Friday, Dec 13, 2013
IL Supreme Court Rules Against "Amazon Tax" Law
JACKSON COUNTY -- The Illinois Supreme Court has ruled the state's "Amazon Tax" is unconstitutional.
The Main Street Fairness Act passed back in 2011 and was aimed at collecting Illinois sales tax from online retailers It was supposed to level the playing field with traditional stores.
On Friday, the Illinois Supreme Court decided to throw out the law. It's a move that has both sides of the lawsuit looking at another option.
My Favorite Toys loves their location inside Carbondale's University Mall. Owners Sam Cox and his wife have run the local shop for eight years.
For most of this year, the store has only been open on weekends. That allows them more time to focus on the internet sales. The traditional store will re-open daily on October 25.
"We're selling through two or three channels of online services," said Sam Cox.
The couple now spends several hours a day packing and shipping playthings. They've filled about 4,000 online orders in the past year.
"Won't be a big percentage of our sales, probably about 10 percent," said Cox. "But it's an important 10 percent."
When Illinois customers check out on the My Favorite Toys website, they'll pay sales tax. It's a step that Cox doesn't like to see other internet retailers skip.
"I think it's the image and perhaps a marketing advantage for online sellers to say they don't charge any sales tax," said Cox.
Cox would like to see all web stores collect tax. Senator Dick Durbin has already introduced a bill called the Marketplace Fairness Act.
It's a position supported by the Performance Marketing Association. However, the trade association was behind the push to get rid of the state's Main Street Fairness Act.
"It has some major flaws that created this sort of scapegoat in about 9000 small businesses," said Performance Marketing Association Executive Director Rebecca Madigan.
The group's members are websites that make money by selling ads. Madigan says the act had caused many of those sites to shutdown or move away from Illinois after losing big advertisers, like Amazon. She hopes some of those companies will come back.
"The law didn't get any out-of-state retailers to start collecting its sales tax," said Madigan. "And the state's losing income tax from all those people and all those businesses that moved out-of-state."
The Illinois Department of Revenue released a statement on the ruling:
"We are reviewing the decision, and are considering several options, including further court review of this law or whether amending the law could address the court's concerns. We will also explore other options to create a level playing field for all local businesses, whether they are physically located here or on the internet. Federal legislation could ensure tax fairness and we will continue to work with the Illinois delegation and congressional leaders on Senator Durbin's Bill."
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