Overstock.com Terminates All NY Affiliates

So they terminated all NY affiliates.

What big Punks.

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HardwareGeeks.com

My Trust in ShareaSale has gone *POOF* (add this to your sig to protest)

Do you have the email or something? Can't believe merchants are doing this, crazy.

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Yahoo Pro Football Pickem' 2009 - Details

Crazy if true.

How about the terminate some of those weekly weekend coupons and weekly weekend coupon corrections.

*ick*

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The Truth About Affiliate Marketing|Affiliate Marketing How To

Affiliate Marketing: Trust No One, Not Even Your Momma

Dear Affiliate,
Unfortunately, at this time we are discontinuing our relationship with all New York based affiliates. We hope this is a temporary situation and that we will be able to resume the relationship in the future. Please see the attached document for details.
<<NY Affiliates.pdf>>
Thank you,
Ryan Sorensen
Affiliate Program Manager
Overstock.com
801-947-3228
rsorensen@overstock.com

can someone add PDF to the permitted upload file types.

I even *****ed about it on my site.
http://www.hardwaregeeks.com/index....id_of_new_york/

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HardwareGeeks.com

My Trust in ShareaSale has gone *POOF* (add this to your sig to protest)

Moderator Note: I've updated the title of the thread.

It's disappointing to see this happening, although hopefully it'll prompt many NY affiliates to take a more vocal stand with their state legislators and governor.

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Michael Coley ABestWeb.com Admin and Amazing-Bargains.com Founder

Merchant Training 101:NEW! NY Tax Solution | Get The Most Out of ABW | Merchant Best Practices Forum | Affiliate Friendly Policies | A Practical Guide to Affiliate Marketing book | Couponing Tips | How Adware Works | My Opinion of CPA Networks

Dear Affiliate:

As many of you may be aware, the State of New York recently enacted legistation (Cahapter 57 of the Laws of 2008) amending New York Tax Law in an attempt to force certain sellers to collect sales tax on all sales to residents of the State of New York. The recently enacted legislation tries to define any seller that enters into an agreement with a resident of New York to refer customers to the seller as a "vendor" under New York law and require the seller to collect sales tax as of june 1, 2008.

Overstock.com, Inc. ("Overstock") has no tax nexus in any state other than Utah, the home of our corporate headquarters, due to the State of New York's new legislation, we now believe it prudent to discontinue, temporarily, our current relationships with our New York affiliates while the battle over the constitutionality of the New York legislation is contested in the courts.

Accordingly, pursuant to Section 5.2 of the Affiliate Form of Master Agreement, Overstock exercises its right to terminate your affiliate agreement as of May 20, 2008. Any money due to you based on your service to that point will be paid by May 30, 2008.

We regret that Overstock has been put in this position and look forward to renewing our relationship in the future should the situation be resolved.

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And for what it's worth, I don't believe this would immediately remove the sales tax liability that NY is claiming. The threshold to be included is that merchants have $10,000 in the previous four quarters in sales generated by NY affiliates. I have no doubt that they far exceed that every quarter, so they'll still "owe" NY sales tax on all shipments into NY through 6/30/09 (because the "previous four quarters" will include this current quarter which is no doubt over the threshold). Plus, if they don't agree to the amnesty/extortion by 6/1/08, NY may go after back sales tax as well.

The punks, IMHO, are the legislators and governor in NY.

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Michael Coley ABestWeb.com Admin and Amazing-Bargains.com Founder

Merchant Training 101:NEW! NY Tax Solution | Get The Most Out of ABW | Merchant Best Practices Forum | Affiliate Friendly Policies | A Practical Guide to Affiliate Marketing book | Couponing Tips | How Adware Works | My Opinion of CPA Networks

There is a copy of the letter here on our blog:

http://bluetent.typepad.com/

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I'm asking everyone on my site to boycott them.

While I dislike what my state is doing, it is the future all net sales will eventually be taxed, and I think it's very tacky that overstock.com is doing this, and the only reason they are doing it is because they are punks and know it's probably a losing battle.

I replied to the email with one word. "PUNKS"

I never promoted them because they never seemed to have a sale for things my visitors would be interested in, but I'm offended as a new yorker by their action.

1.5 - 2 million unique visitors a month, 50,000 plus RSS feed subscribers I hope I make a dent in their bottom line.

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HardwareGeeks.com

My Trust in ShareaSale has gone *POOF* (add this to your sig to protest)

Disappointing, yes, but a trend that I think will continue. NY consumers should also get into this since they will pay more for their purchases. [Rest of my rant removed to stay on topic]

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Greg Rice Affiliate Program Management
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All consumers will have to get use to paying tax on online purchases. All of us are already required by law to pay "USE TAX" on out of state purchases but none of us do.

Well I shouldn't say none of us do because maybe there is some honest tax payer here who actually pays the Use Tax in their state.

NY made the law so it could be challanged, and they publicized it by singling out one company Amazon.com a company they knew could afford to challange it.

Amazon took on the Challange, and depending on if Amazon wins or loses is what will dictate if every state puts the same law on the books.

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HardwareGeeks.com

My Trust in ShareaSale has gone *POOF* (add this to your sig to protest)

FWIW, I posted some suggested legal workarounds last month in the main NY Sales Tax Thread. I'm not a lawyer (and don't play one on TV), so these should be discussed with an attorney.

Eventually, we may get to the point where sales tax is charged for all online sales, but we're not there yet. What the state of NY is doing, IMHO, is unconstitutional and detrimental to NY affiliates and consumers.

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Michael Coley ABestWeb.com Admin and Amazing-Bargains.com Founder

Merchant Training 101:NEW! NY Tax Solution | Get The Most Out of ABW | Merchant Best Practices Forum | Affiliate Friendly Policies | A Practical Guide to Affiliate Marketing book | Couponing Tips | How Adware Works | My Opinion of CPA Networks

That's a key point. I'm sure ALL states with a Sales and Use Tax Statute (that's 44 more of 'em) will be keeping an eye on New York. I'm afraid it's just a matter of time...

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Bill Swartwout, Founder, Beaches and Towns Network, Inc.
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and who knows NY May even feel its unconstitutional, hence why they called Amazon.com out to challange it.

Some could argue that NY State which has a blind dude who cheated on his wife for gov, and an escort loving previous gov who thought of the law, just wanted the law to be challanged to end the debate forever, in hopes that the state would lose.

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HardwareGeeks.com

My Trust in ShareaSale has gone *POOF* (add this to your sig to protest)

This is very unfair. Why not just find a way to keep the NY affs in? Just build it into your cost in order to cover the additional expenses. Imagine all of the sales they are losing. Pathetic.

-sfcom

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As someone who has been cut off by a couple of big performers for me, I can certainly understand the frustration. But I think what NY is doing is crazy. Why don't they just raise property taxes on those million dollar apartments? With as much money as there is in that state, I don't see how they can't make do with the tax revenue they already get. Then again, I know nothing about NY's situation...

Overstock seriously thinks I will renew our relationship if offered the chance in the future?

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Melanie
President - Affiliate Advocacy 2008 ShareaSale Performance Industry Advocate Award, 2009 Affiliate Summit Pinnacle Award - Affiliate Advocate
Affiliate Advocacy
NYAffiliateVoice Seery Writing

I highly doubt that Overstock's business model has any room for "building in costs to cover expenses" as sfcom suggests. The current economic conditions are such that customers are price-driven more than ever, and margins are beyond tight.

This law puts online-only and catalog merchants in a very sticky bind: fire NY-based affiliates, lose competitive edge with other mail-order businesses and charge the tax, or flaunt the law entirely. Absolutely none of these options is good; each are a poison pill of one sort or another.

I am meeting with my bosses today to discuss how we're going to approach this. I'm not optimistic that my lone voice in defense of my affiliates is going to be enough to prevent the Overstock Method from being applied to my programs.

Maybe I don't quite get what's happening, but why would NY-based affiliates be singled out..? The key word is "affiliate" here... not shopper...

As far as my sites go, I don't prioritize local traffic.. it's a big ol' country out there... just because I live somewhere, it doesn't mean my visitors are based in the same place...

Does this mean overstock.com no longer SELLS to NY residents..?

Or is this based on NY affiliates being taxed on commissions? Last time I checked, I have to report all my revenue... online or otherwise..

@teezone:

NY-based affiliates are considered a "sales force" under the terms of the new law, creating a "substantial nexus" or physical presence for merchants in the state. If you have a "substantial nexus" you have to charge tax.

New York doesn't seem to care whether or not you are targeting your ads to New Yorkers, which is part of what's so unfair about this law.

I suggest other affiliates avoid them. I understand their dilemma, but if that's how they choose to treat affiliates, you can be next.

Teezone: They're essentially equating us to a sales force, therefore a tax nexus, meaning that Overstock (and all merchants with NY based affiliates) has a physical presence in NY. Therefore, they need to collect taxes on ALL New York made purchases.

Guess it would be a bad time to be an OPM here, or for Google to open up an Adsense Datacenter here, or lots of things, considering all we are is a marketing channel. Many things fall under that hat.

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Kevin Webster
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There is something else merchants can do, and as I discussed in the other thread, hopefully Amazon has done it already, but I can find no current info re their lawsuit. That is, any merchant potentially affected by the law can file a lawsuit alleging that the law is unconstitutional and petition for a temporary restraining order prohibiting enforcement of the law until that issue is decided. If enough merchants do this, it will have a major effect and get the notice of the NY court system.

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aarf
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That's the stupidest thing I've ever heard... and now understand the issue better, thanks.

Affiliates are not a physical "sales force".. I don't drive around in my car taking customer orders. Or stand on a sales floor..

Here in Canada, we have our own set of tax issues, obviously I have to pay taxes on commissions earned. But at no time could any of my non-domestic merchants consider me a Canadian sales force.

Sorry to hear all this guys, I will watch to see how it plays out...