Illinois-‘Discriminatory’ Sales Tax May Land in Hot Water

Illinois is cruising toward a legal challenge of its Wayfair-inspired laws after the state’s General Assembly finished a short and speedy legislative session without fixing the so-called “Associated Industries problem.”

Illinois passed a law last spring making remote sellers subject to the local retailer’s occupation tax (ROT), rather than the use tax, giving local governments their slice of the Wayfair pie. The law, however, sets up a potentially discriminatory tax scheme that the U.S. Supreme Court has already declared unconstitutional.

Illinois’s law requires out-of-state sellers to collect and remit the destination-based ROT, but it permits sellers with an in-state physical presence to collect and remit on the basis of origin.

All but two of the 45 sales tax states have begun imposing remote sales tax collection-and-remittance requirements based on some measure of economic activity, as opposed to physical presence, since the U.S. Supreme Court’s seminal South Dakota v. Wayfair ruling in June 2018. The ruling tossed out the court’s 1992 physical presence standard affirmed in Quill Corp. v. North Dakota, which limited the ability of states to tax remote sales.

For more information: Bloomberg Tax

Bloomberg tax
by trip baltz
may 28, 2020