Amazon and Overstock sever ties with affiliates in the state to avoid taxing their customers.
California’s new online sales tax, signed into law last week, allows the collection of tax from online retailers that have affiliates in the state. In reaction to this, Amazon and Overstock have both announced they are ending relationships with their California affiliates to avoid having to collect the tax from customers. Bill Dombrowski, a spokesman for the California Retailers Association, said:
In California, out-of-state online retailers basically had a 10 percent price advantage every day of the year. This is nothing more than some companies trying to get a competitive advantage through a tax loophole, and now we have closed it.
Amazon has already severed ties with affiliates in other states, including Illinois and Connecticut, after similar online sales tax legislation was passed, and is challenging a New York law in court.
[via Mercury News]