Sales Taxes
Overstock.com collects sales tax from the buyer on any order with a Utah shipping address and remits that tax to the State of Utah. Overstock.com does not collect or remit tax on any other orders.
US federal law allows a state to impose sales or use taxes only on people within the state. It does, however, allow a state to require an out-of-state seller to collect the tax from in-state buyers. But the state has this jurisdiction over the the out-of-state seller only if it has minimum contacts with the state, according the Commerce Clause of the US Constitution as interpreted by the case Quill Corp. v. North Dakota.
As Overstock.com operates only in Utah, and Utah imposes a duty to collect sales tax on sales to Utah residents, Overstock.com does so. But Overstock.com does not have the minimum contact with any other state to subject it to those states' laws, so does not collect sales or use tax for any other state.
Overstock.com has an affiliate program in which it pays commissions to people who refer business to Overstock.com. Some states believe that having such affiliates in their state meets the minimum contact requirement to give the state the power to place tax collection duties on Overstock.com. Colorado, New York, Illinois, and California are among them. To ensure it would not have to collect the taxes, Overstock.com terminated all its affiliates in those states when the states made that assertion.
Additionally, Overstock.com has declared that it believes the affiliate program does not amount to the required minimum contact under the US Constitution and that it therefore would not be required to collect the taxes even with affiliates in a state. Overstock.com has filed lawsuits seeking to clarify that point.
Overstock.com, because of its sales volume, is usually cited as a leading example of the significance of these interstate taxation laws. It is different from another large interstate seller, Amazon.com, in that Amazon has chosen to maintain ties with and collect sales taxes in some states, whereas Overstock has cut ties and does not collect tax.
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