whatever you choose to pursue. It’s the next chapter of your life Dennis. Thank you for reading and best wishes my friend.


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