Mar
10

Shopping From Your Chicago Home Just Got Costlier

March 10, 2011

When Governor Pat Quinn recently increased Illinois’ corporate income tax rate, some companies threatened to move their businesses elsewhere.

Today, the Governor enacted more legislation that could chase even more local companies out of town.

Governor Pat Quinn on Thursday signed the Main Street Fairness Bill, a law that requires all online companies to collect sales tax from customers buying via affiliate retailers in Illinois and remit the sales tax to the Illinois Department of Revenue (IDOR).

a gavel on a computer screenIDOR estimates that between $153 million and $170 million in sales tax revenue goes uncollected each year from online purchases; this bill will change that.

But it could also hurt small online businesses physically located in Illinois.

Local affiliate sites send potential customers to out-of-state retailers, like Amazon.com and Overstock.com, in return for a percentage of the sales.

But if those companies have to collect sales tax, they could stop affiliating with those sites in Illinois.

According to the Tribune, Overstock.com sent a letter to its marketing affiliates in Illinois right after the bill was signed, notifying Illinois businesses that it will sever ties on May 1 unless the law is repealed or those affiliates move to a state without the law.

Companies without a physical presence in a state aren’t required to collect state sales tax.

“It’s a matter of fairness. Stores and businesses located in Illinois employ Illinois workers, support community programs, and, through the property, income and sales taxes they pay, allow us to provide vital public services,” said Brian Hamer, Director of Revenue. “Online merchants with affiliates in Illinois should be required to remit the same taxes.”

For many brick-and-mortar companies in Illinois, the new law, dubbed the “Amazon Tax” after the largest online retailer, is good news.

“I want to thank Governor Quinn for signing this bill. His action has helped independent bookstores like mine, and thousands of Main Street retailers all across the state,” said Becky Anderson, co-owner of Anderson’s Bookshops. “Illinois businesses will no longer be penalized simply for complying with sales tax laws.”

A website has been created by the Alliance of Main Street Fairness that discusses this matter in further depth.

Visit standwithmainstreet.com for more information.

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Tracey

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