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Overstock.com Eyeing Supreme Court Appeal Of Adverse NY Internet Tax Decision

SALT LAKE CITY, March 28, 2013 /PRNewswire/ --  Overstock.com, Inc. (NASDAQ: OSTK) is considering a U.S. Supreme Court appeal of the adverse ruling handed down today by the New York Court of Appeals in its case contesting the constitutionality of New York's affiliate tax laws.

(Logo: http://photos.prnewswire.com/prnh/20120110/LA33954LOGO)

"We are disappointed in today's ruling, but confident of our position that the New York law is unconstitutional on its face and violates due process," stated Jonathan Johnson, Overstock.com's acting chief executive officer.  "Given that courts in other states have upheld U.S. Supreme Court precedent, and struck down similar laws, the matter appears ripe for resolution by the U.S. Supreme Court."

The company noted the strong dissent filed by Justice Smith, observing that Justice Smith's analysis more closely tracks federal precedent as it bears on the constitutional questions the company has raised concerning New York's law.

The company states that, while unfortunate, today's decision will have no impact on the company's operations.  The New York law passed in 2008 was aimed at conscripting out-of-state retailers to collect New York and local sales taxes if the retailers used the services of New York-based internet advertisers for banner and other types of internet advertising. Overstock and many retailers, rather than undergo the significant burden of tax collection without just compensation, reluctantly terminated the services of its New York-based advertisers. Eight other states have passed similar laws, the chief effect of which has been to put many internet advertisers out-of-business, resulting in lost income tax revenue to those states.  In Illinois, many of the top twelve internet advertisers in the state moved to other jurisdictions.  Subsequently, an Illinois state court ruled the Illinois law unconstitutional.

"We have opposed at each opportunity the patchwork quilt of state laws, but we do not oppose the right federal solution to this national question," noted Johnson, who in recent months has worked with key congressional representatives to shape the contours of a national plan to allow state to use remote retailers for tax collection so long as the states agree to necessary conditions.

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