Overstock Files Lawsuit w Supreme Court to Fight New York Tax Law


Breaking news as first reported by Linda Buquet at 5StarAffiliatePrograms.com, Internet retail giant Overstock who most recently dismissed their estimated 3,400 New York affiliates from their affiliate program which I had written about in a previous post Overstock.com Terminates All NY Affiliates has recently filed suit with the Supreme Court to fight the New York Tax Law, which went into affect June 1st 2008.

The Overstock press release is quoted as follows, “Overstock.com, which is based only in Utah, has no operations in New York, and sells exclusively through the internet, views the new law as unconstitutional under both New York and federal constitutional provisions, including due process clauses under both constitutions and the commerce clause of the U.S. Constitution as well.” [Overstock May 30th press release]

Mark Griffin Overstock.com general counsel stated in the press release, “I am confident of our position in the suit.” [Overstock May 30th press release]
Overstock’s commitment to fighting this tax is a positive step in assisting the strength of the Amazon complaint which was filed on Friday May 2, 2008, as written in The New York Times. Amazon filed a complaint in State Supreme Court in Manhattan objecting to the law, which was approved as part of the $122 billion state budget that Gov. David A. Paterson has already signed and which went into affect yesterday.

Rallying up the Affiliate Marketing Community

Peter Bordes Jr. who is a founder, CEO, and chairman of the board of MediaTrust, Inc and an ardent blogger at www.relevantlyspeaking.com was on the recent IAB public policy meeting on the new Can-Spam legislation. In the last segment of the meeting MediaTrust’s CMO Trip Foster and ValueClick opened the affiliate tax discussion and Peter has some interesting things of note which he mentions in his post here as well is calling for petitions to be sent in to affiliatepetition@gmail.com.

Linda Woods President of PartnerCentric.com and host of Affiliate Marketing Insider a popular radio show on WebmasterRadio.fm is joining with other industry leaders and thought provokers on her Webmaster Radio show this Thursday at 12n PST/3pEST to discuss the New York Tax issue.

Brian Littleton President of ShareASale.com a top affiliate network is commenting on the topic from a network perspective on the ShareASale blog. ShareAsale is the only network I know of to date to offer New York affiliate sales reporting for their networks.

Cecily Lancit President of Affiliopolis.com has been spearheading communication attempts directly with the New York State Tax office representatives. In one of my recent posts Interview with Members of the New York State Tax Department I mentioned the phone conference we were supposed to have with the representatives from the New York Office but at the last minute the NY office stated they would prefer written questions, many persons from the industry submitted questions to Cecily to pose to the New York Office and they have responded with a time line for response of up to one month. Special thanks to Wade Tonkin of GTOManagement.com who also submitted some insightful questions along with others!

Linda Buquet of 5StarAffiliateprograms.com has been a champion concerning ensuring news and information from all around the affiliate community is disseminated to those who need her timely information by accessing her popular affiliate blog and forum.

Shawn Collins the Affiliate Marketing Industry legend and co founder of AffiliateSummit.com also has been spearheading communications of information throughout the community and taking a positive stand in support of Overstocks efforts on his popular blog AffiliateTip.com

New York Affiliate Tax Issue – What’s next?

As the President of PaulsonManagementGroup.com where we manage many affiliates programs in multiple networks, I can tell you that this issue has many of us all rechecking out processes and strategies moving forward. The discussions and emails are going around concerning the development of an affiliate industry association which we are all hoping will be established sooner rather then later. What’s next? Well we need to be prepared to answer that question, let’s hope it is not too late.

Where to register for a Sales Tax Certificate of Authority: http://www.nys-opal.com/ (click the “‘on-line applications” link on the left-hand margin and go from there.)

About Heather Paulson

Heather Paulson is the President of PaulsonManagementGroup.com which provides Affiliate Management, Paid Search Management, Search Engine Optimization, Social Media Management and affiliate video production and affiliate recruiting services.

Heather was appointed to the Affiliate Summit advisory board in 2006. In 2007 Ms. Paulson was appointed to the advisory board for Affiliate Classroom. In 2007 Ms. Paulson was elected as PPCClassroom.com’s education manager. in 2008 Ms Paulson was nominated as a FAB member of the Performance Marketing Association and is an honorary recipient of the ACC Certified Affiliate Managers Course. in 2008 Heather Paulson was invited to become a member of The Internet Oldtimers Foundation. She has passed the Google professionals certification twice. Heather also blogs at Paulson Management Group Blog. You can follow Heather on Twitter: @Heatherpaulsons.

15 Responses to Overstock Files Lawsuit w Supreme Court to Fight New York Tax Law

  1. Mike Allen says:

    Way to go Overstock.com. Too bad they dumped their affiliates first though. Overstock and Amazon should win this one easily and the free press won't hurt them either. NY clearly has overstepped their authority on a federal issue.

  2. peter bordes says:


    Thank you for the post and the great support. I don't think anyone in Albany has really taken the time to understand this law and how it impacts the e-commerce economy and the new long tail economy

    It is a shame that Overstock did not join in the fight before dropping their affiliate program.I hope they are going to work closely with Amazon and the affiliate marketing industry to make sure that NY State understands how poorly thought out this law is and the ripple effect/ backlash it can cause to many companies and individuals.

    I hope the industries collective voice thru the social media has had a hand in the new position Overstock has taken, and that this social ground swell will continue. There is a long way to go and we need more pro-activity from everyone to stop this law before it spreads.

    I thought the Forbes article you linked to was very clear on what this law means and it being unconstitutional. I hope we can get more of this into the main stream media thru our joint efforts.This is a time when we can apply "a call to action" to ourselves and fellow business partners.

    btw we are participating in another IAB public policy meeting next week and will have more info posted on RelevantlySpeaking ASAP.If you would like to participate please reach out to me pbordesATmediatrustDOTcom

    all the best!


  3. Linda Buquet says:

    Thanks Heather for letting Revenews readers know about the Overstock suit and for the comprehensive coverage and links to all the best resources!

  4. Hey thanks,

    I appreciate our comments, many in the industry have rallied together during this time to support each other in our efforts to ensure our merchants are protected and well informed.

    There are many other's who have been instrumental in ensuring information is kept up to date for the affiliate community, if you know of any additional links or information for the NY Tax Law feel free to recognize those persons and their news here by referencing their URL's.


    Heather Paulson

  5. "if you know of any additional links or information for the NY Tax Law feel free to recognize those persons and their news here by referencing their URL’s"



  6. Brook Schaaf says:

    Three cheers for Overstock for filing suit!

    It would have been preferable for them not to remove their affiliates but these issues are complicated and the burden of collecting the tax outweighed the value of their NY affiliates.

    3,400 is a high count but I'd wager a small subset thereof performed, as is normal for a program.

    This suit will cost Overstock and Amazon a lot of money. Consumers and marketers have a lot at stake in this suit. We should follow it closely and support it strongly.

  7. Well in support of both companies I plan on spending my money on their websites!


  8. peter bordes says:

    me too. i just bought "tagging", "groundswell" , "The World is Flat"and "the Long Tail" to mail to Albany!

  9. Bruce Nelkin says:

    The simple solution to this law is to host your affiliate site out of the state of NY or even out of the country.

    By simply doing this you can claim that your affiliates do not have a website in New York and hence the law does not apply.

    Overstock dropping their affiliates though is a low blow. Those 3400 people were the ones responsible for putting Overstock on the map in the first place.

    Companies that dump their affiliates should be put out of business by boycotting their product or service.

  10. Rick says:

    If I refer customers and those referrals lead to $1,000 in sales and I'm responsible for paying sales tax on $1,000 this will kill the affiliate marketing network world. It may or may not harm large web sites as they do away with their affiliate programs but smaller web sites will have a hard time getting business. This may lead to larger web sites getting larger because the smaller businesses will not take a biter out of the larger businesses market but the brick and mortars will get an increase in business.

  11. peter bordes says:

    Heather a business partner of our called me up and asked what questions he should ask Patrick Byrne in an interview he did last night. here is a post regarding the great interview and Overstocks position regarding the affiliate tax issue and how valuable their affiliate program is to the company http://www.relevantlyspeaking.com/2008/06/05/over

  12. Thanks Peter for the link – what a great article, it is always nice to hear from the top brass!

    Thanks for posting this!

  13. Mark says:

    Thank God someone is standing up to the communist state of NY !!! It's bad enough that people in that state are giving up their acreage because the can't pay the taxes on the land, it just keeps going up and up. Pretty soon, the socialist government will own every thing in that state.

    Anyway, Bravo to Overstock for challenging them on this issue.


  14. dee says:

    Good for Overstock. The state of NY is getting absolutely out of control!

  15. […] state tax attack started last year in New York: “OverStock Files Lawsuit w/ Supreme Court to Fight New York Tax Law” and has now started to spread rapidly in many other states like CA, CT, FL, MN, IL ( to name a […]