A lot has been blogged, twittered, and message-boarded about California AB178, dubbed the "affiliate tax bill". I think there's a lot of panic going on. While I agree in general that this is bad for affiliate marketing, and hopefully will be defeated, I don't think the implications are that dire.

In the New York State example, merchants chose to drop their New York-based affiliates, rather than pass sales tax to their customers. That effectively caused some affiliates to lose a lot of income (or declare residency in another state).

But assessing sales tax online is a trend that will continue throughout every state. Merchants like Amazon.com will eventually have to deal with it, instead of trying to run away from it. New York is but one state. And, California is a whale of state, where the lion's share of affiliate marketers reside. Can we truly expect Amazon.com to drop its relationship with tens of thousands, or hundreds of thousands, of affiliate marketers in one fell swoop?

And the tide keeps on rolling, because other states are currently considering the same law. Is that to say that Amazon.com is going to pull the plug on its affiliate program across the entire USA?

I doubt it.

Second, this California bill applies only to sales of tangible goods. These are things that you can feel and touch, like shoes, books, gadgets. This law does not apply to the sales of intangible goods, such as subscriptions, professional services, memberships. Those of us marketing dating sites, real estate services, credit cards, web hosting, paid content, etc., won't notice a thing.

Third, the law only applies to the sales of these tangible goods. It does not apply to lead generation.

Fourth, the law only applies to tangible goods that are subject to sales tax. Each state has a list of goods that are exempt from sales tax. Often times, food is included in this list, as are healthcare items.

It's not the end of the world for publishers.

Affiliate marketers are always adapting to changes with Google, so why should this really be any different? This is only going to separate the men from the boys. So which one are you?  ✓