SALT Report 3380 –The Illinois Use Tax Act enacted in July 2011, required out-of-state Internet sellers with web marketing affiliates in the state to collect Illinois sales taxes on deliveries to the state’s residents. This was struck down by the Illinois Supreme Court who ruled it as a violation of the Internet Tax Freedom Act of 2000 (ITFA), which prohibits states from imposing “discriminatory taxes on electronic commerce.” In violation of the Supremacy clause, the court ruled that the Illinois Use Tax Act violated the ITFA because it was aimed only at web retailers who sell through links on Illinois web sites and not web retailers who simply advertise in Illinois through print or broadcast.
Recently, an amendment to Senate Bill 352 has been sent to the Governor for signature, which would fix the once overturned law. The amended bill would impose sales tax on both online retailers and sales by out-of-state retailers that result from a coupon or promotional code distributed in Illinois by mail, radio or television.
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