EggXpert

It's unfortunate that Newegg has chosen to follow Amazon.com in imposing NY state sales tax while other vendors like Overstock have chosen to stand with their customers and have taken steps to avoid having to impose sales tax.

The reason Newegg will have to collect sales tax is that they have independent website operators in NY State who earn a commission for sales made via links placed on their websites.  There are two ways vendors can deal with this - one favoring their customers and one favoring website operators who are not customers of Newegg, but might bring them incidental business.

Measure #1 - Follow the lead of Overstock.com and certain other Internet vendors and temporarily suspend the affiliate program in place for NY State-based websites.  This immediately exempts Newegg from having to charge any NY state resident state sales tax, maintaining their customers in New York who would otherwise shop elsewhere and find a lower online price from your competitors who are taking the side of customers first.  And considering this tax is being challenged in the courts, website operators should not be the first consideration of Newegg until this court case is decided - their end customers should!

Measure #2 - Allow website operators to continue to pick up a percentage point or two in referred sales and stick it to customers in New York with an 8%+ sales tax imposed not only on the purchase but also on the shipping charges, if any.   

As all of this is happening, Amazon has brought a lawsuit against NY State challenging the constitutionality of this sales tax measure.  So should the outcome be positive for consumers, it can prove a win-win for customers and website owners participating in their affiliate program.  Additionally, several NY based websites, who are businesses that run for profit, are simply establishing themselves out of state, which gets them back into affiliate programs which temporarily suspended them anyway.

There are avenues for website operators to avoid the implications of a suspended affiliate program.  There are NO such avenues for end customers, who will pay sales tax on purchases just so some websites that are not a part of Newegg can continue to cash in.  For me, as a person who buys based on price, I will be likely taking the thousands of dollars I spend at Newegg every year to your competitors who have elected to stand by their customers and get around the sales tax debacle.  After all, they were thinking of their customers' bottom lines first, which is a great loyalty test.  Newegg is failing that test thus far.

if a company has a fiscal presence in the state in which you reside, you have to pay the sales tax in that state,,,,i live in NC,,stinker direct has a store in raleigh,,therefore if i were to buy something from them online i would have to pay NC sales tax,,,on the other hand, stinker direct now owns comp usa,,same people, same stock, prices and so on,,only thing different is the name,,and they don't have a comp usa in NC,, i bought a comp case from them,,,no tax,,,,just my .02 cents ,,,when it comes right down to it, this whole tax thing is just a bunch of

When did this start?

NewEgg's Policy as of Today...

http://www.newegg.com/Info/PolicyAgreement.aspx:

• All orders shipped within CA, TN and NJ will be charged sales tax.

Tax: All customers outside of California, Tennessee and New Jersey will not be charged any tax.

If this is true, this is very disappointing and sad. For the first time in years I may have to do business elsewhere with NewEgg's competitors.

As the number 2 online retailer behind Amazon, I would urge NewEgg to stand united with them on this issue against this change in law. With the big players on the same side in this, the customers have a better chance coming out on the winning side.

Don't do it NewEgg, your customers are counting on you.

 

Noooooo! don't cowtow to them! get you lawyers earning there pay and get around it!

 

 

Edit: (NC already does this, accept it is based on the honor system, you are supposed to report any online transactions when you file your state taxes, wonder if anyone actually does. haha) 

IronMan77, this has always been like that. I live in NJ, and as far as I can remember when I order from Newegg I've paid the 7% tax. The benefit is, if what I order is ship from the New Jersey warehouse, I usually receive it the next day afternoon, without paying anything extra in shipping, plus Newegg service and prices.

As somebody who lives in NewYork.. Yea, this sucks.. However, because of the shift from taxed retail store purchases to online purchases, NY is seeing a huge drop in their funding.. Since businesses and people have been leaving NY state for years because of better job opportunities in California and elsewhere, The funding needs to be restored and soon, or the whole state will go down the toilet pretty quick, in my opinion..  Instead of raising taxes for everybody, it is better that they impose the sales tax for online purchases..  There's just no other way to collect funding. 

As I recall from History, there was a federal law or something that prevented states from taxing goods that were shipped into / through their areas.  The reason for it was because it would artificially cause prices to be higher for shipped goods and so would discourage people from buying things from other states because of the higher prices..  As a result, businesses (who have manuf. plants out-of-state) would not be able to expand their markets as naturally as they should and so when making purchases from out of state, sales tax was not charged because of the additional cost of shipping. For years, this has given an unfair advantage to companies like NewEgg who ship from out of state as compared to the retail stores who must have their goods shipped to the store and charge sales tax.

Yes, it's annoying and disappointing.. And yes NewEgg might find a loop-hole somewhere to get around it..  But really, I don't have a problem with the sales tax and it won't prevent me from buying from NewEgg (as compared to another online supplier).. It will cause NewEgg to fight harder in the New York market to compete against online warehouses that have no connections to New York and are still able to provide the product with no sales tax. Whether or not NewYork is properly spending the little funding that they get is an entirely different issue

Problem is, if NY imposes the Sales Tax on NewEgg, then they would have effectively given Retail stores and advantage over NewEgg (Cheaper shipping by bulk and no waiting for it to arrive)..  There has to be a better solution.

I would eBay my "I Love NY" T-Shirt, but I don't think anybody would want it

 

Giving the NY State Legislature more money to play with is not going to save this state.  I don't want this to deteriorate into a government bashing thread because that won't keep this thread focused on applying pressure to Newegg to make an immediate change which will IMMEDIATELY allow them to rescind charging NY sales tax effective 6/1.

What everyone needs to stay razor focused on is pressuring Newegg to be loyal first to their customers.  Right now, they are throwing their NY customers under the bus by standing first with independent website operators in NY whose bottom line they obviously care more about than ours as customers.

 It's a very simple choice for Newegg:

 1) Ask independent website operators in NY cashing in on affiliate links to forego participating in the Newegg affiliate program until Amazon can successfully challenge and overturn NY state in their lawsuit.  If they do this, Newegg DOES NOT have to impose sales tax on purchases for NY residents.

 2) Continue to run an affiliate program for NY websites (many of whom run by people laughing all the way to the bank on their percentage of earnings from dubious websites with links back to Newegg - they themselves often have not spent a cent as a Newegg customer) which means Newegg values them more than us.

 

Any other issue is besides the point.  You need to write Newegg's executive office and question them about whose loyalty they value more - actual customers who will suffer from the imposition of a sales tax and potentially take their business elsewhere to vendors who understand customers come first, or do they stand with websites that exist to cash in on links back to Newegg, often run by people who aren't even customers of Newegg.

 

ladytekki:

IronMan77, this has always been like that. I live in NJ, and as far as I can remember when I order from Newegg I've paid the 7% tax.

No it hasn't, this is a change in NY state law. Read this to catch yourself up:

http://www.nytimes.com/2008/05/02/nyregion/02amazon.html

You have been paying the tax all along because NewEgg has a physical presence in your state, a warehouse.

GmsCool:

NC already does this, accept it is based on the honor system, you are supposed to report any online transactions when you file your state taxes

Yes, this is how it has always been done. The current debate is not over whether people should pay taxes on purchases over the Internet, it's whether online retailers like Amazon and NewEgg with no physical presence in the state should be forced to collect taxes of residents at the point of sale for the state. Amazon says NO and is taking this change of law to the courts.

 

I see NewEgg losing a lot of NY's business as other e-sites aren't affected by the sales tax.
now to pay 8.75% in sales tax.

The reason I shopped at Newegg is for good prices, No Tax and good cs. Now with NY tax other retailers are looking like a better deal.

 

GmsCool:

Noooooo! don't cowtow to them! get you lawyers earning there pay and get around it!

 

 

Edit: (NC already does this, accept it is based on the honor system, you are supposed to report any online transactions when you file your state taxes, wonder if anyone actually does. haha) 

 haha
 

Chiefvalue, one of Newegg's principle competitors is making hay out of the fact they will NOT be charging sales tax for New York residents and invite those upset with Newegg's decision to protect affiliates over customers to shop with them instead.  Sounds like a plan to me.  I've already written Newegg in e-mail about this and will be closing my credit card account with them on 6/1 and moving on.

 It all comes down to who values my business as a customer more.  A company that values its affiliates or one that values its customers.

 

pdampier:

It all comes down to who values my business as a customer more.  A company that values its affiliates or one that values its customers.

It is unfortunate.

All NewEgg would have to do is to suspend it's affiliate program in NY and they would not be responsible for collecting tax under the new law.

Are the affiliate program members in NY really worth more than the loyalty of the actual NY customers? I think not. 

Hopefully this solution is being considered within the higher ups at NewEgg atm.

 

I agree with Ironman, I have been a longtime fan of Newegg but if im going to have to pay an extra 9% when I buy, it would be easier to just buy it from a retail chain or another online retailer. I can't believe Im actually going to leave Newegg after many great years...I hope they can save their reputation in New York State.

I've been doing business with Newegg since 2001, and have been buying the parts for each new system almost exclusively through them since that time. Over time I'm sure that has added up to a fair amount of money. Unfortunately, given the decision to begin charging NY state sales tax, rather than simply abandon NY affiliates as Overstock did, I will no longer be doing business with Newegg.

 I harbor no animosity toward the company, it's just simple economics - sales tax, on top of shipping, raises the cost to an extent that it is no longer worth it.

 But hey, I have to thank NY state for the money grab at a time when the economy is weak, wages are stagnant and everything is getting more expensive.
 

i read the rules and not starting a discussion on the subject, but just a mere question on where and who can i submit a question (to newegg) regaurding the the law begining on june 1 2008 that newegg is going to be imposing?

I have to agree with most of you guys here. I have been a big fan of Newegg for a while now. I might not have purchased as much as some since my disposable income is very limited. Fact is, it is my limited income that makes me search far and wide for the best value and I'd say 90% of the time NewEgg is it.

Adding the already hefty NY sales tax to the shipping, it will most likely make no sense buying from them.

Sure I understand NJ custumers having to pay because NE's warehouse in that state (to service the NYC region quickly). But now, how will getting products to our doors in 2-3 days compete with getting it the same day in a brick and mortar?

If NE really wants to collect sales taxes for NY, how about opening a store in NYC? Just a thought... Frankly I'd prefer no sales taxes.

I would add I was just pricing parts for a home server. It is cheaper right now then buying a desktop from B&M stores but not after the shipping+tax

If I have to pay 9 percent  tax and shipping, it's only a minimal gain over some local retailers, so I might as well get it immediately at a store near me.

I got the dreaded news this morning.  This letter was in my email box.

 

 

 

I got an email from Newegg this morning stating that tax will be charged effective June 2nd. Shipping costs are getting ridiculous and now add tax on top of that, I have to take my business elsewhere.  I've been shopping Newegg since they first opened because of the great value it provided. I haven't seen those values lately and the tax charges are a deal breaker. Sorry Newegg, you just lost a customer.

As far as I have read of the law, there is no "Affiliate / customer" competition.

This is a blatant revenue-generating move by new york state. As far as I have read, whether you have affiliates in NY or not, if your customer/ship-to is in NY state, you must collect NY sales tax and remit to NY.  

 EDIT:

My Bad -

The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon has hundreds of thousands of affiliates — from big publishers to tiny blogs — that feature links to its products. The state law says that thousands of those have given an address in New York State, although the addresses have not been verified.

The law says that if even one of those affiliates is in New York State, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate. This is an extension of an existing rule that companies employing independent agents or representatives to solicit business must collect taxes for the state.

 Edit 2:  To the poster above, ChiefValue is a wholly-owned Newegg Subsidiary without any affiliate programs. So you money still goes to Newegg... 

 

CheapAsianGamerGuy:

It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer.

Yep your correction is right. It does really comes down to Affiliate Program or Customers of the state. Under the law, a site sould either decide to keep its affiliate program in the state and charge state customers tax or they could suspend the affliate program in the state and not collect tax from state customers.

IMO, NewEgg made the wrong call.

CheapAsianGamerGuy:

ChiefValue is a wholly-owned Newegg Subsidiary without any affiliate programs.

You mean CheifValue is like NewEgg without the tax, awesome! 

I have a feeling CheifValue is going to be picking up some customers.

 

Not only CheifValue has tax free, there a bunch of e-retailers are tax free too. NewEgg just made a wrong call. I think most of the New Yorker will search for some no tax E-retailers and just stay with them. Once a company gets more business, it will improve there services. I just feel bad for NewEgg made this decision.

Stand by your principles and fight this illegal action by New York State or lose my business forever.  Oh, I forgot, we allow companies to be legal "persons" but don't require they be moral or ethical or even honest for the most part.

At any rate it will be a cold day in you-know-where before NewEgg sees another order from me.  Cowards.

 

IronMan77:

You mean CheifValue is like NewEgg without the tax, awesome! 

I have a feeling CheifValue is going to be picking up some customers.

 

No, I don't believe you're 100% correct on that.. If I dig deep and way back into my mind, there was a thread on the forums about 6-8 months ago that discussed the relationship between ChiefValue and NewEgg.  In the end, the only thing they have in common is shared warehouses. The Customer Support that you associate with NewEgg does not come with your purchases to ChiefValue and you can't hold NewEgg responsible for ChiefValue purchases and vice-versa.   If it's the NewEgg warehouses that you love so much, with the fast shipping and such, then you'll probably be fine with ChiefValue.. However, if it's the customer support (the part that I love) then stick with NewEgg despite the tax increase, I am..

Edit: I'm going to go off on a bit of a rant here..  People cry and complain about all the out-sourcing to India when they have a problem and they spend hours trying to get it resolved because the guy on the other end of the phone can't speak English very well.  The reason stores and OEMs are able to provide cheaper prices is because they make cuts elsewhere and people are so cheap that they are blinded by the greed of lower prices and shoot themselves in the foot without even realizing it, yet they don't realize their mistake until they have a problem and it takes 2 hours to get an RMA authorization because you don't speak Tagalog. Then they spend their time cursing the companies out on the Internet and in their blogs when they should have been cursing themselves out for not going with a company that puts more of an investment in Customer Support (Like NewEgg).

There are a lot of people who shop at NewEgg and have ALWAYS paid taxes on EVERY order they make.

Kojak:

<p>Stand by your principles and fight this illegal action by New York State or lose my business forever.&nbsp; Oh, I forgot, we allow companies to be legal "persons" but don't require they be moral or ethical or even honest for the most part.</p><p>At any rate it will be a cold day in you-know-where before NewEgg sees another order from me.&nbsp; Cowards.<br><br>&nbsp;</p>

Are you from NewYork also? If so, you're partly responsible for this, we all are..   Trust me, the people who write New York laws wouldn't give a darn about what a multi-billion dollar company wants and there's no way NewEgg would win as it's a lost cause.. The only people the law makers listen to is *gasp* New York residents! You can write a letter to New York state and let them know how you feel.  Stop telling other people (or even companies) to do things that you yourself don't want to do, especially when your own actions (voting power) would give far more push than NewEgg's lawyers ever could. 

NewEgg didn't write the law, the people who represent us (Citizens of New York State) did.. And they did it thinking it was for the mutual benefit of all New York state residents.If you're a New York state resident and don't believe this, then you've got to speak up to the people who can change the law (Not NewEgg).. If you don't, you have nobody to blame but yourself.

There is no doubt in my mind that Amazon will fail..  Multi-billion dollar company coming to challenge a new law (made to benefit NY residents) because it hurts some of their sales.. Cry more Amazon, cry more..   In fact, they even named the law after Amazon. .. Amazon has no interest in New York except for making money with more sales and that's why Amazon will fail in their fight against the law since the people of NY come before multi-billion dollar companies as the should.. Companies shouldn't be changing the laws of the people, but that's a whole 'nother rant altogether. 

Those who think Amazon is fighting the law to save New Yorkers from having to pay taxes need to wake up and realize it's just that Amazon doesn't want to lose their sales to companies that the law doesn't apply to.  Amazon has an obligation to shareholders to earn as much money as they can, 24 hours a day, 7 days a week, they are not fighting to save your from your taxes, they are fighting to prevent losing sales to other companies.  I wouldn't be surprised that, after Amazon fails,  Amazon did a 180 and attempted to get a law passed to enforce the tax for EVERY internet order to put all stores on an even playing field and so they won't be at a disadvantage to other stores who the law doesn't apply to.   

Poster above labels companies like NewEgg as "Cowards" and will probably label companies like Amazon "Heros"..   Just wait for Amazon to fail and then watch them switch sides and see them push for taxes for all online orders, affiliates in the state or not, just to put the others who evaded the new law on equal ground.

Just my rant / 2 cents / etc..

Newegg has just announced they are throwing their NY customers under the bus.  Sources provided me with this internal e-mail being sent to Newegg affiliates.  If there ever was a clear indication that Newegg cares more about their affiliates than their customers, this is it.  People should contact Mr. Chang (and others at Newegg - start with Customer Service and tell them to send word to Newegg management) and tell them that their disloyalty to standing first and forever with customers and NOT with third party websites will cost them YOUR business.  Let Newegg know you will only do business with companies that remember that CUSTOMERS always come first... not independent third party websites that simply advertise their products.

E-MAIL TO NEWEGG AFFILIATES:

As you are probably aware recent changes in the State of New York Tax Law requiring certain out-of-state retailers to collect and remit sales taxes to the State of New York has caused retailers to evaluate their strategies as it relates managing their business and how to most effectively utilize their affiliate programs.

Newegg.com will begin collecting applicable state and local sales tax for all orders shipped to New York addresses on or after June 1, 2008. Our relationship with our affiliate partners played a significant role in the decision process and we would like to ask for your continued support and commitment in promoting our products through your respective sites.

We are committed to our New York State customers and will continue to work hard to offer great deals and products to optimize the benefits of our affiliate relationships and ultimately provide our customer the online buying experience they deserve.

If you have any question, please contact us.

Sincerely,

Tommy

Tommy Chang | Director, Internet Marketing | t 626 271 1420 x 23396 | m 626 384 0574 | e tommy.t.chang@newegg.com