By Stephen Di Benedetto
SPRINGFIELD – Shoppers who turn to Amazon and other online retailers for less expensive, tax-free purchases will have to start paying the Illinois sales tax under legislation Gov. Quinn signed Thursday.
With Illinois now becoming the fourth state to adopt the controversial “Amazon tax,” businesses targeted by the new tax promised to start packing their bags to move out of state because of Quinn’s action.
Internet retailers without stores in Illinois, like Amazon or Overstock.com, aren’t normally required to charge the state’s 6.25-percent sales tax as companies like Best Buy and others with a physical presence here do.
Quinn’s signing of the law, called the Main Street Fairness Act, requires those Internet retailers to collect sales tax on purchases from Web-based partners that have operations in Illinois.
Until Quinn’s action, those Amazon or Overstock.com partners — or affiliates — didn’t have to collect the state sales tax as a local store selling the same product must, creating a price difference in favor of the online offering.
“This law will put Illinois-based businesses on a level playing field, protect and create jobs and help us continue to grow in the global marketplace,” Quinn said in a prepared statement.
The Illinois Department of Revenue estimates the tax could generate as much as $170 million annually for the state.
Some Illinois-based affiliates that market their products through Amazon are now contemplating moving because the larger online companies that give them a platform to sell their goods want to cut business ties.
“It’s not going to accomplish anything,” said Tom Storm, CEO of FatWallet.com, an affiliate based in Rockton, Ill. “The online companies are going to terminate the relation with the affiliates; therefore, there is no sales tax. This benefits no one.”
Storm said Amazon and Overstock have contacted him about ending their business relationship. He said he plans to move his Rockford-area company, which employs 54 people and just recently added two people to the payroll, out of state immediately.
CouponCabin.com, an Illinois company that offers printable and local coupons, also is looking to move. The company stated in a release that it plans to move to Indiana, despite leaving their “longtime home in Illinois.” FatWallet and CouponCabin are two of the estimated 9,000 affiliates in Illinois.
Amazon and other retailers have cut ties to affiliates in Rhode Island and North Carolina after the states approved the “Amazon tax.” Amazon currently is appealing a lawsuit in New York challenging the validity of the Empire State’s version of the tax.
Before the General Assembly passed the bill during the lame-duck session in January, many sponsors, including Senate President John Cullerton (D-Chicago), argued the law was needed to create parity between major online retailers and small businesses located in Illinois.
David Vite, president of the Illinois Retail Merchants Association, praised the signing as a way to finally put retailers with a physical presence here against their online competitors who had been able to sell their products tax-free.
“We will no longer be bullied by Amazon or any other Internet seller who choose to disregard sound tax policy,” Vite said.