Friday, January 7, 2011

Amazon Targeted By Illinois Internet Tax

The State of Illinois has passed an Internet Tax Bill, specifically targeted at Amazon.com and other out of state retailers, who do not collect taxes for the state, in a move that has Internet companies in that state up in arms. The move--similar to moves nationwide by cash strapped states to find new sources of revenue--declares that sites which have affiliates in a state to have a "nexus"--and thus, are taxable--in a state. Internet Tax Bill (HB 3659) was passed by the Illinois Senate on January 5th, its House of Representatitives on January 6th, and is expected to be signed into law today.

Illinois would not be the first state to pass a law--New York, Colorado, North Carolina, and Rhode Island have similar laws--however, instead of paying taxes to those states, Amazon.com so far has simply been pulling its business relationships with affiliates in those states. A number of affiliate-based businesses are located in Illinois, including CouponCabin.com, FatWallet.com, and BradsDeals.com. CouponCapin, one of those affected by the new tax, said "this bill will do significant harm to our growth by cutting our business by nearly one-third", resulting in the loss of revenue. Fellow coupon site FatWallet.com told the Chicago Tribune that the firm is actively looking to leave Illinois, since the law will shut off 30 to 40 percent of the firm's revenue, immediately.

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