Seeking Nexus California Only Hurts Itself

California, the state known for its innovation and commitment to start ups, stands on the edge of a massive change to its business landscape. In the pursuit tax dollars, the California Senate recently passed SB 234, a bill that if passed by the State Assembly and signed by Governor Jerry Brown, will create a broad mandate to establish nexus. Establishing nexus will then require that any individual or business who falls under its terms to collect sales tax at the point of purchase.

In the past, ReveNews has covered both the pursuit and the results of similar “Amazon taxes” in other states. However, unlike other states that specifically target affiliate marketers, the California bill as written can be interpreted to apply nexus to a wide range of professionals and industries beyond affiliates. Keith Posehn outlines in detail the history of the bill and his recent efforts in conjunction with the Performance Marketing Association (PMA) to lobby against its passage. So, even if you aren’t a traditional affiliate marketer, how does SB 234 and the California State Assembly-versions AB 153 and AB 155 impact California in general?

California is home to 25,000 affiliate marketers. Those businesses pay state income tax. According the 25000businessesatrisk.com (a site supported by the PMA) those businesses contribute $124 million in income tax. Given California’s current budget situation, if those affiliate marketers move out of state so they can maintain their businesses, California’s financial woes will only increase.

In addition, Posehn has helpfully outlined the other ways that the law will impact individuals beyond affiliates:

  • If you are a company that in any way makes a commission or markets on behalf of another company as your monetization, you are in danger.
  • If you are a contractor, web host of some kind or other service provider that is even peripherally facilitating the sale of a product in any fashion, you are in danger of out-of-state retailers canceling their contracts. This could include web design, web hosting (including out-of-state hosts with a server in California), coding, mobile apps, you name it.
  • If you have any manner of advertising for out-of-state retailers, they will likely cancel any budget with you as advertising online itself could qualify as nexus.

If you live in California, there are several avenues you can pursue to speak out against the California’s effort to pass and implement nexus legislation.

If you know anyone in the VC or start up communities in California, I encourage you to contact them and encourage them to get involved. Adding their voices to the fight will help reinforce just how broadly this bill will impact California residents and businesses as a whole. When Walmart, Best Buy, and Target are key supporters of a bill that proponents tout will help “Main Street,” one has to wonder who exactly benefits.

About Britt Raybould

Britt Raybould has a passion for telling stories and she specializes in helping companies figure out how to tell their own stories. Through her firm, Write Bold, she shows companies how storytelling can define them, both to their customers and within their industry. When she remembers to, Britt blogs on her personal sites at bold-words.com and brittraybould.com. You can find Britt on Twitter @britter.

Twitter: britter

3 Responses to Seeking Nexus California Only Hurts Itself

  1. Keith Posehn says:

    Britt, thank you so much for helping get the word out! :)

  2. nexus is a very bad idea,

  3. [...] Britt Raybould reported May 26 that California is in the midst of deciding on legislation that, if passed, “will create a [...]

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