Overstock cuts its NY affiliates due to tax law

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In response to New York's recently enacted “Amazon tax” law for e-commerce firms operating within the state, discount retailer Overstock.com has notified more than 3,400 New York-based affili­ate advertisers that their relation­ship will end as of June 1, when the law goes into effect.

“We hope this termination period will only be temporary,” said Jonathan Johnson, SVPof corporate affairs at Overstock.com. “We think that the New York law is unconstitutional and we think that lawmakers have made a mistake that is hurting small businesses in New York.”

The New York State law, approved last month, will require out-of-state online retailers to begin collecting sales taxes on purchases shipped to New York addresses, meaning that Amazon.com and Overstock, each of which has no employees or operations in New York, will be required to collect state taxes because several of its affiliates are based in the state.

Amazon is challenging the law in New York state court. Overstock may join Amazon or begin its own court battle, Johnson said. If the law is dismissed, Overstock will reestablish its relationships with all of its New York-based affiliates. The retailer believes that if it cuts out its affiliate advertisers based in the state, it will avoid charging customers sales tax.

“When it came down to choos­ing between our customers and our affiliates, it was an easy choice,” said Johnson.

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