Commission Junction Responds To California’s New Nexus Law
Commission Junction responded today on the heels of California passage the Affiliate Nexus Tax. Kerri Pollard, President of Commission Junction, one of the world’s largest and highest regarded affiliate networks provided the following statement which was provided to us by Ashley DeVan, Director of Marketing for Commission Junction. In the statement Kerri expresses her disappointment at the lack of understanding and foresight by the California Legislature and Governor Jerry Brown as to the impact this tax will have on small businesses in their state.
With clients on both sides, we are not opposed to the collection of sales tax. We are disappointed in California’s shortsighted approach to solving their budget crisis. Using small businesses engaged in the act of online advertising (aka, affiliates) as Nexus justification for non-California based, Internet retailers harms all parties involved -the internet retailers, California small businesses/affiliates, and the state government.
As demonstrated in other states, many Internet retailers terminate affiliate relationships to avoid nexus. As a result, incremental sales tax is not generated since Nexus has been avoided. The impact is that the affiliate pays less in-state taxes (due to less income) and worst case, may be forced to close their doors due to the severed relationship with the Internet retailer. As a result of this bill, California will likely recognize higher unemployment – not additional funds.
The California budget may appear balanced on a paper, but it’s not.