Following in the footsteps of Amazon, Inc. which recently pulled its affiliate program out of Hawaii, North Carolina, Rhode Island and potentially California, Overstock.com Inc. has shut down its affiliate programs in each of those states.

Legislators in Hawaii, North Carolina, Rhode Island and California have either passed or are close to passing laws requiring merchants to collect sales tax on sales made via affiliates in those states.

Overstock CEO Patrick Byrne said Overstock will sever its affiliate program in any state that appears close to passing similar laws, but will reinstate its program if such laws are found to be unconstitutional, or are vetoed or repealed.

Forcing online merchants to collect sales tax on affiliate sales is an administrative burden that many merchants – presumably Amazon and Overstock – are ill-equipped to deal with. It also means they will either have to increase prices or accept lower profits (as will affiliates), reducing one of their competitive advantages over ‘bricks and mortar’ retailers.

Source: Lauren Pollock, “Overstock Drops Affiliates In 4 States to Protest Taxes,” The Wall Street Journal, July 2, 2009

Related Articles:

• Affiliates To Suffer as More U.S. States Consider ‘Amazon Tax’ Laws
• Affiliate Nexus Tax Laws Fail, But Connecticut and Vermont Enact Them Anyway
• What Do Affiliate Marketers Want From Merchants?
• Publicis Chief Says Advertising Market on Rebound
• Amazon Pulls Affiliate Program Out of North Carolina

This entry was posted on Monday, July 6th, 2009 at 4:00 pm and is filed under Affiliate Marketing, Law, News and Comment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.