Months before the Former Governor of New York, Elliott Spitzer was in the news for his scandalous behavior he was making news for his potential major impact on e-commerce. The buzz was from his attempt to pass legislation that would make it necessary for online merchants to collect taxes on Internet sales made by New Yorkers. Specifically, the legislature would make it necessary for merchants to collect taxes from New Yorkers if they work with any Affiliate Marketers based in NY.
Current NY Governor, David Patterson has move forward with the Spitzer plan. Starting June 1, 2008 merchants will be required to collect taxes or face repercussions.
On May 2, 2008 Amazon filed a complaint in State Supreme Court in Manhattan objecting to the law. Amazon is challenging the constitutionality of the law. According to a New York Times Article, Amazon states, "It is impossible,...for it to determine which of its affiliates are actually in New York State".
Yesterday, Overstock dealt with this issue by removing all New York based affiliates from their program. Below is the email sent to their affiliates. It will be interesting to see how this plays out. How will other large online only retailers react? Will other states follow suit?
ABestWeb, a forum for Affiliate Marketers has started a conversation on this topic.
*Image credit - downtown ecommerce blog