Illinois Governor Signs Amazon Internet Sales Tax Law

[devils chaplain]

Source: Forbes

After two-months of fence-sitting, Illinois Governor Pat Quinn today signed controversial legislation requiring Internet retailers like Amazon.com and Overstock.com to collect Illinois’ 6.25% sales tax if they have affiliate sellers in the state. House Bill 3659, the Mainstreet Fairness Bill, was passed by the state’s lame duck legislature in early January. Since then, the bill has been the subject of fierce lobbying by traditional bricks and mortar retailers, who supported it, and Illinois-based Internet-only businesses, who warned that if Quinn didn’t veto it some of them would flee the state. Had Quinn done nothing, the bill would have become law tomorrow without his signature.

Amazon has already said it will terminate its Illinois affiliates, just as it has said it will drop 10,000 California based “associates” if similar legislation pending in that state becomes law. Affiliates are paid a fee by Amazon and other retailers for sales brought in through advertisements and links on the affiliates’ web sites. In an escalating PR war, Wal-Mart, Sears, Best Buy and Barnes & Noble have all issued public invitations to Amazon’s spurned associates to join their affiliate marketing programs instead. Yesterday, the Alliance for Main Street Fairness, a bricks and mortar retailers organization, even announced a new web site to connect affiliates “about to get thrown under the bus” by online-only sellers with retailers who already collect sales taxes on line. Quinn’s office said today that the affiliate matchmaking service had been launched at his request.

Read more: http://blogs.forbes.com/janetnovack/2011/03/10/illinois-governor-signs-amazon-internet-sales-tax-law/

[ProgressiveProfessor]

1. The affiliates need Amazon, much more than Amazon needs them

This needs to settled on a nationwide basis, not piecemeal attempts to reverse SCOTUS on this.

[Sherman A1]

2. Well, if all states did this then Amazon would be

in a much different position and I expect over the next few years it will come to that. Of course by then those affiliates may not be so interested in Amazon's Brand, time will tell.

[Imajika]

6. Don't count on it...

There will always be many states that won't do this at all in effort to lure business. And those states WILL advertise in Illinois and other states that apply this tax. You've seen the ads, "Come to Texas, we hardly tax business at all!". Hell, that is part of Scott Walker's agenda in Wisconsin. He intends to advertise and lure business away from Illinois and elsewhere by offering massive tax incentives.

The problem with our current system of 50 states competing with one another is that the states that go for progressive tax rates that call for the wealthy and businesses to pay their fair share end up bleeding wealth and businesses to states that couldn't much care less about social safety nets, etc.

As for this tax on internet purchases. I live in a state that doesn't do that and I kinda like my tax free purchases, but if your going to have a sales tax for goods it really does make sense to apply it to brick and mortar and the online e-world.

[aquart]

7. Which, added to shipping costs, cripples the online business.

[Name removed]

12. Deleted message

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[right2bfree]

18. Bingo, we have a winner!! eBay would be eGONE if sales tax is applied. nt

[ProgressiveProfessor]

14. I think you are confused on your tax models

[TBF]

22. You're right about Texas -

when the Texas comptroller got in a battle with Amazon (decided he was going to tax them) governor Perry was furious.

[TygrBright]

3. Great. Way to get Amazon to dump IL affiliates, Dude. n/t

[madrchsod]

5. if amazon wants to dump one of the largest states

there will be others ready to replace them.

[ProgressiveProfessor]

13. Amazon is not dumping Illinois customers, just its Illinois affiliates

[madrchsod]

17. that`s what i meant...sometimes i don`t read what i write

[madrchsod]

4. every little bit helps my state...

[Astraea]

8. While it's nice to get out of paying sales tax,

saving money and all, it's unfair to the brick-and-mortar stores that have to compete with online sites that don't have to worry about it. Customers are going to go for whatever's cheapest, and just because the transaction takes place virtually doesn't mean that the place the order comes from is 'virtual', or that the place the order gets sent to is 'virtual' either. This takes money away from the states and creates an uneven playing field. I know it's difficult to distinguish who should pay the tax/which state should receive it; I wish we could have a national tax on online transactions that would divide the revenue equally between the seller's state and the buyer's state.

[LisaM]

9. Plus it shrinks the tax base more (not charging sales tax)

Don't people realize how much our infrastructure is bleeding because the tax base has been so whittled away?

[groundloop]

10. Exactly correct. My opinion has evolved in that I now understand how badly states need those $$$

Before internet shopping, one state or another collected sales tax on pretty much everything. With more and more sales done online with no sales tax being collected states are missing out on a large bit of revenue, and (especially the republican) state governments are not very willing to ask for some sort of tax increase from anyone to make up for that loss of revenue. IMHO there should be a nationwide policy enforcing a fair and equitable means for all states to collect sales tax for items sold online.

[right2bfree]

19. Collect sales taxes for what good reason? The roads here sucked well before online shopping. nt

[Lord Magus]

27. The only nationwide policy on sales tax should be to ban it.

By constitutional amendment, preferably.

[Lord Magus]

25. What's unfair is that sales taxes are allowed to exist.

Such regressive taxation should be banned nationwide.

[ErikJ]

11. FINALLY!

Why should Brick and Mortars have to pay sales tax but not internet stores?

The internet is helping to kill Main Street USA Mom and Pops stores.

Now maybe our streets wont be all boarded up after all!

[right2bfree]

20. No Walmart and Home Depot are doing that. nt

[NeoConsSuck]

21. It doesn't have to be an either or

both are responsible.

[christx30]

24. People are going to

change their behaviors to try to save money. My state might need the tax money, but if I can get out of spending an extra 8% on something, I'm going to do it. We order my kid's diapers from Amazon.com to save that little bit that we can use to, say, get the brakes on my van fixed, or fly my mother in law down next month for my sister's wedding. There's only so much money to go around.

[Lord Magus]

26. Because it's unconstitutional for a state to tax interstate commerce.

Pretty simple, I think.

[Jersey Devil]

28. No, not if it is delivered in your state

This isn't new law. Many states, including NJ, charge sales tax on items ordered over the internet. The only thing this law does is puts the onus on the merchant to collect and pay it at the time of sale. Currently sales tax for most items ordered over the internet and delivered to NJ residents is payable directly to the state by the buyer who is asked to declare any such items on his state tax return. OK, so it is probably stupid because most people aren't going to declare anything, but making these items taxable isn't what is new. Only the way of collecting it is new.

[ttwiddler]

29. Not so fast

If it were that simple, virtually no state sales tax would be permissible. After all, almost all products need to travel on a road. Roads, in their entirety, fall under federal jurisdiction.

[deacon]

15. Awful Awful thing to do. This will hurt a small sellers in a big way. It's cruel.

[apnu]

23. Its what happened to us. We were affiliates at Amazon, and other places in Illinois.

Now we're not.

Thanks Gov for shutting down a revenue stream!

[DollyM]

16. I wonder if Ebay will be next . . .

I sell on ebay but rarely do I get a buyer from Illinois. I don't think anyone in Illinois has money anymore. (Being in a county that "only" has 12.5 percent unemployment now and is happy because we are down from 14 percent unemployment last year.) I don't think it will make much of a difference actually, people who have money will continue to buy online and people who don't, won't.