Friday, January 7, 2011

Overstock Faces New Foe In Illinois

Salt Lake City-based Overstock.com is facing a new foe in the State of Illinois today, as the state is expected to sign a new Internet Tax Bill into law. Overstock, along with Amazon.com, has been fighting efforts to tax the firm in states where it has affiliates. Illinois's new Internet Tax Law was (HB 3659) was passed by the Illinois Senate on January 5th, its House of Representatitives on January 6th, and is expected to be signed into law today. Overstock and Amazon have been the target of a number of cash-crunched states, who are looking to force Internet retailers to pay taxes to those states directly by passing laws that make affiliates of those sites a basis for a tax "nexus" in those states.

So far, both Amazon.com and Overstock have instead been dropping their affiliate relationships with all of their affiliates in states with Internet tax laws, instead. Anticipating a similar move in Illinois, a number of affiliate based Internet retailers in Illinois are up in arms, including contemplating moves out of state. Coupon deal sites CouponCabin.com, FatWallet.com, and BradsDeals.com are among the firms located in Illinois. CouponCapin said the bill will "do significant harm" to the firm's growth, cutting its business by nearly a third, and fellow coupon site FatWallet.com told the Chicago Tribune that it is actively looking to leave Illinois, since the law shuts off 30 to 40 percent of the firm's revenue.

The move is similar to the Internet tax bill passed in Colorado in March, which resulted in affiliates in that state losing their access to those retailers. That bill had been heavily opposed by such groups as the Colorado Software Industry Association.

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