Overstock to Reinstate California Affiliates
Hot on the heels of announcing that they would join the lineup of Internet merchants dumping their affiliates in California, Hawaii, North Carolina and Rhode Island – states that plan to tax Internet referals – Overstock reversed its decision to drop its California-based affiliate advertisers following an assurance from Governor Arnold Schwarzenegger’s Office that his rejection of the affiliate nexus tax bill will stand.
Overstock.com’s Chairman and CEO, Patrick Byrne responded “I compliment Governor Schwarzenegger on getting it right” and assured the Governor that it would turn back on the advertising feeds from its California-based affiliate advertisers.
I can only hope that Hawaii, North Carolina and Rhode Island will see the negative impact of their anti-consumer, anti-business legislation and choose not to sign it into law – especially in a down economy!
Have you had your affiliate feed turned off? Please share your story…
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Posted / Revised on July 2, 2009 under News  |
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Rosalind Gardner is a Super Affiliate blogger, author, speaker, and Internet marketing consultant. For more info, subscribe to her No-Hype, No-BS, No Spam NPT newsletter and join Affiliate Blogger PRO to get answers to all your affiliate marketing questions. Thanks for visiting!
In our hemorrhaging economy, out here where each day brings California closer to broke, that took guts. This reminds me yet again why I voted for the Governator. Way to go, Ahhnold! And, by the way, WAY TO GO, Overstock. Their email rescinding my cancellation was a welcome relief.
It took more intelligence than guts since the nexus bill will lose tax revenues instead of increase them. But I appreciate Arnold taking a stand against our very lame legislature.
Hi Ros! I am in NC and my account was terminated by Amazon. Overstock.com has also terminated its affiliates here, along with several other companies. Many affiliates in NC have banded together to appeal to lawmakers in NC who think this ‘Nexus tax’ is owed to them. According to what I’m hearing, lawmakers are mad at Amazon.com for not collecting taxes they feel are owed to our state.
What lawmakers are trying to do, (in essence) is to say that affiliates constitute a physical presence of the company in our state by representing them. What we are trying to make them understand, is that NC affiliates are not employed by Amazon. We simply advertise for them.
Amazon (and other companies) will still sell their products to NC residents, not collecting taxes, and so this new law would only hurt affiliates. More affiliates out of work only means more devastation for our state’s unemployment rates. NC already has the seventh highest unemployment rate in the country. (11.1%) If this new law gets passed, there will be thousands more people out of work. Many, who have a good business, are considering leaving our state altogether which means more lost tax collections.
There is a really good article about it posted in the AP yesterday:
http://www.google.com/hostednews/ap/article/ALeqM5iBGCcJcja-ma5ddQHOL9Nrcr9TYgD996EV680
The problem in NC, is that we have a Democratic governor who doesn’t seem to ‘get it’. I am going to write Governor Arnold Schwarzenegger after I leave this post, and appeal to him to talk to our governor. It’s coming down to the wire here next week. Lawmakers are still bumbling over this.
Is there anything you can do to help us Ros? I have been in touch with Joel and hoped you’d help us somehow. (although I am not sure how!) A twitter appealing to other NC affiliates to ‘take action’ before it’s too late? I’m not sure Ros. We, the little people, are stabbing in the dark. No one knows what’s going on behind closed doors in the General Assembly. At last count, we needed 9 more votes against this new tax, to nix it.
Hi Carolyn,
I’m not sure how I can help either, other than to suggest that every affected affiliate should call their state legislator’s office and tell them what a devastating effect this legislation will have on their business. Tell them EXACTLY how much tax you WON’T be paying when you’re forced out of business.
Cheers,
Ros
Thanks Ros! Guess it was just wishful thinking on my part. I thought you might know someone… I dunno. I have been doing all I can from my home, including contacting senators and House of Representative legislators. Most seem to have a one track mind though when it comes to this issue. I’ve even heard that even if lawmakers take the tax out of the budget, that our Governor Beverly Perdue will veto it right back in. I have appealed to other affiliates in NC to contact her and I’ve also since contacted Arnold Schwarzenegger (haven’t heard back from him) to contact her and talk to her for us. The budget has to be in place by the July 15th deadline.
All I know, is that this sucks! The other part of what sucks about all of this for NC affiliates, is that we were all caught with our pants down. No one knew that this was included in the budget until Amazon sent us letters saying that our account might be in jeopardy, which was around the second week of June. We had only two weeks to fight this issue but have been given a bit more time because of the extension lawmakers needed in our state to pass a budget they agreed on.
Lawmakers in our state can’t make up their feeble’s. I heard today that the July 15th deadline is dead. There will most probably be another extension as the GA just can’t seem to come to any agreement.
In a letter from a Senator (Daniel Clodfelter), it seems clear that this is going to be an uphill battle still!
“This (law) was not recommended by Revenue Laws Study Committee as a
revenue-raising measure and doesn’t depend on raising any particular
amount of revenue. It was recommended as a matter of equitable
taxation. The United States Supreme Court has clearly held that a
company that pays commissions to agents in a state to refer business to
it has taxable presence in the state and is subject the requirement that
it collect and remit sales tax on sales made into the state. This is
not new law. The form of solicitation; the identity of the agents; the
method of payment is not material. Many online retailers currently
collect and remit sales tax on sales made and delivered into North
Carolina. They compete with companies such as Amazon, as do retailers
with physical locations in the state. It is Amazon’s choice (and every
other company’s choice) whether or not to retain commission agents in
this state or any other. But if they do so, then they must play by the
same rules as do other similarly situated sellers. The tax system
should not intentionally favor one group of competitors over another
group of competitors by differential application. They sell the same
products to the same buyers.
Some have said that online retailers should be exempt from
collecting the sales tax from NC residents because they don’t place any
burden on the state. But their products are delivered to NC buyers using
the same road and highway network created and maintained by the state
government; they use the state’s court’s to collect monies owed to them
and enforce their contracts; the packaging in which their products are
shipped must be disposed of in public landfills; and so on.
So, again, it isn’t about getting more revenue. It is about
equitable treatment of all sellers of the same products to NC buyers.”
I am checking on the legality of what he says, but if what he writes is true, every state in our country will be trying to pass this measure and it isn’t good news for anyone here!
Wouldn’t the wholesale dropping of affiliates from various U.S. regions be a benefit to Canadian affiliate marketers because of less competition, etc? (I’m still fairly new to all this, and I’m not trying to say it’s “good” when *any* government meddles too much in the affairs of business, but still… it seems like this could turn out to be a great thing for shrewd affiliates in Canada).
Hi Erik,
You’re absolutely right. If various states continue to unfairly penalize their resident affiliate marketers, affiliates all over the world would pick up the slack and capitalize on their misfortune.
I personally hope it doesn’t come to that, especially considering the current unemployment rates in the U.S. — which makes the tax all the more ludicrous.
Cheers,
Ros
I heard a rumor that some Amazon.com affiliates in NY simply changed their mailing address (to an out of state friend/relative) in advance of the cutoff and were thus spared termination.
For business reasons I have an online PO box with a service that gives me an address in my choice of a variety of US states, whether a PO box itself, or a street address. Personally, given the state I reside in and receive mail to, I don’t think I’m (currently) at risk of losing my affiliate arrangements because of this tax issue, but the online PO box service (which scans paper mail and emails you the PDF or JPG) is pretty handy for a variety of reasons.
-Jake
Jake,
You’re a wonder. I can’t believe I didn’t think of that – knowing a number of Canadian affiliates who use Nevada addresses to avoid paying taxes in Canada (not something I agree with considering they benefit from our exceptional social services without paying into them)… but if it means the difference between being able to operate your business or not — then it’s a smart option.
Thanks for sharing!
Cheers,
Ros
I doubt this would work in the long term – state Revenue agencies regularly audit large companies and would probably demand proof of compliance. As tax revenues dry up, they will be auditing more and more small companies seeking unreported tax revenue. Nexus is defined as the physical location – not the mailing address.
I’m sure companies will be asking for some sort of proof of where the affiliates reside. If a company has affiliates physically located in states where tax is to be collected and they do not collect it would be considered tax fraud and the company would be subject to fines and penalites. I doubt companies would take that risk.
Washington passed a law this year, effective July 26, that all digital products purchased and downloaded by residents of the state are subject to Washington state sales tax. How that will work, I have no idea.
Jake,
I don’t understand: “For business reasons I have an online PO box with a service that gives me an address in my choice of a variety of US states, whether a PO box itself, or a street address.”
How does one go about getting an online PO box? A ‘how to’ would be great to know! How might one contact you to get more information? Thanks!
Hey there, Carolyn…
At one point I realized that I needed a new address for my online business that was separate from my personal work-at-home address. For example, for my email newsletter (to comply with anti-spam laws) and for press releases and other publicity events. So, I started spending $25/month for a real PO box that I, in reality, never actually received mail to (but would check every few weeks, just in case).
It occurred to me that in this day and age there’s just GOT to be some kind of online mail receiving/handling/scanning/forwarding service that would deal with with my (rare) physical mail, for a cheaper price. Sure enough, I found and ended up settling in with EarthClassMail.com .
If you cruise on over to their site you can probably get answers to many of your questions, but you (or anyone else reading this) are welcome to contact me privately with Qs if you wish. Just click on my name up above to visit one of my sites, then click the “Contact Us” link in the footer to shoot me an email.
-Jake
Thank you Jake! The members of the forum that I’m participating in, have some really good ideas however, they must be legal. (to be in compliance with forum rules.) According to Amazon Associates, they basically said we could incorporate out of state and have a physical office there; that it was enough. We’d be asked for proof of having moved our business. What kind of proof they are looking for, no one knows yet.
I will look into the site you recommended to look for answers Jake! Thanks ever so much!
Hi Ros – Thank You for blogging about this issue.
I believe that every affiliate in the US needs to become active to prevent laws like this from being passed. In the face of state budget cuts and a lack of understanding about what Affiliate Marketing is and is not in many state legislatures, our incomes as affiliate marketers in many US States may be at risk! Even if the problem hasn’t come to your state yet, it might come unless politicians at the state level in every state are made to understand why such laws will not increase their sales tax revenue but will instead hurt their income tax revenue and force affiliates making significant incomes to leave their state.
My account with Amazon was also terminated on Wednesday morning. But fortunately for me, I had moved from North Carolina to South Carolina over 2 years ago. I had signed up for the affiliate program several years earlier but never got it together to get going on it. I have just recently purchased the Super Affiliate Handbook and plan to get serious about affiliate marketing this year. In the rush of moving, I had forgotten to update my affiliate info at Amazon in 2007 when I moved.
After contacting the Amazon affiliate desk, I managed to get my account re-activated and received the following email:
————————————
Hello,
I am sending this message as a follow up to our recent phone call. Because you have changed your state of residence, your account has been reinstated.
However, we want to be sure you are aware that you may be asked to provide proof of residency at your new address. If this is the case, we’ll contact you with instructions on what documentation to provide and the submission process for this documentation.
Thank you for your participation in the Associates Program.
————————————
Two good places for more information for those who don’t already know:
The Performance Marketing Alliance at
http://www.performancemarketingalliance.com/category/anti-affiliate-legislation/
And NC State Representative Thom Tillis at
http://www.thomtillis.com/
He represents the 98th District, which includes areas in and around Charlotte. This issues is highlighted on the front page of his web site, and he is actively working to stop this tax from going through. He is probably a good contact for all affected NC affiliates, even if you don’t live in his district.
Hi Jane,
Thanks kindly for sharing your experience and this information with us. I’m glad to hear that your state rep is working to stop the tax. Let’s hope his (and your) efforts succeed!
Cheers,
Ros
Nuts, nuts, Nuts! Politicians are so out of their head most of the time. They only think of what can be done right this moment. I wish politicians and our so called leaders not just think for themselves and today and start thinking for their constituent and the future!
Similar to this i also heard a rumor that some Amazon.com affiliates in NY simply changed their mailing address in advance of the cutoff and were thus spared termination.