‘Amazon tax’ issue heard in IL Supreme Court

May 22, 2013

The Illinois Supreme Court heard arguments Wednesday in a case challenging the state's so-called "Amazon tax." The decision could change the way Illinois websites make money online. IPR’s Brian Mackey reports: 

 When you click a product link on a website -- like if a blogger links to a book she's reviewing -- the blogger can make a deal with the retailer to get a cut of the sale.

 Those are called "affiliate marketing links," and Illinois passed a law to collect sales taxes on such purchases. It's often called the "Amazon tax," and it was declared unconstitutional by a Cook County judge.

 The state appealed that decision to the Illinois Supreme Court.George Isaacson, representing the affiliate marketers, argues the tax treats different kinds of online businesses differently. And he says the tax has been bad for Illinois. "There's no indication that this legislation has been successful in raising additional revenue. But ... it has resulted in the termination of Illinois Web affiliates." Amazon.com severed relationships with its Illinois affiliates.The situation could be resolved by federal legislation that would allow states to force online retailers to collect sales taxes. The legislation has been approved by the U.S. Senate, but faces an uncertain future in the House.