The fallout to the recently enacted New York State "Amazon Tax" has begun. Overstock.com, one of the largest internet retailers, has notified more than 3,400 New York based affiliated that their relationship will be terminated June 1st when the law goes into effect.
"We hope this termination period will only be temporary", said Jonathan Johnson, SVP of corporate affairs at Overstock.com. "We think that the New York law is unconstitutional and we think that lawmakers have made a mistake that s hurting small businesses in New York."
The Law requires out of state online retailers to begin collecting sales taxes on purchases shipped to New York addresses, meaning that Amazon.com and Overstock, each of which have no employees or operations in New York, will be required to collect state taxes because it has affiliates based in the state.
Amazon is challenging the law in New York state court. Overstock may join Amazon or begin its own court battle, Johnson said. If the law is dismissed, Overstock will re-establish relationships with all of its New York based affiliates.
"When it came donw to choosing between our customers and our affiliates, it was an easy choice," said Johnson.