More taxes for state, or less jobs? New Internet bill signed

SPRINGFIELD — Illinois consumers will be paying sales taxes on some Internet purchases under a new state law, which was opposed by some websites.

The law says sales taxes must be charged when people buy from online retailers through an Illinois-based partner. For instance, an Illinois business might sell products through Amazon.com.

Online businesses generally don’t charge state sales taxes. Illinois customers are supposed to pay it directly to the state, but they rarely do.

Proponents say the measure that Gov. Pat Quinn signed Thursday will level the playing field between online businesses and brick-and-mortar stores. Opponents say it will drive business out of Illinois.

The new tax law relates to out-of-state merchants like Amazon.com and Overstock.com that do not have a physical presence in Illinois but have relationships with Illinois advertisers and publishers. Under the new law, these merchants are deemed to have a presence in Illinois and are, therefore, required to collect Illinois sales tax.

Last week, Hoffman Estates-based Sears Holdings, parent of Sears and Kmart stores and their companion websites, took a jab at Amazon.com involving this legislation. Sears President of eCommerce Imran Jooma said that at a time when states are in fiscal distress, including Illinois, online retailers should collect and remit sales taxes that are due.

On the other hand, Scott Kluth, CEO of CouponCabin.com, was deeply disappointed.

“As a result, Illinois will lose jobs, many thriving businesses like CouponCabin and other affiliate marketing firms will be forced to move to other states, and most important, this law will not generate the tax revenue Illinois thinks it will collect,” said Kluth. CouponCabin.com originated in Hoffman Estates and is now headquartered in Chicago.

“Those of us who opposed HB 3659 made every effort to persuade the governor that it is a misguided attempt to bring ‘fairness’ and new revenue to Illinois by requiring out-of-state merchants who advertise on websites operated in Illinois to collect sales taxes from Illinois customers,” said Kluth.  

“The reality is that just like other states that approved similar legislation, Illinois will not collect additional tax revenue,” said Kluth. “Instead, the merchants who would be affected by this law will simply sever their contracts with Illinois affiliate advertisers, as they have done in every other state. The only result of this law is that high-growth businesses like CouponCabin will be driven out of Illinois to maintain their relationships with out-of-state merchants.”

Ÿ Daily Herald business writer Anna Kukec contributed to this report.