Illinois enacts Internet sales tax law

[Rex Kickass]

Well it appears most of the affiliates are trying to move their business out of state, which actually hurts Illinois more than it helps them. They really didnt add any tax revenue to their bottom line, just ousted some more business in state.

 

If these affiliates aren't collecting taxes from sales made from Illinois residents in the first place, exactly how is this hurting Illinois again?

[bigruss]

If these affiliates aren't collecting taxes from sales made from Illinois residents in the first place, exactly how is this hurting Illinois again?

Loss of jobs and businesses? Don't businesses pay other taxes besides sales tax??

[Rex Kickass]

Loss of jobs and businesses? Don't businesses pay other taxes besides sales tax??

 

I don't know many companies that earn enough income from referral links that would be anything other than a self-proprietor, or a small co-operative.

[Y2HH]

So people are using on-line purchases to save hundreds of dollars *and* avoiding sales tax. Seems like there are some very nice cost savings being an on-line retailer.

 

Brick and morter stores have to get their product shipped to them, and pay shipping and insurance. Either as a separate line item or built into the price.

 

Whether the difference in sales tax is 5% or 7% or 0% or 5 there is still a difference, and the economic impact will follow.

 

There are benefits to being local vs needing to have it shipped, too. I went over most of these in earlier posts...both brick and mortar and online shops have advantages and disadvantages...and in many cases, brick and mortars have more advantage than not, especially in an era of price matching guarantees. When my xbox breaks, I drive 10 minutes and I have a new xbox, replaced under warraty...if I ordered it online, it can be weeks...and now I need to package it up, ship it back, insure it, etc...all disadvantages to online shopping.

 

Unless the cost savings is significant, online ordering is more of a hassle, especially for big items that, if they break, need to be sent back...meh.

[Texsox]

So you are in favor of giving a break to the on-line companies to preserve the pricing advantage. That brick and mortar stores should pay sales tax but on-line should not. With more and more sales going on-line, how should states make up that revenue?

[Y2HH]

So you are in favor of giving a break to the on-line companies to preserve the pricing advantage. That brick and mortar stores should pay sales tax but on-line should not. With more and more sales going on-line, how should states make up that revenue?

 

The fact is, states do make up that revenue with constant fees and increasing those fees on just about everything you do, without even knowing it...such as entertainment taxes on your Internet bill and television bill, license plate stickes, etc, etc...the sad part seems to be, that no after how high taxes are, no matter how many new fees they create, and no matter how many new streams of incoming revenue they invent, they never seem to have enough money...

 

Even when they do pass a law that taxes these online organizations (which they're doing now) they will gripe about needing more money...after all, their son in laws need those million dollar construction contracts that normally cost 100k.

 

I'm tired of hearing how states need to make up revenue...as if they haven't already done that.

[Texsox]

Are you suggesting then fees come close to sales tax in total dollars? They might, but I find that hard to believe. We could find a source but it seems to me that income tax and sales tax are huge compared to any fees. It really comes down to how nice of a state you want to live in. What kind of roads do you want to drive on, how nice of schools you want your kids educated in. How well maintained you want bridges and railroad crossings. How many cops you want on the streets.

 

It does become tiring paying taxes, but most Americans want the best of everything, and expect 1st Class service while paying coach fares.

[Y2HH]

Are you suggesting then fees come close to sales tax in total dollars? They might, but I find that hard to believe. We could find a source but it seems to me that income tax and sales tax are huge compared to any fees. It really comes down to how nice of a state you want to live in. What kind of roads do you want to drive on, how nice of schools you want your kids educated in. How well maintained you want bridges and railroad crossings. How many cops you want on the streets.

 

It does become tiring paying taxes, but most Americans want the best of everything, and expect 1st Class service while paying coach fares.

 

I don't mind paying taxes, never have for the reasons you mentioned. But when you watch them sink hundreds of millions of dollars into Chicago public schools, and they get worse...you have to start questioning them about it. If it were as simple as throwing money at it, most problems would be solved...but the more money they throw at some things, the worse they get (or they stay the same, despite the added funds).

 

When you can see the difference tax money makes, I don't think a single person complains about it...such as park improvements, roads, etc...but when you see deficits grow despite the fact they added fees and increased taxes of all kinds...you have to start wondering when enough is enough.

 

And back to my original point on is subject...they have to be smart about increasing taxes, and if the tax increase in question will actually do anything...this one happens to do nothing but tell online businesses to move to an adjoining state if they want to remain in business, such as those that lived on Amazon.com.

[Texsox]

I agree on all accounts. There is a problem, IMHO, on a business model that seemingly is built around not paying state sales tax.

[Dick Allen]

I don't know many companies that earn enough income from referral links that would be anything other than a self-proprietor, or a small co-operative.

But the companies do employ people who pay taxes on just about everything they purchase(except Amazon). If they close up shop and go elsewhere, the people go elsewhere or collect unemployment.

[Texsox]

But the companies do employ people who pay taxes on just about everything they purchase(except Amazon). If they close up shop and go elsewhere, the people go elsewhere or collect unemployment.

 

Great argument to eliminate all taxes except income tax.

[Y2HH]

Great argument to eliminate all taxes except income tax.

 

Not entirely. This is partially their fault for not reexamining online business the last 10 years, letting it ride as it, and suddenly deciding to change the rules they were happy to overlook for so long. Because of their own oversight, or outright ignorance of the tax laws, businesses were built around this model...and now these businesses are being penalized in select states because of it. This, again, is something that can't be selective per state...otherwise this is what happens, especially when every surrounding state is happy to let it stay as it was.

[Balta1701]

Not entirely. This is partially their fault for not reexamining online business the last 10 years, letting it ride as it, and suddenly deciding to change the rules they were happy to overlook for so long. Because of their own oversight, or outright ignorance of the tax laws, businesses were built around this model...and now these businesses are being penalized in select states because of it. This, again, is something that can't be selective per state...otherwise this is what happens, especially when every surrounding state is happy to let it stay as it was.

At any point during the last 10 years, if Illinois had put together a law like this, you'd have been just as unhappy with it at that point.

[Y2HH]

At any point during the last 10 years, if Illinois had put together a law like this, you'd have been just as unhappy with it at that point.

 

Im not unhappy with it, it doesn't affect me. However, what you said holds no water...because if this law was in place BEFORE these businesses were built up and created 10 years ago before e-commerce was an everyday reality, these businesses wouldn't be threatening to leave or leaving (or closing shop because Amazon has now abandoned them).

 

So

[Balta1701]

Im not unhappy with it, it doesn't affect me. However, what you said holds no water...because if this law was in place BEFORE these businesses were built up and created 10 years ago before e-commerce was an everyday reality, these businesses wouldn't be threatening to leave or leaving (or closing shop because Amazon has now abandoned them).

 

So

Ecommerce wasn't an everyday reality in 2001?

[Y2HH]

Ecommerce wasn't an everyday reality in 2001?

 

Not really, no. Ecommerce was a new venture, and most collapsed without a dime of profit...if you don't remember, that was the year of the .com collapse. The amount of people that used the internet to buy things in 2001 vs now are in different galaxies of numbers.

[Texsox]

Im not unhappy with it, it doesn't affect me. However, what you said holds no water...because if this law was in place BEFORE these businesses were built up and created 10 years ago before e-commerce was an everyday reality, these businesses wouldn't be threatening to leave or leaving (or closing shop because Amazon has now abandoned them).

 

So

 

There should have been a law in place *before* those businesses started? How the hell do you create a law for a business that wasn't even a reality?

[Y2HH]

There should have been a law in place *before* those businesses started? How the hell do you create a law for a business that wasn't even a reality?

 

The writing was on the wall, everyone knew it was going to catch on and become big business. Even if they delayed and waited a few years, these taxes should have been enacted years ago, and by more than just a handful of states. They created the problem by delaying these laws...and now it's hurting some states and helping others. Typical bad planning and reactive governing, versus proactive measures.

 

As I said, even if they missed the boat, it shouldn't have taken very few states to catch onto what's been going on for more than 6 years now.

[Iwritecode]

Only if you had the item shipped to you. If you bought it, and paid the sales tax, you would not need to pay a second sales tax.

 

They way I read it was that it's for anything you buy out of state. Having something shipped to you is just the most common way.

 

http://www.revenue.state.il.us/Individuals...e-Tax.htm"" target="_blank">Illinois State Website

 

In 1955, the General Assembly passed the Use Tax Act. Use Tax is a sales tax that you, as the purchaser, owe on items that you buy for use in Illinois. If the seller does not collect at least 6.25 percent sales tax, you must pay the difference to the Illinois Department of Revenue. The most common purchases on which the seller does not collect Illinois Use Tax are those made via the internet, from a mail order catalog, or made when traveling outside Illinois. You must keep your receipts when you make these types of purchases.

 

From the FAQS

 

What is use tax?

Use tax is a form of sales tax designed to distribute the tax burden fairly among consumers and assure fair competition between in-state and out-of-state businesses. Illinois, like most other states, imposes use tax on the privilege of using goods within their borders as a complement to sales taxes. This tax applies to individuals, businesses, and organizations. Illinois law requires you to pay tax at Illinois rates on purchases you make for use or consumption in Illinois

 

+ when you buy goods from businesses located outside Illinois and bring them into Illinois or

+ when you have the goods delivered to you from businesses located outside Illinois.

 

[southsider2k5]

That is how they make people pay taxes on vehicles.

[Iwritecode]

That is how they make people pay taxes on vehicles.

 

Cigarettes are also a big one they want people to report on their tax forms. But my point remains the same. Why should I pay taxes on something if I buy it in another state when I can't get it in my own state?

[Texsox]

When you are travelling and take it with you, you probably paid their state sales tax. As long as it is equal to, or less than Illinois, no additional tax is required. Plus, Illinois state sales tax is only 6.25%, most places will be equal to or greater with their state and local taxes added. Now if you buy something over the internet or mail order, they will not charge you either local or your state tax, so you would be responsible for the Illinois use tax. So I wonder why, if the law is from 1955, why Illinois needed a new law for internet sales. Wait, unless it is because they are requiring the seller to collect and reimburse.

[Y2HH]

When you are travelling and take it with you, you probably paid their state sales tax. As long as it is equal to, or less than Illinois, no additional tax is required. Plus, Illinois state sales tax is only 6.25%, most places will be equal to or greater with their state and local taxes added. Now if you buy something over the internet or mail order, they will not charge you either local or your state tax, so you would be responsible for the Illinois use tax. So I wonder why, if the law is from 1955, why Illinois needed a new law for internet sales. Wait, unless it is because they are requiring the seller to collect and reimburse.

 

Because, Tex...The U.S. Supreme Court ruled in 1992 that companies without a physical presence in a state aren't required to collect state sales taxes. What happened here was Amazon, who collects the money, doenst have a physical presence in IL, it's affiliates do, which it doesn't own...they merely sell through Amazon. Call it a grey area...but it's a law that needed to be reexamined in light of the fact that this has been going on close to a decade now. However, it's being passed on state levels, so when only 4 states out of 50 tell Amazon that it's affiliates have to collect taxes for Amazon, Amazon simply says no thanks, we no longer want your business...and they cut off the affiliate, because Amazon knows it can ship that same product from another state that doesn't require the tax.

[Balta1701]

Because, Tex...The U.S. Supreme Court ruled in 1992 that companies without a physical presence in a state aren't required to collect state sales taxes. What happened here was Amazon, who collects the money, doenst have a physical presence in IL, it's affiliates do, which it doesn't own...they merely sell through Amazon. Call it a grey area...but it's a law that needed to be reexamined in light of the fact that this has been going on close to a decade now. However, it's being passed on state levels, so when only 4 states out of 50 tell Amazon that it's affiliates have to collect taxes for Amazon, Amazon simply says no thanks, we no longer want your business...and they cut off the affiliate, because Amazon knows it can ship that same product from another state that doesn't require the tax.

However, at least a half dozen additional states, including the big gun (California) are likely to pass a similar law in the next few months. California actually passed that law in 2009 but it was vetoed by the failed governor at the time.

[Y2HH]

However, at least a half dozen additional states, including the big gun (California) are likely to pass a similar law in the next few months. California actually passed that law in 2009 but it was vetoed by the failed governor at the time.

 

You don't realize why California stuck that down, either. Amazon is located in Seattle, not in California...and told California that they will yank all 11,000+ affiliates from them if they pass it. So, when they do pass it, they will do the same thing to CA that they just did to IL.

 

California decided it was better to keep the businesses alive at the time.

 

Once again bringing us back to my original point...it cant be a few states...it cant even be 25 states...it has to be so many states that amazon cannot avoid it anymore.

Edited March 21, 2011 by Y2HH