Marketing Madness

California Affiliate Tax Repealed?

As you may know, just a few months ago, CA Governor Brown signed into a law an affiliate tax that had taxed purchases by any company with California affiliates. The immediate result had been the removal of tons of affiliates from companies like However, according to the Performance Marketing Association, Governor Brown has signed legislation that will repeal this law for the period of one year.

The Performance Marketing  Association’s Executive Director, Rebecca Madigan stated, “The signing of this legislation means these 25,000 web-based entrepreneurs will be able to get back in business. For the PMA, this issue has always been about keeping the vibrant Affiliate Marketing sector of the economy strong and growing.”

However, as Kevin Wallach has pointed out in his article about this subject, Amazon Takes Deal Screws Affils this isn’t really much of a deal, since this is only a yearly deal and really doesn’t provide any incentives for companies to continue working in California. In fact, if you read Kevin’s article he makes a very good point that this is just a law to help protect Amazon and as part of their original deal, they dropped their bid to repeal the law completely. What does this mean? In a year the affiliate tax will be back in place, and we’ll be no closer to helping California Affiliates.


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Pace Lattin

Pace Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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  1. Pace, I’d like to share some additional perspective.

    I’m not sure why people are surprised that Amazon made a decision that favored its own business. Why wouldn’t they? My personal theory is that Amazon’s ‘same-day delivery/local access’ strategy is now more important than their sales tax strategy. That is the only conceivable reason I can think of why they would expand their business in California, when it is notoriously anti-business and expensive. They’ve stated they’ll build multiple distribution centers throughout the state, meaning their products will now be theoretically within driving distance of the big population centers in the largest economy in the country. They would clearly have nexus with these centers, they will clearly have to start collecting sales tax. To further support my theory, a 1-year reprieve in sales tax collection is very brief, shorter than they negotiated in other states (4-5 years typically) and shorter than many big box retailers (Walmart has 10 year sales tax exemptions in some California cities); that makes me think they care less about sales tax collection than ever. I would look to see similar deals around the country, particularly in large population states (I bet Texas will be next).

    And I don’t think Amazon is lying about the centers. They’ve made similar deals and followed through in other states, no reason to think they’d stick their necks out so publicly then go back on their word. At the press conference when the deal was signed, Amazon said they’re investing $500mm and bringing 10k new jobs over the coming years. That’s a big commitment.

    Amazon also said they’re going to focus on getting a federal solution passed. At first I thought that was a bunch of spin, but I’ve changed my mind because Amazon doesn’t want to be the only e-tailer to collect sales tax, they’re going to want all their online competitors to collect as well. Can they do it in a year? I’m dubious, but if Walmart and Amazon are on the same side, IMHO that’s the only way it will get anywhere.

    Amazon has been the only e-tailer putting their money and efforts behind fighting the affiliate nexus tax around the country, and only Overstock has ever made any public opposition comments. I’ve been hearing rumblings from other e-tailers that they are mad at Amazon over this deal. Well where the heck where those e-tailers in this fight? Nowhere. Not a peep. We couldn’t get them to sign a single petition – not one e-tailer! They let the largest e-tailer in the world fight their battles. Shame on the other e-tailers for not engaging in their own destinies.

    Lastly (thank you Pace for the proverbial ‘ink’ for my comments), over this next year, we aren’t going to sit idly by and wait for this to repeat. The PMA will continue to lobby Sacramento aggressively, for a permanent repeal or an extension or a federal solution or some other approach. California was gunning after Amazon and they finally got them. Maybe they’ll give our industry a break this time.

    Rebecca Madigan
    Executive Director
    Performance Marketing Association

What's your opinion?

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