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Wed May 14 2008 21:30:13

Overstock.com Bails on NY Affiliates over Sales Tax Issue

By: Ina Steiner

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Overstock.com is bailing on its affiliates in New York State, according to the New York Times newspaper. I find it interesting the company refrained from fighting the state over this issue, given Byrne's battles against Wall Street and school reform.

Byrne is so passionate in his fight against Hedge funds and the financial press, he told me in an interview about Grandmas eating dog food for dinner so "clowns on Wall Street" could drive Porsches.

But I never got the idea he embraced the small entrepreneurial sellers on his own auction site, perhaps failing to see them as hard-working grandmas, grandpas, stay-at-home parents, mom-and-pop businesses, etc. When the going got tough at Overstock.com, Auction sellers took it on the chin. I imagine many Overstock.com affiliates share similar profiles as online-auction sellers.

Amazon.com, however, is sticking with its affiliates and filed a lawsuit against New York and its governor. I can't wait to see what other Internet retailers do, and how it all turns out.

 




Comments (7) | Permalink

Readers Comments

Overstock.com Bails on NY Affiliates over Sales Tax Issue   Overstock.com Bails on NY Affiliates over Sales Tax Issue

by: Patricia

Wed May 14 22:00:43 2008

I ran auctions on Overstock years ago and also on Amazon when they had auctions running.  In my mind, Overstock could have been a serious threat to ebay in the auction business.  They had sellers lined up ready to list.  I often wonder why they started out like a house on fire (remember the Overstock commercial where the woman comes into the boardroom and tosses something on the table and says we're taking on the big boys?) - then it all came to abrupt stop.  One might think they were threatened by ebay goons but I know that's not true.  What made them recoil as though burned?  I'll never understand it.  Anyway, their auctions side of the business is a big joke.  Best thing they can do it close that up and just stick to what they do best.

As for Amazon....I simply don't know what happened there.  I made a few sales...nothing big and then they stopped auctions too.  I can honestly say neither company is at all interested in moms, pops, and grandparent sellers.

Overstock.com Bails on NY Affiliates over Sales Tax Issue   Overstock.com Bails on NY Affiliates over Sales Tax Issue

by: Patricia

Thu May 15 13:32:13 2008

Oh...one more thing and this is to the point (sorry for rambling in my last post).  Anyone selling in a state should be paying sales tax to that state.  I'm but a lowly little seller and yet I collect and pay California State Sales Tax - to my benefit it allows me to buy my supplies tax free so I find it a good deal.  Only people ducking the tax would be objecting to this.  It really has little to do with taxing the internet - only upholding the laws each state has on collecting sales tax.

Overstock.com Bails on NY Affiliates over Sales Tax Issue   Overstock.com Bails on NY Affiliates over Sales Tax Issue

by: Randy Smythe

Thu May 15 14:34:50 2008

Patricia, what this law does is say, even though your business is in CA you still have to collect sales tax for orders shipped to New York, if you have an affiliate program with New York residents as members.

With all 50 states having different sales tax requirements the accounting alone would put you out of business. Do you, as a small seller, want to have to collect sales tax for each of them?

All the states have to do is inforce laws already on their books to collect ''use tax'' from residents. That is what they should be working on not making businesses be their tax collectors.

Overstock.com Bails on NY Affiliates over Sales Tax Issue   Overstock.com Bails on NY Affiliates over Sales Tax Issue

by: Adam

Thu May 15 19:29:40 2008

Only problem is enforcing Use Tax is next to impossible.

Overstock.com Bails on NY Affiliates over Sales Tax Issue   Overstock.com Bails on NY Affiliates over Sales Tax Issue

by: Randy Smythe

Thu May 15 20:27:07 2008

Adam, where there is a will there is a way. If the States want the tax revenue from online sales then they have to work for it, IMO. It should not be the responsibility of business.

Besides, New York has no jurisdiction to force compliance to a company in another state.

Overstock.com Bails on NY Affiliates over Sales Tax Issue   Overstock.com Bails on NY Affiliates over Sales Tax Issue

by: Jennifer

Fri May 16 07:50:32 2008

While I know there are many affiliate programs that will be affected by this law, I believe NYS is using this as a test before they go after another target - Amazon Marketplace Sellers. Amazon does not collect sales take on marketplace transactions in states where it does not already have a phyisical presence. Unlike eBay where the seller (not eBay) receives payment, buyers pay Amazon directly so NYS considers them the seller of record and there is no sales tax liability currently. If the affiliate case is one, I imagine sales by independent sellers through the site will be next I believe this is why Amazon is choosing to fight this. B&N, Staples etc (ie sites with stores in most states) already collect sales tax in most, if not all, states but it's an all or nothing for each state. This would be an additional burden for Amazon because they would have to determine which affiliate/marketplace sellers' sales have to be taxed and at which rate (in NYS, sales tax is collected based on where the buyer is located, most other states it would be based on where the affiliate/marketplace seller is located).

Overstock.com Bails on NY Affiliates over Sales Tax Issue   Overstock.com Bails on NY Affiliates over Sales Tax Issue

by: barry

Sat Jul 19 16:03:02 2008

Overstock's strategy may have paid off.  They had a lot to say about this in their most recent earnings report.  Apparently New York state will no longer enforce this new tax law.  I found the entire transcript of this on Seeking Alpha's website.  You can read about it here:

http://seekingalpha.com/article/85766-overstock-com-inc-q
2-2008-earnings-call-transcript?source=Overstock



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