State internet taxes an issue for national etailer

0 will no longer strike contracts for advertising in the state of Connecticut due to a new State tax on retail transactions conducted over the internet. The company believes the tax is unconstitutional.

Overstock has been challenging such taxes in court on a consistent and long-term basis, and is continuing this policy. Relationships with advertisers in six states have now been severed over the issue. In addition to the new break with Connecticut partners, the company has parted ways with partners in Rhode Island, New York, North Carolina, Alaska and Illinois.

It says it is taking money it would have paid to its in-state partners and paying it instead to customers who now face an in-state add-on tax when they buy something with the company’s Club O account.

“It is unconstitutional for a state to pass a law making out-of-state retailers collect sales tax simply for having business relations with marketing affiliates in those states,” said CEO Patrick Byrne. “So we have severed relationships with all of our affiliates in Connecticut, and have taken the money we would normally pay those affiliates, and are using it to reward our best customers in those states. Any customer in Connecticut that has spent more than $300 in the past year will receive a free Club O membership (normally priced at $20) and their membership account will come preloaded with an additional $10 balance. Those qualifying that are already Club O members will also have $10 added to their existing Club O Rewards account and their membership extended for one year.”  

The Salt Lake City UT business offers bargain prices to consumers and an additional channel to distribute inventory to product suppliers.