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Illinois
Internet Retail Sales Tax Law |
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 Illinois
is on its way to levying taxes on Internet retail purchases
with the passage of
House Bill 3659 by a
vote of 88-29 in the State House. The bill once signed
into law by the governor will require Internet retail
businesses in Illinois with sales over $10,000 to collect
6.25% sales tax on Illinois residents who make purchases.
This includes businesses that do not have a physical
presence but have a contractual relationship with other
businesses that reside in the state. Lawmakers have 30
days to send the bill to the governor and he has 60 days to
sign it. If signed into law it would take effect 1
July 2011. |
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Other states that passed
such law include New York (2008), North Carolina
(2009), Rhode Island (2009) and Colorado (2010). Twelve
other states have rejected attempts to impose such laws.
In January 2011 a U.S. District Court granted an injunction
against the Colorado Law. |
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Small
businesses such as drop shipped sales, affiliate programs
and all other forms of retail Internet based business will
be affected. When the same laws were enacted in
New York, Colorado, North Carolina and Rhode Island the
result was the loss of jobs in those states.
Companies moved their businesses to other neighboring states
to avoid paying the tax and to protect their businesses.
Companies like Amazon.com have already sent out notices to
their Affiliates informing them that their contracts will be
terminated if the Governor Pat Quinn sign the bill into law.
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In 1992 the U.S. Supreme Court
ruled such laws in the Quill Corp. v. North Dakota case.
It ruled that more than 6,000 separate sales and local tax
jurisdictions in the United States amounts to an
unreasonable burden on interstate commerce. In short, the
court said, attempts to force out-of-state merchants to
collect state and local sales taxes are unconstitutional. |
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See follow on story.
By
Owen Daniels |