It’s long been one of the perks of online shopping that purchases made an Amazon and from similar online retailers don’t incur sales tax. In the State of Illinois a business must currently have a brick and mortar presence within the State to be charged sales tax. A new law sent to the Governor in the final days of the 96th General Assembly, however, seeks to change those rules, expanding the state’s ability to tax online retailers.
The bill, HB 3659, alters the defintion of “retailer maintaining a place of business in this State” to include companies who work through Illinois based affiliates. Although now allowing Illinois to tax Amazon across the board, this change would allow sales tax to be assessed on purchases made through Illinois affiliates. Most commonly this would mean bloggers, based in Illinois, who drive customers to Amazon and similar sites through links on their own sites.
If the bill is signed, this means buying something directly from Amazon, typing Amazon.com into your browser, would still not incur sales tax. Clicking a link to Amazon from an Illinois based blog or site, however, would add Illinois’s 6.25% sales tax to the purchase. When a similar law was passed in Colorado Amazon stopped working with Colorado affiliates.
At present the future of HB 3659 is uncertain. It went to the Governor on January 10 and he has done anything with it since. The Illinois constitution provides that if the Governor does not sign or veto a bill after 60 days it automatically becomes law. Governor Quinn has not made his position on this new affiliate sales tax clear. Proponents argue it will bring in more revenue to the financially strapped state. Opponents look to the example of Colorado and elsewhere, arguing the new law would simply stop Amazon from working with Illinois affiliates.
How this law might affect affiliates not on the web, or other sales tax matters is not clear at present.
For more on this or other tax concerns contact Horowitz & Weinstein.