
What happened? It's a complicated story, but I'll try to boil it down here:
I was enrolled in affiliate programs for Amazon.com and Cabela's. What that meant was if you clicked on any of my Cabela's or Amazon links or widgets and bought something - anything - I got a commission on that sale.
It wasn't huge income for me, but it was for some bloggers. And personally, I'll take anything I can get for the enormous investment of time I put into this blog.
But both programs cut me off yesterday because of something California put in its new state budget.
If you do much shopping online, you may have noticed that some online retailers don't collect sales tax on your purchases. The reason is this: A 1992 U.S. Supreme Court decision - Quill v. North Dakota - said that states can't force remote retailers (back then, this meant mail-order companies) to collect sales tax on purchases unless those retailers have a physical presence in those states. This principle is referred to as nexus.
The reason for the decision is that there are something like 30,000 distinct sales taxes in the United States. Most states have one, and sometimes counties and cities slap on an additional sales tax. The Supreme Court basically said it was too much of a burden on retailers to force them to collect taxes for all 30,000 taxing entities.
Instead, states have had to rely on their residents to voluntarily disclose the amounts they spent on goods that weren't taxed by retailers, and pay taxes on those amounts. And - you guessed it - most individuals ignore that requirement. That means states are losing out on substantial amounts of tax revenue.
So, how did California screw me?
To pass a sorta balanced budget, the Legislature declared that online retailers' affiliates - people like me - constitute nexus, a company's physical presence in our state, and therefore all retailers with affiliates in California must collect sales tax on purchases by Californians.
This is, in all likelihood, unconstitutional, but Amazon and Cabela's didn't sit around waiting for a favorable court decision; they said, "Screw that," and promptly fired all of us. They didn't even wait for the new law to take effect at midnight tonight - they cut us off yesterday.
Before I logged off last night, I noticed blank spots where I'd had Cabela's ads. Meanwhile, all the Amazon links were still there, which meant Amazon was still making money off of me, despite the fact that I could no longer make money off of Amazon.
Nice, eh? Yeah, I've already started stripping out the Amazon links.
Here's the funny part: I've paid income taxes on my Amazon and Cabela's income, so California has now lost that income tax revenue. Brilliant, eh? And yes, the Legislature KNEW this would happen because Amazon made it clear (and Amazon has done this in other states that have passed similar laws).
Fortunately for me, Cabela's and Amazon aren't the only affiliate programs out there. There are others that actually have a physical presence in this state, so they aren't butt-hurt about the new California law - they're already collecting sales taxes here.
The only question is whether my readers will patronize them the way they have Cabela's and Amazon.
© Holly A. Heyser 2011