The Homa Files

Last week, Illinois’ governor signed into law controversial legislation requiring Internet retailers like Amazon.com and Overstock.com to collect Illinois’ 6.25% sales tax if they have affiliate sellers in the state.

• See Forbes.com for details

Previously,, internet sellers were only compelled to collect sales taxes if they had a physixL presence in the state – e.g. stores or distribution centers.

So, Borders.com would have to collect sales taxes, but Amazon.com didn’t.

Hardly a level playing field.

But, Amazon has over 10,000 “affiliates” based in Illinois – companies that hawk their wares through Amazon. 

Now, these affiliates count like physical outlets.  So, if Amazon has a single affiliate based in the state, it is compelled by law to collect sales taxes

Amazon’s plan: terminate all affiliates located in Illinois.:

My take:

First, the law has nothing to do with level playing fields – it has all to do with tax revenues.

Given that, consider the so-called “second order effects”.  Many Amazon affiliates are likely to move out of Illinois – across the border to Indiana or Illinois – taking with them jobs and, oh yeah, corporate tax revenues.

Hmmm …

This entry was posted on March 17, 2011 at 6:30 am and is filed under Internet Marketing - eCommerce -. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.