Seeking to plug a $15 billion budget deficit, Illinois legislators are contemplating the implementation of taxes on online purchases, which they estimate could raise up to $150 million. Companies impacted by the tax, however, say it will result in out-of-state companies severing their affiliation with Illinois-based partners.
The Internet tax is an amendment to Illinois House Bill 3659, and calls for a 6.25 percent use tax on online purchases. Illinois Governor Pat Quinn is expected to sign the bill, which would allow the use tax to begin July 1 of this year.
Illinois companies affiliated with Internet merchandisers outside the state, however, predict these suppliers will terminate their business partnerships rather than pay the tax. For example, online merchandisers Overstock.com and veterinary products distributor Drs. Foster & Smith terminated business dealings with affiliates in New York when that state passed a similar law.
Brent Shelton, spokesperson for Rockton, Illinois, online merchandiser FatWallet, stated the new taxes will not only force Amazon to sever its relationship with his company, but may force FatWallet to relocate in another state. “We are affiliated with many retail partners outside of Illinois,” he said. “And if these retailers are required to collect taxes from affiliate partners in Illinois, they’ll respond, ‘If that’s the law, we’re not going to have a partnership with FatWallet.'"
Read the rest of Bruce Edward Walker's essay
Bruce Edward Walker is managing editor of InfoTech & Telecom News.
Filed by Grant Davies