And the exodus begins…
Unfortunately, with the threat of the California budget hanging over their heads like Damocles sword, the first merchant has pulled their affiliate program from California.
According to David Lewis of Cashbaq.com, Overstock.com sent a boiler plate rejection letter out to their affiliates via CJ’s internal email this afternoon.
I’m sorry to see the impasse come to this, but Democratic legislators flat out refused to see the light here and as other large and small companies follow suit, we will simply see more money leaving the state.
I would urge affiliates that receive these sorts of removal letters to send them directly to your representatives and ask them point blank why they stood idly by and did nothing to protect your business, your income, and your families from financial devastation.
Click here to find your Assemblyperson and Senator.
**UPDATE**
Here is the full text of the “official” letter from Overstock that affiliates received tonight:
June 30, 2009
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 In the future should these laws be vetoed, declared unconstitutional, or repealed, we will cheerfully resume our former business relationship.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.
AB178 Nexus language added to CA budget bill
And it’s time for round three apparently…
On Monday, June 22nd a group of us will be headed to the California State Capitol yet again to fight what is now known as the “Amazon Tax” or “Internet Advertising Tax”. We’d love to have you in attendance if you can make it. Please contact me for more details if you are available.
If you are unable to make it on such short notice (believe me, they sprung this on us last minute), please give us your support by contacting your Legislator via email, phone and twitter using the contact list I created below.
They prefer to hear from their own constituents of course and honestly, it’s people that live in their own district that seem to make the biggest impact. They don’t like upsetting their own voters. You can locate your representative via zip code here.
Also, please feel free to contact the Governor’s office and twitter him your concerns at @Schwarzenegger.
GTO Policy on New York based affiliates
We have been doing a lot of thinking and research on the topic of the New York decision to hold non – New York based merchants who have affiliates doing business in New York accountable for collecting state sales tax. We’ve been speaking with lawyers, other affiliate managers, industry colleages, our clients and each other on this.
We don’t by any means claim to know all the answers in this – no one does until the Amazon and Overstock lawsuits are decided or settled with clarification of the law. We encourage all of our clients to meet with counsel with understanding of the New York law and it’s details to make the decision that is best for them.
If the client has no objections, we’re recommending that our clients incorporate language suggested by Deb Carney on ABestWeb to add this language or something similar to their affiliate agreements:
If Affiliate is based in New York State or has office(s) located within
New York State, Merchant will only allow Affiliate to promote Merchant
brand(s) and/or web site(s) via Affiliate’s web site. Affiliate may not
promote Merchant through any other marketing channel, that targets NYS
residents, including, but not limited to: paid search marketing, e-mail
marketing, offline marketing, (including flyers and physical
newsletters), lead generation, mobile marketing or telemarketing.New York State affiliates CAN use these methods to market their *own
website*, as long as the ad copy, email, etc does NOT mention the
Merchant directly.
We feel that the affiliates from the State of New York really are pawns in this game and we stand by them and their right to earn a living through affiliate marketing. Unfortunately, this language may put a crimp in some of their efforts for a time, but we’d rather change the way that we work together a bit than have to lose them altogether. We’re adding this language to the Agreement’s of our clients C28 and Geoff and Drew’s Cookies, as well as any other retail merchants we work with until this issue is clarified.
Happy Selling!
Wade Tonkin
GTO Podcast with Brian Littleton- New York Affiliate Tax and more
Karen and I had the chance to chat with Brian Littleton of Shareasale on a few topics. Most importantly, we spent some time chatting about the New York Affiliate Tax issues.
Some of the main points:
- Sales totals from New York Affiliates that require merchants to report and pay tax
- Fact that orders need to be shipped to New York addresses to qualify and the challenge this present to affiliate networks
- Some of the steps that Shareasale has taken to facilitate merchant compliance without compromising affiliate privacy
- Some good advice from Brian on where to get guidance on this. Merchants should consult with their accountant and someone familiar with New York law if New York affiliates are a substantial piece of the their mix or may be in the future to come up with a sound policy
- We reviewed some of the actions that we’ve been seeing merchants take due to the law including Overstock and Amazon filing suit.
- Affiliate shock on receiving action notices from merchants making compliance decisions.
We also chatted a bit on what is happening at Shareasale (technical innovation) and chatted about Brian’s tendancy to end up at a piano at industry events and availability of piano bars near the Affiliate Summit hotel.
Enjoy!
Listen Now!
