Amazon tax law in Illinois removed.

7:16 pm

In March 2011, the Illinois legislature passed the Main Street Fairness Act, a bill that states that all companies who have any type of presence in Illinois and sell to Illinois customers, online, must charge an Illinois sales tax, from each of the company’s Illinos residents. Gov. Pat Quinn signed that bill. Gov. Quinn and many legislators thought that the law would help the Illinois government increase revenue by about $153 million, in 2011, but that didn’t happen, since some Illinois companies left the state, to avoid collecting the tax from their Illinois customers. New York, Rhode Island, Hawaii, and North Carolina passed similar laws, so those laws might affect many businesses who sell products, online, or consider doing that. In 2011, the Performance Marketing Association filed a lawsuit in the Circuit Court of Cook County, to challenge the law. In April 2012, Cook Co. Circuit Judge Robert Lopez Cepero ruled that the law is unconstitutional. However, the Illinois Department of Revenue might appeal, so we still don’t know whether the law will be enforced. For small companies who are considering selling products, online, the effect of paying state sales taxes could be large, in terms of the cost to comply. Those companies might need to pay C.P.A.’s for many hours of work, if the companies are required to charge different amounts of sales taxes, depending upon the homestate of each customer. One of the reasons for the large increase of ecommerce is that it’s relatively easy to start a website and sell products, online. If many states enact laws that charge sales taxes on online sales, in those states, many new companies will decide that it’s not worth the work of complying, causing the companies to not sell, online. No one knows the affect of Illinois law, since it might be overturned. If the state appeals and wins, the law will probably discourage some companies from selling, online, to Illinois customers. If the law isn’t enforced, that will probably cause more companies to sell, online, to Illinois customers, creating more jobs.


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