Overstock Terminates California Affiliates

The media is making the state advertising tax issue out to be all about Amazon, but there are many thousands of other affiliate programs out there that may well fire affiliates in proactive or reactive measures against the legislation.

Yesterday, Overstock served walking papers to affiliates in California.

Dear Affiliate:

We regret to inform you that the North Carolina, Rhode Island, California and Hawaii state legislatures have or are about to pass unconstitutional tax nexus and collection laws in an attempt to force Internet retailers to collect and remit sales tax on all sales to residents of these states.

These legislative measures purport to establish a state tax nexus on the basis of contracts with local advertising affiliates, even when none exists under U.S. Supreme Court precedent. Overstock.com, Inc. (“Overstock”) has no tax nexus in any state other than Utah.

Due to the passage or eminent passage of these unconstitutional laws, Overstock regretfully must discontinue its relationships with all of its advertising affiliates in these states.

Accordingly, it is with reluctance that Overstock hereby gives notice of termination of your participation in Overstock?s Affiliate Program.

Any money owed to you, based on your advertising services prior to termination, will be paid in the normal course of business.

Overstock regrets that it has been put in this position. In the future should these laws be vetoed, declared unconstitutional, or repealed, we will cheerfully resume our former business relationship.

Respectfully,

Jonathan E. Johnson III
President
Overstock.com, Inc.

There goes some more taxable income for the California state coffers. And hey, maybe some longer unemployment lines, too.

How cool would that be if politicians acted like successful business-people and adapted ideas that work? I haven’t seen any case studies on how the state of New York was benefited by an advertising tax.

Actually, the elected and selected officials in Albany, NY are possibly the most disfunctional governing body in the country – maybe other states can farm some more clever ideas from them.

Back in May 2008, Jim Kukral, Lisa Picarille, Sam Harrelson and myself talked about Overstock and their actions with the New York advertising tax. It’s an interesting listen on the issue over a year later and you can see feedback from Patrick Byrne, CEO of Overstock, in the podcast comments.

Update:
Governor Schwarzenegger vetoed the advertising tax in California, and Overstock.com announced that they will not be dropping California afiliates.

More details at http://affiliatetip.com/archives/governor-schwarzenegger-terminates-advertising-tax-in-california/.