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California's New E-Commerce Tax: A Fashion Blogger's Foe

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From Style Section L.A.

In case you haven't heard, online purchases are about to get pricier. Last Wednesday, Governor Jerry Brown signed off on legislation that taxes every on-line purchase made in California -- whether or not the web seller has a brick-and-mortar store in the state.

Before the law was passed, savvy shoppers could save sales tax by buying from websites that didn't have an actual store in California, as only those with a physical presence in the state were required to charge tax. For bigger spending sprees, those eight percentage points add up.

The new law is annoying to consumers, yes. But not completely unreasonable, either, seeing as how teachers are being laid off and I keep ruining tires because of apocalypse-sized asphalt craters.

It's the next part of all this that really sucks: affiliate purchases are now going to be taxed, too. Which means that out of state e-commerce sites such as Shopbop, Vivre.com and Net-a-Porter will begin paying sales tax on purchases made through their California-based affiliates. And fashion bloggers who get a cut of the action for referring readers to e-commerce sites through links placed on their blogs are about to see their incomes shrivel (in the spirit of full disclosure, this website doesn't generate revenue through affiliate programs).

Amazon.com, which owns Shopbop, has already shut down its affiliate program in California -- a move that affects 10,000 of California's 25,000 affiliate participants. And they're not the only ones. Overstock.com has cancelled their program in our state, too. While large digital fashion publisher Refinery 29, who has been offering a 10 percent sales commission to bloggers who promote their Reserve offerings of Groupon-esque clothing deals, has -- as of last Wednesday -- decided to offer store credit instead.

"This absolutely gives fashion bloggers a reason to leave [California]," says Patrick Kee, a digital media master who advises on marketing for Refinery 29 and founded Friendbuy, the affiliate engine that powers that site's Reserve program. Kee notes that while affiliate programs are usually only one small slice of a larger website's revenue pie, smaller fashion bloggers who make a good chunk of their living by linking outfits to shopping sites for commission may be screwed.

"It's a pretty big deal if you're a fashion blogger used to getting a check for $2,000 a month and now you're getting nothing." he said.

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