According to Internet Retailer, "threats by [Web] retailers to cut off affiliate marketing relationships in states that are trying to tax sales generated by affiliates have had an effect. The governors of California and Hawaii have vetoed legislation that would have imposed such taxes in those states.
"The governors acted after such major online retailers as Amazon.com Inc., Blue Nile Inc. and Overstock.com Inc. began this week cutting off affiliates in states that adopted laws requiring collection of sales taxes by e-retailers with affiliates in those states."
Overstock CEO/Chairman Patrick Byrne points out that in New York, where Overstock has stopped working with affiliates because of a similar law in that state, affiliates represent about 1% of Overstock’s business and about 0.05% of its net profit there. But because New York represents about 10% of Overstock’s overall sales, it doesn’t make economic sense to maintain its affiliate relationships there, he says. “It comes down to, do we start charging sales tax on 10% of our business or give up 0.05% of our profit?” he says. “Even setting aside the additional costs of collecting and remitting sales tax, the economic effect is so horrible, it’s better to give up affiliate sales.”
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Tuesday, July 07, 2009
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