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Edition: U.S. Article Comments (2) Follow Reuters Facebook Twitter RSS YouTube Read Violence flares before key Greek austerity vote | 29 Jun 2011 UPDATE 1-Los Alamos scurries to protect nuclear lab from fire 28 Jun 2011 Looking for answers, Casey Anthony's father bought gun 29 Jun 2011 WRAPUP 8-Obama call for stimulus may complicate debt talks 29 Jun 2011 Euro extends gains, cheered by Greek vote 29 Jun 2011 Discussed 221 Biden deficit-cut talks hit impasse: Rep. Cantor 114 Fragile economy pushed Obama to tap oil reserves 97 Top Republicans insist no taxes in debt deal Watched Austerity vote passed amid violent Greek protests Wed, Jun 29 2011 A Tokyo-Paris flight in under three hours on the horizon Fri, Jun 24 2011 New report delves into the costs of war Wed, Jun 29 2011 Amazon protests California Web-sales tax plan Tweet Share this Email Print Related News Obama call for stimulus may complicate debt talks Wed, Jun 29 2011 Small Web firms caught in "Amazon tax" fight Wed, Jun 29 2011 Tax standoff blocks progress in debt talks Tue, Jun 28 2011 California governor, Democrats OK budget deal Mon, Jun 27 2011 Republicans walk out of budget talks over taxes Thu, Jun 23 2011 Analysis & Opinion Tax delinquencies and the economic downturn Green shoots? Related Topics Technology » Money » Media » A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008. Credit: Reuters/Rick Wilking NEW YORK | Wed Jun 29, 2011 8:08pm EDT NEW YORK (Reuters) - Amazon.com Inc warned its 10,000-plus California sales affiliates on Wednesday that it may be forced to sever ties with them should the state begin taxing their online sales. The wealthiest U.S. state became the latest -- on the heels of Illinois and Connecticut -- to be dropped by Amazon from its nationwide sales-affiliate program, which relies on in-state websites to drive its own online business. Its affiliates, paid a fee when they funnel traffic to Amazon that results in a sale, have found themselves in the middle of a battle between Amazon and several states that argue the online retailer has a duty to collect sales taxes when those affiliates operate within their state. Amazon counters that such taxes spur job and income losses. On Tuesday, California's legislature passed a budget that incorporates such an online sales tax and on Wednesday, Governor Jerry Brown signed the relevant bill. "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," Amazon said in an email sent to Californian affiliates Wednesday. "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." Analysts say Amazon could cut its partnership with affiliates in more U.S. states that require the online retailer to collect sales taxes. Many traditional chains such as Best Buy and Sears have openly voiced concerns about online-only retailers gaining an unfair advantage by avoiding sales taxes in states where they do not maintain a corporate presence. Lawmakers in states -- many facing huge budget deficits -- say Amazon and other online retailers such as Overstock.com have a duty to collect tax because its affiliates operate locally. Amazon has already announced plans to cancel its affiliate program in Illinois in response to the state's new law to target online retailers. Texas is considering taxing online sales as well. (Reporting by Alistair Barr; Writing by Eddie Chan; Editing by Lisa Shumaker) Technology Money Media Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (2) drizzt134 wrote: This is a big opportunity for smaller states to take business away from these big, old and inefficient states. I guarantee you, the first state to say they will not tax online sales at all costs will get 10000 new Amazon affiliates (and probably more). If there is anyone that is still wondering why California is going broke, this is the prime example of why. Businesses don’t like to be taxed. Why should business pay for financial mistakes lawmakers and local government make. They want to spend billions of dollars for non-sense project, then turn back and look at the businesses to fill the hole they created in the budget with taxes. I wonder if any of California lawmakers ever heard of a term called sustainability. Looks like they will only be satisfied when all the businesses leave California. PS. I left California and moved to another state due to taxes myself. I am living a very comfortable life with the +5% income I gained for not paying California income taxes. Good luck to California but it looks like the end of the road for them. Jun 30, 2011 1:52am EDT -- Report as abuse ZorekR wrote: Way to go California. Tax away your jobs and business opportunities. The power to tax is the power to destroy. Jun 30, 2011 1:55am EDT -- Report as abuse See All Comments » Add Your Comment Social Stream (What's this?) © Copyright 2011 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Reader Feedback Mobile Newsletters RSS Podcasts Widgets Your View Analyst Research Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts Venture Capital Journal International Financing Review Project Finance International PEhub.com PE Week FindLaw Super Lawyers Attorney Rating Service Reuters on Facebook Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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