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Amazon Internet Sales Tax Law In Illinois

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Illinois Governor Pat Quinn signed new legislation that requires Internet retailers to collect Illinois’ 6.25% sales tax if they have affiliate sellers in Illinois.

The House Bill 3659 is called the Mainstreet Fairness Bill was highly contested by companies within the state and would have become law had Quinn not done anything anyway.

In response, Amazon said it will terminate its Illinois affiliates and will drop 10,000 California based associates if similar legislation pending in California becomes law.

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The ramifications are already being seen as other stores such as Wal-Mart, Sears, Best By, Barns & Noble publicly invited the downtrodden Amazon affiliates to team up with their affiliate programs. In addition, Scott Kluth the founder and CEO of Chicago-based said that Quinn’s approval of the bill would bring him to actively explore moving his business to Indiana instead.

Quinn defended his move as stating that it was a fairness issue so that brick and mortar stores could compete with online retailers.

The US Supreme Court had ruled in 1992 that only sellers with a physical presence within a state are required to collect that particular state’s sales taxes.

The growing debate about taxes and the internet may either collapse or drastically alter the way business is done on the web. It will be interesting to see how this issue plays out over the next year.

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