On Friday the Governor of California, Jerry Brown, signed AB 155 — “a statute that repeals the Affiliate Nexus Tax law for one year” [source]. I tweeted about it on Friday, and also retweeted the news on Sunday, receiving an immediate question (a very good question): So what’s next?
Well, let’s rewind things back 3 months, and look at the whole chronology:
- On July 29, 2011 Governor Brown signed “the online sales tax law, AB 28 1x” the essence of which was “to seek to force online retailers who have no physical presence in California”, but receiving sales’ referrals from California-based online affiliates, to collect sales tax [more in this Los Angeles Time article].
- The expected aftermath immediately followed, and tens of thousands of California affiliates were terminated from multiple affiliate programs including, but not limited to, Amazon’s Associates Program (as well as affiliate program is its subsidiaries Audible.com, Endless.com, Zappos.com, 6pm.com, etc) and Overstock.com’s affiliate program [more here].
- Performance Marketing Association, as well as Amazon, start working on changing things. On July 11 Amazon filed a petition for a referendum in California seeking 500,000 signatures of California voters to repeal the new law [more at TheStreet.com].
- In the meantime, some continued to misportray who affiliates actually are, and how/why they make their money [more here].
- On September 8, 2011 Amazon.com cut “a tentative deal with legislative leaders … that would allow it to postpone collecting sales taxes from Californians for another year”. Everyone looked towards Governor Brown “whether he would support the deal” [more in Los Angeles Times].
- On September 23 Gov. Brown signed the above-quoted bill AB 155 into law, giving “25,000 web-based entrepreneurs” hope “to get back in business” [more here] while everyone works with Congress on a federal level solution, also known as the Main Street Fairness Act, by July 2012.
- If the federal legislation is not in place “by July 2012, the original terms of ABX1 28 will be reinstated” [more at Blog.FedTax.net and at ReveNews.com]
As mentioned in an interview I had in the Spring of this year — when asked how I “think the tax legislation will play out” — “I believe we’ll continue seeing new affiliate nexus bills proposed nationwide (most states still face bad budget shortfalls), affiliate marketers fighting for their jobs (winning some battles, and losing others), and only a carefully weighed federal solution can put a period in the sentence”.