Illinois Voting on Online Sales Tax Collection
I am not inclined to go political on a business blog, but for those in Illinois who work with Amazon or Overstock or any other product network; be afraid; be very afraid.
The Illinois legislature is voting this week on whether to impose sales tax on online purchases in "certain circumstances" which will impose the 'Affiliate Nexus Tax". Think New York or North Carolina or Rhode Island or Colorado. If they do sign off on it there is no doubt Amazon and Overstock will litigate, but in the meantime you most likely will not be allowed to work with them. When New York and the other states did this, Amazon and Overstock had to either quit doing business with affiliates or deal with complex tax issues while all this moves through the court systems. They chose the former. Colorado didn't see it coming; they never thought Amazon would do it. I see no reason they won't do the same in Illinois. If you use the Amazon network, which I do, this could devastate your business or at least make us re-do many sites.
I received emails from many of my affiliate networks today asking we contact our state reps and state senators, which I have done (but mine aren't the loony ones :-)
I would 1) encourage anyone in Illinois to do the same and 2) plan accordingly if you use product networks. The landscape of this business changes daily so we need to understand what we are up against and change with it. I believe they are going to vote tomorrow or Thursday.
Best,
Judy
You are correct in some respect, but the lawsuits in NY and CO are a result of states re-writing the "nexus" laws. This is what is being litigated in three of the states. Amazon has stopped doing business with affiliates in 3 states (4 total with NC) when the legislatures changed the definition of nexus. Nexus from a sales tax view means brick and mortar. The states, in order to collect on internet sales, have redefined nexus as not physical presence, but economic presence; so affiliates in a state "selling" advance a non brick and mortar company to have a "presence" under the new state definitions.
Amazon and Overstock are not willing to have 9000 tax schedules for every state, county and municipality in the country. So they just pull the plug on affiliates. NC was a little different as the law was not just about nexus. At least Amazon has the money to sue and take it up the litigation food chain, but this is years away from being settled. North Carolina's is a first amendment issue; the others are commerce clause issues with. I really think this will go to the S/Court. One by one the states are testing this. Connecticut just killed their bill this year. It originally passed the house and got through the senate committee, but the committee legislators had an awakening and pulled the bill. It's dead-for now.
How does this affect Amazon?
You as the affiliate are not the one taking the sale and taking Tax. Amazon is paying you for the referal.
Now that said, it is my understanding that Amazon itself may not sell to IL residents because they (AMAZON) do not want to deal with tracking sales tax.
If I'm wrong.... Please let me know, ASAP, but that is my understanding of the NY/ CO dispute.
