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Overstock Threatens to Terminate Colorado Affiliates Over Pending Legislation

Jan 27, 2010
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In a high stakes game of chicken with state legislators, Overstock is once again using the threat of affiliate terminations as leverage in a preemptive move, this time with Colorado state bill HB 1193 (pdf), as the target. The bill, introduced on January 22nd, 2010 attempts to establish responsibility for collection of sales tax for out‐of‐state retailers if those out‐of‐state retailers use Colorado‐based affiliate relationships as a method of advertising. The bill is set for a hearing in front of the House Appropriations Committee for on Wednesday, January 27, 2010 at 8:30AM.

Sponsored by Colorado State Representative John “Jack” Pommer, who is also Chair of the Appropriations Committee, and Senator Rollie Heath, HB 1193 is comprised of the same DNA as the so-called Amazon Tax that was passed by New York State in 2008 and which is currently making its way through a series of legal challenges lead by Amazon. In its current incarnation Colorado’s version of the bill does not stipulate a minimum amount of revenue for nexus and  mistakenly treats affiliates as a sales force rather than as publishers  engaging in a method of advertising.

While I don’t condone the way Overstock President Jonathan E. Johnson III callously uses affiliates as bargaining chips, this type of tactic worked quite effectively in California with AB 178 which was ultimately led to a veto by California Governor Arnold  Schwarzenegger. Schwarzenegger even mentioned and appealed to Overstock directly in his reasoning prior to the veto.

In an effort to display small business solidarity and put a face to those in the affiliate industry who would be hurt by Colorado HB 1193, Brian Fox, Senior Director of Business Development at  Adperio, has organized a  meeting at the Legislative Service Building, located on corner of East 14th Avenue and Sherman St., which is directly across the street from the Capital Building. You can find more about the group on Facebook here.

To find out more about HB 1193 visit either the Performance Marketing Association here, or Affiliate Advocacy here. Both are great resources.

If you wish to contact Rep. Jack Pommer you may do so through the following: email:  jack.pommer.house@state.co.us; phone: 303-866‐2780.

If you wish to contact Senator Rollie Heath you may do so through the following: email: rollie.heath.senate@state.co.us; phone: 303-866-4872.

Filed under: Affiliate Marketing + Civic Responsibility + Legal Issues + Performance Marketing + Taxes
  • http://affiliate-marketing-forums.5staraffiliateprograms.com/affiliate-industry-events-news/20988-important-affiliate-tax-issues-colorado-virginia-new-mexico-advertisingtax.html 5 Star Affiliate Marketing Forums

    Important Affiliate Tax Issues in Colorado, Virginia, New Mexico #advertisingtax…

    IMPORTANT INFO!

    Overstock.com announced they will Terminate Colorado Affiliates.
    Use this info to your advantage as it helped to cause the Gov of CA to veto the bill.
    Schwarzenegger even mentione……

  • http://microsteph.com Stephanie Lichtenste

    Great post Angel I hope this helped today during the CO hearing.

  • http://www.revenews.com Angel Djambazov

    Actually, Stephanie, I owe you a direct thank you for the story. Was about to turn off my computer for the evening when I saw your email on Facebook citing the letter from Travis Hopkins that prompted me to write the article to try to get the word out. Wouldn't have seen it until the morning otherwise. Thank you for helping us and the industry spread information on such an important announcement.

  • http://microsteph.com Stephanie Lichtenste

    Glad I could help by sending the message. I just saw the turnout of over 100 CO affiliates at the hearing. This is great news that affiliates are getting involved. The 6-5 vote is close so they can definitely still beat it like in CA. Keep it up CO affiliates!

  • http://www.wakalix.com/wp/2010/02/04/colorado-hb-1193-internet-sales-tax/ Colorado HB 1193: stop this Internet sales tax | wakalix

    [...] Also see this post from ReveNews: Overstock Threatens to Terminate Colorado Affiliates Over Pending Legislation. [...]

  • http://affcon2010.com/ Daron Babin

    Want to make your voice heard? Want to hear why THEY want to pass this bill? Hear from the man himself coming up in June. We just got it confirmed from their office that Colorado State Representative John “Jack” Pommer, who is also Chair of the Appropriations Committee…will be present and sit on a panel at Denver's Affcon2010.com

    I'm stoked about this. This really gives the community the chance to speak directly to our lawmakes at one of our conferences to try and help educate them and to hopefully in the long run, make a difference.

  • http://www.revenews.com Angel Djambazov

    Hi Daron,

    Good to see you on ReveNews. Just a small tip, if you want to be taken seriously when you promote an event you need to be current on industry news. HB 1193 is no longer a "bill", it was signed into law on February 25 by Governor Bill Ritter.

    Now John "Jack" Pommer who was the sponsor of the bill is a great guest to have. It will be interesting to hear his take on the fallout now that Amazon and others have terminated Colorado affiliates.

    Angel

  • http://affcon2010.com/ Daron Babin

    Agreed!

    ! Saw it come across my desk today and knew this would be good for affiliates.

    We've wanted to be proactive within our trade shows regarding the ever changing laws that affect affiliates.

    So this should be a good panel nonetheless, and you can bet there will be no punches pulled with this crowd.

  • http://www.calling-plans.com Greg

    I just received this email from about 50 Commission Junction Advertisers that I do affiliate marketing for. (CJ.com)

    "Dear XXXXXX,

    Due to the recent tax laws regarding nexus involving online affiliate publishers in the state of Colorado (legislation known as HB 10-1193) we will no longer be able to accept new publishers from Colorado into our affiliate program.

    Additionally, we will be immediately terminating our relationship with any publishers located in Colorado that were already joined. We sincerely apologize for the abrupt interruption in the program if this affected your account directly. This, unfortunately, affects our ability to continue business with loyal publishers and we understand that we are losing valuable relationships due to these new laws.

    If you are a publisher located in Colorado, your publisher account will be closed as of May 18, 2010, and we will no longer pay advertising fees for sales referrals after that date. All sales made prior to May 18, 2010 will be credited to you and paid out in accordance with our regular schedule on June 10, 2010. Please accept our apologies and we appreciate your understanding. Hopefully in the future, these laws will be reversed in order to keep the networks diversified and growing.

    Kind Regards,

    XXXXXX"

  • http://www.calling-plans.com Greg

    According to the state of Colorado, the law states that outside retailers have to notify the State of Colorado and the customer of what they spent, so that the state of Colorado can collect the money. It doesn't make any difference if they have affiliates in the state or not, if they make any sales in the state, then they have to report the sale.

    http://cclponline.org/pubfiles/Amazon%20fact%20sh…

  • http://gregahern.us/2010/10/amazon-affiliates-out-of-business-by-colorado-law-hb-10-1193/ Amazon Affiliates out of Business by Colorado Law HB 10-1193 | Greg Ahern's Blog

    [...] Feld – local Colorado entrepreneur and founder of venture capital companies. Overstock.com is threatening to cancel all affiliates in Colorado Cary Bergeron Denver Post, Vincent Carroll The [...]