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I just saw on a Tweet from Linda Buquet that Overstock has filed a lawsuit to fight the New York affiliate tax.

Overstock.com, Inc. (Nasdaq: OSTK) announced today that it has filed a lawsuit challenging New York’s new tax law that requires internet retailers to collect and pay to the New York state tax on their New York sales despite the fact that the retailer has no physical presence or nexus in New York.

The controversial new law attempts to redefine the relationship that internet retailers have with their New York-based advertising affiliates by requiring that when those affiliates solicit customers, the internet retailers collect and pay sales and use tax from all their New York customers.

Overstock.com, which is based only in Utah, has no operations in New York, and sells exclusively through the internet, views the new law

It’s great to see another online retail powerhouse fighting the state of New York over the affiliate tax.

Earlier this week, Overstock chairman and CEO Patrick Byrne shared his perspective in my blog comments on this issue.

Go Patrick… go Overstock… fight the good fight!

Linda has some more information on her 5 Star Affiliate Programs Blog.

Read the Overstock press release for more details.

Andrew Wee of WhoIsAndrewWee.com recently had super affiliate Zac Johnson on his podcast to talk about Zac’s success with niche affiliate sites.

Andrew chatted with Zac on how he got his start in Internet marketing; how he developed a niche site into a big success; and how he researches and develops new niche sites.

Zac also provides tips for new affiliates developing their sites. This is a great resource for affiliates getting started - definitely take the time to listen.

You can stream or download the podcast at http://www.whoisandrewwee.com/podcasts/friday-podcast-niche-site-development-with-zac-johnson/.

Zac also provides tips to affiliate bloggers in the first issue of FeedFront Magazine, available to download at http://feedfront.com/feedfront-issue1.pdf.

Internet Retailer magazine has posted coverage on the upcoming “affiliate tax” in New York state. The new law kicks in June 1, 2008.

Amazon.com Inc. and Overstock.com Inc. each gave a strong message last month to New York State: You may need more tax revenue, but we won’t let you cut into our profit margins without a fight.

In the long-simmering battle between states and Internet merchants over the collection of sales tax, New York upped the ante in April when it amended its sales tax law to cover sales by out-of-state online retailers who get customers through New York-based affiliate web sites. The law targets retailers like Amazon and Overstock, which, because they maintain no physical presence in the state, have been exempt until now from sales tax responsibilities.

I’m glad to see more of the media picking up on this issue. Spread the word and speak out on forums, blogs, etc. about the affiliate tax and let your affiliate managers know what you think about it.

Read the complete article at http://www.internetretailer.com/article.asp?id=26575.

The May 28, 2008 episode of Affiliate Thing opened with talk about the efforts to form a new affiliate marketing trade association.

Then Lisa Picarille and I discussed the impact of the New York affiliate tax, a robot with no name at Magnify.net, and Melissa Salas of Buy.com becoming a national TV star.

Also, we chatted about a chance to win cash money by designing a new Affiliate Summit site, third party ads on Google AdSense, and what’s happening in the affiliate porn business.

Show Links

• New York Affiliate Tax
• Name the Magnify.net Robot - Get a Flip Camera
• BuyTV is Going to National Television
• “So You Think You Can Design” Contest
• Third-Party Ads on Google AdSense
• Naughty Affiliates

Subscribe to the Affiliate Thing RSS feed or listen on iTunes. You can also send a blank e-mail to affiliatething@aweber.com to get each podcast delivered by e-mail.

Stream the show on WebmasterRadio.fm or download it.

There are many ways to conduct business, ranging from co-opetition to cut throat. Many industries operated somewhere in between, but affiliate marketing tends to have more of a community vibe.

So when somebody violates the mores of the collective industry, it tends to result in a swift backlash.

The latest example comes in a thread I was just reading on ABestWeb about Experience Advertising.

This is a company that manages affiliate programs, and the action that caused an uproar was Experience Advertising owner Evan Weber bidding on the company names of his competitors in Google AdWords and running the following ad:

In response to the complaints about his marketing efforts, Mr. Weber created an account on ABestWeb, “hatingonme,” and posted:

Hey guys its Evan here..all the ads are down…why shouldn’t companies be able to advertise in Google for other companies keywords? This goes on everyday…nonetheless, I have removed all of them. If you want to keep bad mouthing me here thats fine, when everyone loves me in the internet marketing industry, but don’t be suprised if I don’t do the same on my site about you.

This reminds me of something Jason Calacanis said during his keynote at Affiliate Summit 2008 West.

He said something along the lines of “just because you can do something doesn’t mean you should do it.”

Exactly.

Pepperjam just announced that they have partnered with the eBay Partner Network to bring eBay’s links and graphics to Pepperjam’s affiliates.

HIGHLIGHTS: Make up to 75% of all the transactions and up to an additional $35 for every new active user you send to eBay. Pepperjam has in place a dedicated eBay affiliate management team to work with you in real-time to maximize your eBay revenue. Learn more about our aggressive commission structure by logging-in to your Pepperjam Network account!

This is the latest chapter in the Commission Junction and Pepperjam soap opera.

In addition to the recent rift between these two, eBay recently closed their affiliate program at Commission Junction.

LinkConnector sent a message out to their merchants with recommendations on how to react to the New York affiliate tax, which comes into play on June 1, 2008.

1. Determine if this law actually applies to your Affiliate Marketing program. It is the opinion of LinkConnector (and many others in our industry) that most campaign designs will not even subject you to this law. If you are running a pay-per-click, per-per-go, pay-per-call, pay-per-lead, or pay-per-impression campaign; your NY affiliates are simply advertisers and running this type of Affiliate Marketing program may not subject you to the new requirements of this law. If you are running a pay-per-sale campaign, there are further actions you can take to protect yourself.
2. Design a better pay-per-sale campaign. If a pay-per-sale campaign is best for you (and no other type promotion will work for your NY affiliates), you can take steps to protect yourself from this new NY law. As long as your affiliates do not specifically target NY state residents; your pay-per-sale campaign, by itself; does not subject you to the new law. By building specific restrictions into your LinkConnector campaign level Terms and Conditions (and enforcing them with our assistance), you should be able to provide enough evidence to the state of NY to eliminate your need to collect local and state sales tax for NY sales. A New York affiliate having a website link to your site isn’t enough to require you to start collecting additional taxes. The NY affiliate must also target NY residents (e.g., sending out flyers promoting their website, sending e-mails, possibly setting up an SEM campaign that specifically geo-targets NY residents, etc.).
3. Run an unrestricted pay-per-sale campaign. If you don’t wish to restrict the specific behaviors of your NY affiliates, LinkConnector can help you determine the volume of sales attributable to NY affiliates. We can send you a report for past months of all Order IDs attributable to NY affiliates in LinkConnector. For those merchants who would like to access the data real-time, LinkConnector can help you set up your campaign to provide the information necessary to access such a report. Either way, merchants are able to determine whether or not they meet the threshold of the NY law and are required to collect sales taxes when selling to NY customers.

Choots Humphries, Co-President of LinkConnector, encourages merchants to contact him with any questions.