Repeating a program it implemented in four other states in April, Ovestock.com has ceased affiliate operations in Connecticut this week after the state became the latest to adopt online tax legislation and will be focusing resources on Connecticut shoppers instead.
As it already does in New York, North Carolina, Rhode Island and Illinois, Overstock will take money it would’ve directed towards affiliates in Connecticut and instead divert it to in-state members of the retailer’s Club O loyalty program.
Connecticut’s online tax law is scheduled to go into effect on July 1 and will require merchants that total more than $2,000 in annual sales from affiliates to collect sales taxes.
Overstock, naturally, isn’t too fond of the law.
“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,” said Overstock CEO Patrick Bayne, who called the Connecticut law unconstitutional.
So what are Connecticut-based Overstock customers going to get?
Those that have spent more than $300 on the site over the past year will get free Club O memberships with an extra $10 thrown in. Shoppers already enrolled in the loyalty program will have their memberships extended for another year and receive the additional $10 added to their rewards account as well.
Club O memberships normally run about $20 annually and include 5 percent off of every purchase made on Overstock, free shipping on items over $25 and exclusive access to special sales and promotions.
Neither Overstock nor Amazon has shown any qualms about simply packing up shop in states that enact online sales tax bills in the past two years or so. And with 5 states now on board with Overstock’s reactive strategy to online tax legislation, the question really becomes whether or not such a strategy will ultimately force lawmakers to consider the impact online sales tax bills will have on affiliates in those states before they enact such legislation.
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