T.I.E. BlogT.I.E. Blog

(The.Idea.Exchange) Blog. Timely articles on a wide range of topics including new tax legislation, accounting regulations, best practices, industry news, business insights and more.

Warady & Davis Blog – The Idea Exchange (TIE)

Illinois Amazon Tax - Chicago CPA

Quinn Signs the Illinois Amazon Tax into Law

Source: Horwood Marcus & Berk Chartered

Author: Breen Schiller

[Governor Pat] Quinn signed into law the Illinois “Amazon tax” that requires the online retailer with affiliates in Illinois to collect a “use tax” for all sales to Illinois customers. Illinois’ first attempt at an Amazon law was struck down by the Illinois Supreme Court under the U.S. Constitution’s Supremacy Clause, which prohibits States from passing laws that conflict with federal law. Illinois’ original affiliate tax fell because it directly conflicted with the Internet Tax Freedom Act, a federal law that prohibits discrimination against electronic commerce.

The Amazon tax was found to be discriminatory because it didn’t apply the same tax to companies with affiliate programs that involved print or broadcast media rather than online sales. Previously, it was aimed at Illinois-based websites affiliated with out-of-state sellers such as Amazon.com Inc., which the State Supreme Court said was discriminatory and in violation of a federal moratorium on Internet taxes. However, the General Assembly came back with a new bill this spring in an attempt to circumvent the Commerce Clause by claiming that it is a “rebuttable presumption” that any online retailer with affiliates in the State has a physical presence in the State, which the retailer can rebut by “submitting proof” that its Illinois affiliates’ activities during the past year “were not sufficient to meet the nexus standards of the United States Constitution.”

Additionally, the General Assembly broadened the law to impose sales tax on sales by out-of-state retailers that result from a coupon or promotional code distributed in Illinois by mail, radio or television. The new law passed both the House and Senate in May and was recently signed into law by Quinn.

Overstock.com and Amazon ended relationships with their Illinois-based marketing affiliates; Chicago-based CouponCabin moved to Indiana; and FatWallet.com, which had been headquartered near Rockford for three years, moved over the border to Wisconsin. We will have to wait and see what further repercussions the Illinois Amazon law will have, but it’s probably a safe bet that these moves will be the first among many to happen.

If you have any questions, please contact Warady & Davis LLP at 847-267-9600 or visit the Horwood Marcus & Berk Chartered website – www.hmblaw.com.

Source: Horwood Marcus & Berk Chartered