In a letter to those websites that are registered to New York state businesses participating in the Overstock.com affiliate program Geoff Atkinson Vice President announced the hopefully "temporary" discontinuation. Cited in the letter is the recently enacted NYS tax law regarding internet businesses.

Earlier this month, Amazon.com filed suit challenging the new law. "We are challenging the constitutionality of the recently enacted legislation in New York," Amazon spokeswoman Patricia Smith said.

In essence, the NYS tax law recently enacted seems to imply that any company that has a representative doing business in NYS is required to collect sales tax on any item sold to a NYS resident. In this case the State of New York is saying that if you sign up for Overstock's (or any other internet company's) affiliate program, you then become a representative of that company and in turn that company must then collect sales tax on all internet sales shipped to NYS residents. 

This law could have significant impact on affiliate programs world wide and drastically reduce income for large affiliate websites. As states try to find ways to generate income for their general funds, they will continue to search out ways to circumvent the federal statute which exempts interstate internet transactions from sales taxes.

Though the email to NYS affiliates was received today, there has been no official posting on the Overstock.com website or blog.