Illinois wants online retailers to collect sales tax

  • The Illinois Senate on Tuesday began moving legislation that would require some online retailers to collect the state's 6.25 percent sales tax.

    The Illinois Senate on Tuesday began moving legislation that would require some online retailers to collect the state's 6.25 percent sales tax.

 
 
Updated 1/5/2011 6:40 AM

SPRINGFIELD -- A recent plan to force huge Internet retailers such as Amazon.com and Overstock.com to collect the Illinois sales tax could face a long road to becoming reality in the courts, if not in the General Assembly.

The Illinois Senate on Tuesday began moving legislation that would require some online retailers to collect the state's 6.25 percent sales tax.

                                                                                                                                                                                                                       
 

Now lawmakers can't require websites without physical presences in Illinois to collect sales taxes. The legislation would require out-of-state sites that have certain kinds of contracts with Illinois companies to begin collecting.

Senate President John Cullerton, a Chicago Democrat, pushed for the plan, saying it's not a new tax.

"It's just a way of collecting the tax," Cullerton said.

A Senate committee Tuesday approved the idea by a 12-0 vote.

Local retailers complain that Internet sites have a competitive advantage when they sell products without collecting sales taxes.

Illinoisans already owe taxes on all the stuff they buy on online. But because some retailers don't collect it, many people probably don't know what they owe. For that reason, the state collects very little of the $150 million it thinks it should be bringing in via online sales, Department of Revenue spokesman Mike Klemens said.

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Other states already have tried to collect taxes from online sales in the same way. But in every case, the laws have been tied up in court.

Klemens said Illinois probably should expect the same court challenge if the proposal is eventually approved.

A full Senate vote could come later this week.