More and more states are joining the fight against e-commerce giants, like Amazon.com. Illinois is the latest state to join in the fight to try and begin collecting sales tax revenue from purchases made over the Internet. The Internet sales tax law, which could possibly go into law by Friday, January 14, 2011, requires out-of-state Internet merchants such as Amazon.com and Overstock.com, which do not have physical presence in the state of Illinois, but who do business with Illinois advertisers and publishers, to have Nexus in Illinois and be required to collect sales tax from purchases made from Illinois consumers.
Four other states have previously passed this law, which include: New York, Colorado, North Carolina and Rhode Island, in an effort to increase their sales tax revenue. But as states decide to pass this law, they need to be aware that many e-commerce merchants, including Amazon.com, have severed their relationships with states in an effort to avoid collecting and remitting sales tax.
Many states have rejected this legislation because they do not want to jeopardize their relationships with various e-commerce merchants. In states like Indiana for example, Amazon.com has hired thousands of employees to work in their warehouses, so I’m sure the state of Indiana has no plans in passing legislation for fear of loosing those jobs.
Internet sales tax is a confusing topic, that is almost always evolving. Trying to manage the compliance associated with Internet sales tax can be equally challenging. Fortunately there are automated sales tax solutions that help ease the burden.