Overstock Cuts Off NY Affiliates Over NY's Amazon Sales Tax Law

from the nice-work,-New-York dept

Thu, May 15th 2008 11:31am — Mike Masnick

Last month we wrote about how New York was changing a law to try to force Amazon to collect and pay sales tax in New York by defining any affiliate in the state as being an Amazon point of presence. This is a clear perversion of the intention of the law that only requires collecting sales tax if the company has a physical presence in the state. While Amazon is now fighting this law in court, others are taking more drastic measures. E-commerce site Overstock.com has declared that it will no longer allow New York affiliates in order to avoid having the state consider it to have a "physical presence" there. This would be an unintended consequence of such a law. In an effort to get e-commerce providers to cough up more in taxes, not only will Overstock not be paying those taxes, it just made life a lot more difficult for thousands of Overstock affiliates in New York.

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Filed Under: affiliates, new york, sales tax
Companies: amazon, overstock

23 Comments

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Anonymous Coward, 15 May 2008 @ 12:02pm

This sort of action pleases me greatly.

States think they can unfairly bilk people on sales taxes like this and that it will reward them in the end. The truth is that people will simply stop buying things and they'll dick the economy over in the long run.

Right now, I buy everything I can over the internet. I use Amazon's premier service (I buy a LOT of stuff from them - probably $15k per year just from Amazon alone).

If I had to start paying taxes on everything I bought? I would simply stop buying things. Period. I would wait until I visited my home town of Portland Oregon and buy everything tax free and in person.
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Haywood, 15 May 2008 @ 12:19pm

Re: +infinity
Now they can lose the property tax those affiliates would have payed, along with the jobs they would provide. The people who would have worked those jobs would have paid taxes as well. Way to go NY lose lose situation. Grabbing defeat out of the jaws of victory.
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JB, 15 May 2008 @ 12:20pm

Money Swirls Around the Economy
New York will lose income taxes due to reduced income for these affiliates.

Taken to the extreme, these affiliates spend their income in the state, and now other NY businesses will have reduced revenue, so those businesses and their employees will also pay less income tax to the state.

End result: the state will STILL collect no sales tax on Overstock purchases, but they also cut their income tax receipts as well.
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Anonymous Coward, 15 May 2008 @ 12:30pm

New York is the new Florida
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JL, 15 May 2008 @ 12:45pm

Re: New Florida?
I thought Florida is where New Yorkers (City) went to die?
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Gary, 15 May 2008 @ 12:45pm

I spent the first 30 years of my life in New York.

I moved out of New York in large part due to the dysfunctional nature of the state government.
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Bah who needs one, 15 May 2008 @ 12:50pm

Those ex-affiliates will even be paying less NY sales tax, having less money and therefore presumably buying less goods within the state.
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Katrenavantassle, 15 May 2008 @ 1:03pm

Overstock vs New York
Is the dysfunctional state government why all the New Yorker's came to Charleston SC???
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Anonymous Coward, 15 May 2008 @ 1:11pm

Same here
In Santa Cruz they over tax businesses so all the businesses left. Now Santa Cruz is broke and everyone that lives here has to drive to the Bay Area to work. Not very smart.
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Anonymous Coward, 15 May 2008 @ 1:22pm

is "payed/paid" the new "loose/lose"?

Outside a couple decent online camera shops, NY seems to be filled with a lot of online grey market scammers and bait and switchers.

Loosing (see what I did there?) NY affiliates might actually be a positive thing.
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TSO, 15 May 2008 @ 1:47pm

Re:
> If I had to start paying taxes on everything I bought? I would simply stop buying things.

Bad news for you: you have to. http://en.wikipedia.org/wiki/Use_tax
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Anonymous Coward, 15 May 2008 @ 2:01pm

What about every online store that originates in New York, like B&H Photo? If I, being in the dry heat of Arizona purchase online directly from B&H will I be force to pay the tax? If so I guess I'll find a none New York store to by from!
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Anonymous Coward, 15 May 2008 @ 2:47pm

EXACTLY how youa re supposed to do it
Good job Overstock. Bravo.

Now if only people would do that to the music/movie companies represented by the RIAA/MPAA...
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wasnt me, 15 May 2008 @ 3:49pm

good job overstock, maybe amazon should do the same.
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Josh, 16 May 2008 @ 8:12am

Now its Amazon's turn
I'd like to see Amazon speculate on doing the same thing. Or better yet, speculate on having to stop all deliveries in NY because of that law. You'd get all the customers in NY complaining, plus affiliates, plus other companies like UPS and FedEx that make a bundle shipping the products.
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somedude, 16 May 2008 @ 3:55pm

i'd pay to see amazon.com announce they were no longer shipping products to new york.
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Jason Forthofer, 21 May 2008 @ 9:20am

Another angle to this law
Another angle on this law. It's actually the network that pays the affiliate (in most cases). It's the network, not the merchant that sends the W-2. Can this new law only apply to the affiliate networks based in New York, like Linkshare? Essentially, merchantes pay the network, not the affiliate.
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Bucknutty, 4 Jun 2008 @ 5:28pm

God I hate New York. We get creamed on sales taxes, property taxes, income taxes and gasoline taxes. We pay the highest fees for bridges and tunnels and forget about parking a car unless your willing to shell out $50 a day. Now we can't buy online without NY taking a cut. All that tax money to pay a corrupt and dysfunctional state government. It really sucks
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I hate NY, 3 Jul 2008 @ 10:37am

Re:
do you mean it's the new nations wang?
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Mike Lau, 12 Jul 2008 @ 10:08am

Change Address
Can we change address in our profile and be allowed back in?

Any help is appreciated.

Thanks,
Mike
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barry, 22 Jul 2008 @ 5:10am

OVERSTOCK SAYS NY STATE IS BACKING DOWN
According to their most recent earnings report, they said that NY state will reverse themselves since it will cost them so much to fight it in court. You can read the entire transcript here with the link going directly to the part of interest:

http://seekingalpha.com/article/85766-overstock-com-inc-q2-2008-earnings-call-transcrip t?page=-1&find=new+york
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barry, 27 Jul 2008 @ 1:04am

NEW DEVELOPMENT! NY MAY REPEAL THIS TAX LAW!
There have been some new developments in this on going issue. NY state maybe backing down according to this new Seeking Alpha article:

http://seekingalpha.com/article/86766-amazon-overstock-gamble-may-pay-off
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kidknight7, 2 Aug 2010 @ 6:34pm

Amazon vs. the States
I heard about this on the news only that it was in a state out west. I think Colorado, Amazon was up in arems about being taxed by a state and suspended the payments to affiliates registered there in order to avoid paying a tax. In the future it will be forthcoming. "New York Tours"
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