IMPORTANT UPDATE: 5/31 Overstock Files Suit Against New York!

Complete Coverage of the New York Affiliate Tax Issues Here

Yesterday Overstock released a press release regarding their reason for dropping 3,400 affiliates over the New York, affiliate-driven sales tax issue.

Check out the Overstock Press Release headline! Overstock.com Says ‘Yes’ to New York Consumers, ‘No’ to New York’s New Internet Sales Tax

NO Overstock, you didn’t say ‘Yes’ to New York Consumers – get real! You said YES to your own bottom line! And hurt the bottom line of over 3,400 affiliates in the process.

NO Overstock, you didn’t say NO to the state of New York, you said NO to over 3,400 affiliates who WERE your partners – who WERE helping your bottom line! You threw them under the bus for the all mighty dollar. In case you didn’t know – affiliate marketing is a relationship business!

Overstock, you just killed off a lot more relationships and reputation than you realize! I suspect lots of affiliates across the country will drop your affiliate program in protest.

(NOTE: Be sure to see several other important issues, including how to get involved in fighting the New York tax law, toward the bottom of this post.)

Here are some snippets from the Overstock PR job.

SALT LAKE CITY, May 15 /PRNewswire-FirstCall/ — Overstock.com, Inc. (Nasdaq: OSTK) announced today that it has notified its more than 3,400 New York-based affiliate advertisers that as of June 1, 2008 they can no longer provide advertising for Overstock.com until either New York changes its controversial new internet consumer tax law or the courts say the law is unenforceable. On June 1, the controversial new law will require internet retailers to turn off their New York-based ad partners or collect an up to 9.5% sales tax from all New York internet customers.

“We love New York,” said Patrick Byrne, Overstock.com’s chairman and chief executive officer, “but New York’s new tax law required us to choose between New York customers and New York ad businesses. In the end, we chose our customers.”

Now an interesting question that’s been brewing in the affiliate marketing blogoshere is: Will canning NY affiliates even help Overstock evade this tax?

Adam Viener at WiseAff asks: Will Overstock have to Close or Move their Affiliate Program? “But wait, Overstock’s entire affiliate program is with Linkshare, a New York based company, and Linkshare earns a percentage of EVERY OVERSTOCK AFFILIATE TRANSACTION!!! So based on this, it would appear that Overstock would still be liable for the 9.5% sales tax from, as would every Linkshare merchant.”

In contrast to Overstock’s knee jerk decision to terminate New York affiliates, Amazon, who is fighting the law, took this stance and is standing by their affiliate partners. “Nothing is changing with regard to Amazon’s relationships with Affiliates in New York state. We expect to begin collecting sales tax (as the new legislation requires) no later than June 1, 2008. This, according to the New Your Times article: Overstock.com Throws New York Affiliates Overboard to Avoid Sales Tax

GET INVOLVED – HELP STOP THIS TAX in it’s TRACKS!

This new New York tax law, if allowed to go unchallenged, will surely be adopted by other states. I reported yesterday, California and other states are already considering it. If you are not a New York affiliate, please don’t sit back thinking this problem does not affect you. It could affect the entire industry. If you want to get involved in somehow lobbying against this law here is an option.

Peter Bordes from MediaTrust is talking to the IAB today to see if there is any way they can help us in this fight. “We at MediaTrust have reached out to the IAB to see what actions are suggested. If you would like to work together as a collective on this issue, please contact MediaTrust thru the following email: affiliatepetition AT gmail.com

In case you haven’t been following, here are previous blogs I’ve written on this important issue.

Warning – California May Copy NY’s Amazon Affiliate Tax Law

Amazon Sues New York State Over Affiliate Related Sales Tax

Overstock Fires New York Affiliates Over New Tax Law

Affiliate Driven Sales Tax Issue Heats Up

RELATED UPDATE – 12:05: Shareasale, so far, to my knowledge, is the only network that has made a public policy statement about New York affiliates and how this tax issue will be handled. Brian blogged today regarding how affiliate privacy issues will be balanced with getting merchants the information they need to comply with the New York law:
Shareasale – NY State and the “Affiliate Sales Tax” Law

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