In a USA Today article, we learn that on Friday: the Illinois Supreme Court has thrown out a law which taxes certain internet sales. According to the court: the “Amazon tax” violated the federal ban against unequal taxes on digital transactions. The first time a court has overturned an ‘Amazon’ internet sales tax law.
The Illinois department of revenue is considering taking the matter to the U.S. Supreme court.
The court has found that the Illinois “Main Street Fairness Act” of 2011 is superseded by federal law (the federal Internet Tax Freedom act, which is scheduled to expire in November 2014). Federal law states that imposing a tax on electronic commerce is prohibited if it requires collection that is not required for transactions by other means. For example: if a tax does not apply to purchases through print or television advertisements.
The Illinois law required out of state retailers to collect taxes for sales that involve “in-state affiliates”, “website operators”, and bloggers. For example, if a blogger in Illinois were advertising a product in exchange for a share of the sales revenue, then the Illinois law would require the merchant in another state to collect sales tax in Illinois.
David Vite of Illinois Retail Merchants association argues, Friday’s Illinois ruling ‘underscores the need’ for Capitol Hill action, arguing “It’s time for the federal government to clarify and finish putting retailers, who are making payroll and putting people to work, on equal footing.”.