Amazon has threatened to cut ties with 10,000 Californian advertising affiliates if state laws proceed to demand the collection of taxes on items sold to residents.
The online sales giant has threatened to abandon deals it has with Californian advertisers which get a sum of money for sales of items from Amazon advertised through their sites, stating that such a law would be unconstitutional as the firm has no physical presence in the state itself.
The ultimatum by Amazon means that many jobs could be in jeopardy should it go through with its threat.
“If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon ‘Associates Program’,” said Paul Misener, Amazon’s vice-president for Global Public Policy, in a letter to the Californian Board of Equalization.
A number of cash-strapped states have already demanded that firms such as Amazon collect taxes, just as other business which are within their jurisdiction are forced to do.
As the advertising affiliates are based in the state, authorities such as in North Carolina, Rhode Island and Colorado have in the past attempted to draw cash from sales made by customers accessing adverts on affiliates sites.
This has seen Amazon fight a number of battles across the US, citing a 1992 Supreme Court ruling that companies should not in fact be forced collect state sales taxes if they are not, as is Seattle-based Amazon’s case, physically represented in that area.
One of the main concerns that have been raised over attempts to demand sales tax revenues is that when the authorities get their way, jobs and income are in some cases lost, meaning that there is “little, if any new tax revenue” according to Misener, making the legislation potentially counterproductive.
In response to the letter, Senator George Runner highlighted the impact that such a move could have on the Californian jobs in the online sales sector.
“In no uncertain terms, Amazon has made it clear to me that the checks they send Californians will be cut off overnight if pending legislation aimed at regulating their operations becomes law,” said Mr. Runner.
“This is an imminent threat to California jobs. Lawmakers would do well to pay attention.”