Looming Internet Sales Tax Prompts Amazon Threat to Cut Off Affiliates

California's pending legislation to collect sales tax from Amazon.com has prompted the online retailer to threaten cutting loose its affiliates. Now several retailers -- Barnes & Noble, Sears and Walmart -- are trying to get Amazon affiliates to jump ship and replace that revenue with links to other retailers, making it harder for consumers to find links to products on Amazon.

The issue of collecting internet sales tax from goods sold online is contentious, complicated and ongoing. Basically, most states don't require online-only retailers collect sales tax. Only retailers with a physical presence in that state do so. The states may require consumers to pay on their own, but few actually pursue it. So a retailer with stores across the country, like Sears, must collect state sales tax for online orders, while Amazon shoppers get off tax free, with a few exceptions.