Repercussions - Amazon v/s the State of Illinois
From the
Chicago Tribune:
Web businesses say they'll flee Illinois if sales tax is OK'd
Some Illinois-based Web businesses were furious Thursday at a legislative plan that would require online retailers, such as Amazon.com and Overstock.com, to collect a 6.25 percent state tax if they have commissioned affiliates in the state.
That puts at risk huge revenue streams for such Illinois-based Web sites as FatWallet.com, CouponCabin.com and BradsDeals.com, which receive much of their commissions from sending customers to major online retailers. Their commissions are at risk because large retailers have shown in the past that they will sever business relationships with affiliates like those to avoid collecting state sales tax, called a use tax in Illinois, on products they sell.
The bill, passed Thursday afternoon, needs approval from Gov. Pat Quinn.
"I feel like I've been completely flipped the bird," said Tim Storm, chief executive of FatWallet, based in Rockton, near Rockford. "Essentially, 30 to 40 percent of our revenue gets shut off instantaneously."
FatWallet officials were busy Thursday scouting ways to leave Illinois, Storm said.
"The reality is that as a business owner with 52 employees, we're not going to just get shut down because of a law Illinois passes. Our customers don't care whether we're in the state of Illinois," he said.
Brad Wilson, founder of BradsDeals, in Chicago, said about half his revenue would be in jeopardy, along with 20 jobs at his company.
"We don't have much choice. If this is going to stick, we literally can't physically be in Illinois," Wilson said. "My wife is from Cleveland and would be thrilled if we moved back there. That's the kind of thing that's going through my head."
Though consumers are technically supposed to pay sales tax on Internet purchases via their state income tax forms, few do. That amounts to a built-in discount for consumers and a competitive advantage for online retailers who sell to them.
Currently, only online retailers that have a physical location in Illinois � a retail store, headquarters or warehouse, for example � have to collect state tax at checkout. The new law, which would take effect July 1, would define online retailers as having a physical location in Illinois if they have affiliates in the state.
Hey Governor -- if you want to make Illinois a small-business friendly state why don't you start cutting taxes to them and cut the State budget. It is not rocket science...
Posted by DaveH at January 7, 2011 5:43 PM