Amazon Affiliates and Taxes

Last week I had my 15 seconds of almost fame. I’ve been an Amazon Affiliate for years. When I got mTweet!y email from Amazon that they were closing my account because of the sales tax law passed by California. For some reason my name got passed to a couple journalists as a spokesperson for the 10,000 or so affiliates who had their business shut down without recourse.

So while I was up on a ridge above Loleta watching my daughter rider her mustang I did a phone interview with a writer from SF Weekly. I tried to steer him to someone who had actually made some good money and so had more at stake, but I guess they couldn’t connect.

A couple days later I was interviewed by a reporter from the Eureka Times-Standard. Again, I tried to slough her off to someone else. But she was persistent so there I am again. I guess it shows how easy it is to get noticed using the right keywords in social media posts, especially if the topic is newsy.

Although I hadn’t made much money from my affiliate program, I know others who have made thousands and will now be forced to find alternatives. These folks generate income by adding value floating on top of the Amazon retail river. Since Amazon cut them off, the State of California will not gain any income from their sales tax. In fact, big players in this realm will simply move or move their “official” address to another state, thus reducing the revenue in income tax for the State as well. This is a fine example of unintended consequences of what seems like a sensible action. I understand the State needs revenue, and don’t mind paying sales tax. But this was clearly not the way to go about it.

This actually does hurt me more than I let on as I have been working on a number of personal web projects where the Amazon Affiliate program would have played a part in building sustainable revenue. I guess I will have to rethink that part of  my plan. I’ve also been looking longingly at property in the state of Washington.

If you have a story to share about your Amazon Affiliate program, I’d love to read it. Put it in the comments!

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4 comments for “Amazon Affiliates and Taxes

  1. 7/11/2011 at 5:42 pm

    Ah, just another reason why we knew it was time to pack up and leave. Stupid Brown . . . bad move Moonbeam.

  2. Bob Doran
    7/11/2011 at 8:24 pm

    Here’s the missing part of this story: The state says Amazon terminating its affiliates programs does not mean they have no presence in Calif. and thus won’t have to collect sales taxes. And we know that the formerly uncollected tax revenue will far outweigh loss of income from a few online businesses that got pocket change for helping sell Amazon products. Threatening to pull out of the state worked during Arnold’s term, but Jerry would not back down. Now it looks like Amazon is going the referendum route to try to change the law.

  3. Steven
    7/12/2011 at 8:11 am

    The Amazon affiliate program is a great opportunity which actually pays quite well. It’s a shame that California small businesses are caught in the crossfire between these two big behemoths trying to one-up each other (Amazon and State of California).

    I think Amazon and California are both cutting off their nose to spite their face on this one.

  4. 8/14/2011 at 8:12 am

    Late to the game on this post, but losing my affiliate status bugged me and effected my income (though not by much). It was a dumb move by Brown, and while I understand why Amazon did it, I think it would’ve been better for Amazon to just leave everything in place and fight it instead of cutting everyone off.

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