Overstock drops Web affiliates in fallout over NY sales tax law

On the heels of Amazon.com suing the State of New York over a new tax law aimed at online retailers, Overstock.com has cut its ties with New York affiliates, saying it will no longer do business with Web site owners in the state who get commissions for referring customers to its site.

Overstock.com is the first major e-tailer to take this step.

"We believe the law is unconstitutional and won't stand the test of the courts, but in the meantime we have been very careful to keep our footprint just in Utah," Jonathan Johnson, Overstock's Senior Vice President for Corporate Affairs told The New York Times. "We can't afford to have our New York affiliates up online if it subjects us to New York sales taxes."

The online giant Amazon.com Inc. has also said the law is unconstitutional and filed a complaint with the Supreme Court of the State of New York. The new law requires e-tailers based outside of New York to collect the state's sales and use taxes and send tax revenues to the state treasury. As part of the state's new budget, the law requires retailers from out-of-state to register as vendors with New York by June 1. Failing to do so could bring civil and criminal penalties.

"New York tax department officials have indicated that out-of-state retailers who refuse to register could face auditing and years of back taxes for any sales made to New York customers," Forbes.com reported.

Overstock's Johnson said the company wants to show the New York governor and legislature that the new law is bad for business and Overstock's 3,400 active and inactive New York affiliates will see their business go away. The state had hoped the new law would bring in $50 million a year.

For decades, New York and other states have required residents to pay use taxes on purchases made out of state for which no sales tax was collected. The question now is whether the vendors must collect those taxes. At stake is what constitutes a presence in a state.

Related Story:

  • Amazon cries foul: e-tailer sues New York State over sales tax law

    You may like these other stories...

    Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
    Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
    PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

    Already a member? log in here.

    Upcoming CPE Webinars

    Sep 9
    In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
    Sep 10
    Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
    Sep 11
    This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
    Sep 24
    In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.