Illinois - and the Internet Sales TaxGovernor Quinn signed HB3659 into law which forces out-of-state retailers to collect Illinois state sales taxes on Internet sales.
This law states a view that an affiliate marketer constitutes a tax nexus for retailers. (A nexus is used in tax law to describe a business that has a presence in a state, and which makes this business subject to state income taxes and sales taxes for sales within that state).
How does this law affect affiliate marketers in Illinois? It may put them out of business. How? Well, as can be expected the target of this law seems to be online retailers like Amazon, who do not have a physical presence in Illinois. And this law may have the same consequences as it had in other states.
When other states have put in to place this same type of legislation, Amazon and other online businesses removed the affiliates of that state from their affiliate programs because they did not want to assume a tax nexus. No tax nexus, no additional tax revenue paid by the online business.
If Amazon and other online retailers fire their affiliate marketers, it could mean a lose of income or a business for the online entrepreneur, and a lost of revenue for the online retailer. And for the state, a lose of tax revenue.
Who wins? No one, in my opinion.
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