The Performance Marketing Association, Inc., Says Amazon Deal Gives California Affiliate Marketers a One-Year Reprieve, But then What?

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Amazon tax deal reached in California, but the agreement remains disappointing to the 25,000 small online businesses whose incomes were devastated when the affiliate nexus tax first passed in June.

The Performance Marketing Association, Inc. announced a legislative agreement has been reached that will repeal the Affiliate Nexus Tax (aka the ‘Amazon Tax’) until 2012 while parties seek a federal sales tax solution.

Rebecca Madigan, executive director of the Performance Marketing Association, Inc. (PMA), stated, “To be clear, this is not an equitable solution for all businesses in the state. It is, in fact, very disappointing to the 25,000 small online businesses whose incomes were devastated when the affiliate nexus tax first passed in June.”

PMA continues to contend, the very premise of the law was flawed in June and it remains flawed now. It will not compel any other out-of-state retailers to collect sales tax in California in 2011, 2012 or beyond. It simply equates putting California’s economic engine at a further disadvantage as these 25,000 affiliate marketing businesses further erode.

As recent PMA survey results confirmed; when the affiliate nexus tax passed in June, it immediately devastated the income of these small California companies, forcing them to make tough business decisions such as closing their doors, laying employees off, or moving out-of-state. The survey uncovered some dire outcomes for these businesses: 37% lost over half their income; 22% closed their affiliate businesses; almost 32% have moved or are planning to move out of state.

“This new deal unfortunately will not change those realities, it will only give these 25,000 businesses a year to decide if they can afford to stay in business or if another state looks more inviting,” Madigan continued.

Madigan concluded, “While we agree that federally driven sales tax reform is needed, it doesn’t seem readily viable. And, I’m certainly not confident that it will develop in time to keep these Affiliates in business.”

The Performance Marketing Association (PMA) is the national trade association representing affiliate marketers. The not-for-profit trade association was founded in 2008 by the leaders of the performance marketing industry. The PMA gives performance marketers a unified voice to address issues and challenges facing the industry, such as the ‘nexus tax’ proposed in some states.

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Shelly Sullivan

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