Illinois Internet Sales Tax Overturned

The Illinois Supreme Court ruled that the Illinois “click-through” nexus law that require the collection of sales taxes from Internet transactions from residents of Illinois is invalid.  The court ruled that the law violates the federal Internet Tax Freedom Act.

A 1992 challenge to the federal Internet Tax Freedom Act resulted in a ruling from the U.S. Supreme Court that reailers can’t be forced to collect sales tax on out-of-state purchases unless they have a physical presence in those states.

“The court noted that “performance marketing,” when engaged in through print media or on-the-air broadcasting, does not give rise to tax obligations under the Illinois statute. This enactment is therefore a discriminatory tax on electronic commerce within the meaning of federal law, which preempts it. The Illinois Supreme Court did not reach the commerce clause issue. The circuit court was upheld.”

Amazon ended its affiliates program in Illinois when the law was adopted in 2011.  It had over 9,000 affiliates in Illinois at the time.

Currently Amazon.com or its affilaites collects Internet sales tax for the following states.

-          Arizona

-          California

-          Georgia

-          Kansas

-          Kentucky

-          New Jersey

-          New York

-          North Dakota

-          Pennsylvania

-          Texas

-          Virginia

-          Wshington

-          West Virginia

Sources:
IL Supreme Court Ruling
1992 U.S. Supreme Court Ruling

By Owen Daniels