Thousands of online retailers in Illinois have been dreading today. Today is the day that online retailer Amazon.com shut off their affiliation with over 9,000 Illinois affiliates because of a new bill called The Main Street Fairness Act, signed by Illinois Governor Pat Quin. The bill requires businesses based in Illinois to charge taxes on all online purchases, regardless of where the customer is — even though the US Supreme Court ruled in 1992 that retailers can’t be forced to collect sales tax on out of state shipments unless they have physical offices in those states.
According to the Wall Street Journal, Rebecca Madigan of the Performance Marketing Association estimates that these Illinois affiliates generated roughly $611 million in advertising revenue in 2009 and tax revenue of $18 million. Madigan estimates that the state will lose 25-30% of that tax revenue as the affiliates will cut jobs or move out of state.
This means that absolutely no Illinois resident or company will receive a commission for sales through Amazon.com. This doesn’t mean that Amazon.com itself is forbidden to sell in Illinois, Illinois residents may continue to purchase products from the company.
CNet reports that the “Main Street Fairness Act” may in fact make it to the President’s desk which, if signed means that it online giants like Amazon.com wouldn’t be able to avoid state tax collection just by killing it’s affiliate programs in certain states, like they did today.
So how do you weigh in?
Do you feel like online retailers should be treated just as brick and mortar retailers? Do you believe it is fair that Amazon cut ties with their Illinois affiliates? No matter what you believe some one loses.