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 â€œAmazon taxesâ€ 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 arenâ€™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 Californiaâ€™s current budget situation, if those affiliate marketers move out of state so they can maintain their businesses, Californiaâ€™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 Californiaâ€™s effort to pass and implement nexus legislation.
- Go to 25000businessatrisk.com to access links for contacting your legislator, connecting with other members of the coalition, or to share information with friends and family.
- Join the California Google Group.
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 â€œMain Street,â€ one has to wonder who exactly benefits.