Shortly after California governor Jerry Brown signed the budget which includes the affiliate nexus tax, Amazon affiliates in that state received the following email from Amazon:

Hello,
For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

Affiliates in the following states are now affected by the affiliate nexus tax:

1. California
2. Colorado
3. Illinois
4. North Carolina
5. Rhode Island
6. Connecticut

The Performance Marketing Association advises California publishers and out-of-state advertisers to consult a tax or legal professional regarding this issue.

Are you a California publisher? Thoughts? Comments? What are your plans?

Comments, questions or suggestions? Please leave a comment below!

Cheers,

Hot on the heels of announcing that they would join the lineup of Internet merchants dumping their affiliates in California, Hawaii, North Carolina and Rhode Island – states that plan to tax Internet referals – Overstock reversed its decision to drop its California-based affiliate advertisers following an assurance from Governor Arnold Schwarzenegger’s Office that his rejection of the affiliate nexus tax bill will stand.

Overstock.com’s Chairman and CEO, Patrick Byrne responded “I compliment Governor Schwarzenegger on getting it right” and assured the Governor that it would turn back on the advertising feeds from its California-based affiliate advertisers.

I can only hope that Hawaii, North Carolina and Rhode Island will see the negative impact of their anti-consumer, anti-business legislation and choose not to sign it into law – especially in a down economy!

Have you had your affiliate feed turned off? Please share your story…