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New York Tax Law Repels Online Retailers

By | June 9, 2008 12:00 pm

A new law quietly enacted recently along with the budget of the state of New York has opened a can of worms, and sent shockwaves through the world wide web.

In a nutshell, the law states that any online retailer who solicits sales through affiliates located in the state of New York is responsible for collecting sales tax on any items shipped there – even if they don’t have any employees, offices or other physical operations in the state.

While tax counsel for the Direct Marketing Association (DMA) George Isaacson doesn’t feel that it will affect online affiliate marketers, he does say that “At its extremes, the New York statute is clearly unconstitutional.”

Ecommerce giant Amazon.com agrees, and has already filed a suit challenging the statute on those grounds.

Popular website Overstock.com has reacted by restricting their affiliate program to disclude New York affiliates. The company’s general counsel told InternetNews.com that he had read a bulletin intended to clarify the law and felt certain that his company could be held responsible for collecting the tax.

This change can affect any affiliate marketers in New York who have a custom online store containing Overstock.com items or even those who simply have affiliate links on their site.

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Founded in 1998, ECommerce Partners is a full-service, ecommerce and interactive agency headquartered in New York City. Best known for our unique process methodology, we combine Internet expertise, creative talent, and business know-how to help clients across a variety of industries achieve rapid, measurable online marketing results.

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