Internet Retailer:

Threats by retailers to cut off affiliate marketing relationships in states that are trying to tax sales generated by affiliates have had an effect.

The governors of California and Hawaii have vetoed legislation that would have imposed such taxes in those states.

The governors acted after such major online retailers as Amazon.com Inc., Blue Nile Inc. and Overstock.com Inc. began this week cutting off affiliates in states that adopted laws requiring collection of sales taxes by e-retailers with affiliates in those states.

California Gov. Arnold Schwarzenegger called Overstock CEO and chairman Patrick Byrne to say he was going to veto the sales tax legislation. “We couldn`t be more pleased to have been directly told that the governor is going to focus on balancing the budget via cost cutting and not by jamming consumers and small businesses with new taxes,” Byrne says. “I compliment Governor Schwarzenegger on getting it right.”

Overstock reinstated relationships with its California affiliates following Schwarzenegger’s call, and resumed relations with affiliates in Hawaii today after getting news that Gov. Linda Lingle had vetoed that state’s sales tax law yesterday.

Photo by svilen001.