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The Comeback Kid: Illinois Amazon Tax Law

  • Jun 3, 2014 | Gail Cole

 Will Internet sales tax come back to Illinois?

Update 01.23.2014: The amendment to the use tax act went into effect January 1, 2015, and Amazon will begin collecting tax on Illinois sales February 1, 2015.

In July 2011, Illinois enacted the Use Tax Act, which imposed a sales tax collection obligation on certain remote retailers selling into Illinois. The so-called Amazon tax prompted its namesake to sever business with Illinois affiliates. Then the other shoe dropped: the Illinois Supreme Court found the law to be a “discriminatory tax on electronic commerce” and therefore unconstitutional.

If this was a blow to many in the state of Illinois, it was a boon to the Amazon Illinois affiliates reinstated after the law was struck down.

Now it looks like the Illinois Amazon Tax Law may have a comeback. Both the House and Senate have passed an amendment to the Use Tax Act that broadens the definition of a retailer maintaining a place of business in the state. The new legislation includes retailers that directly or indirectly refer potential customers to the retailer by “providing to the potential customers a promotional code or other mechanism that allows the retailer to track purchases referred by such persons.” In addition to “a link on the person’s Internet website” (included in the original legislation), such mechanisms include:

  • Promotional codes distributed through the person’s hand-delivered or mailed material; and
  • And promotional codes distributed by the person through radio or other broadcast media.

By including print and radio advertising, Illinois lawmakers are addressing the Supreme Court’s basis for finding the original law unconstitutional.

Illinois Governor Pat Quinn (D) signed the original Use Tax Act and is expected to approve this amendment.

Do you sell across state lines? Is your business prepared for online sales tax?

photo credit: alles-schlumpf via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.