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* Walmart is helping push back against threats by Amazon’s affiliates and others to pull out of Illinois if Gov. Quinn signs a controversial tax reform into law. From a press release…
Walmart today is issuing an open invitation to all of those Illinois online businesses – known as affiliates– to explore the opportunity to join Walmart.com’s Affiliate Network. This invitation comes as Amazon.com and Overstock.com threaten to terminate their relationships with all Illinois affiliates should H.B. 3659 (Main Street Fairness Act) be signed into law.
“We applaud and support the members of the General Assembly and Governor Quinn for their leadership in supporting this retail fairness legislation,” said Julie Murphy, Senior Vice President of Operations for Walmart “ This legislation will create a level playing field for online-only retailers and brick and mortar retailers”.
Walmart is committed to supporting the affiliate programs which help to drive Walmart.com’s online business. It currently partners with more than 45 Illinois based affiliates representing millions of dollars in revenue. Walmart will continue to collect and remit all sales taxes due on all Walmart.com sales to alleviate all regulatory burdens from its customers. Any affiliate interested in working with Walmart.com should visit www.affiliates.walmart.com.
* But other Illinois employers are threatening to leave the state if Quinn signs the bill…
Because online merchants don’t often have a physical presence in the state, the bill taxes them via affiliate marketers, like Storm’s FatWallet.
If Quinn signs the proposal into law, many retailers that do business with his website will terminate their contracts to avoid paying the tax, Storm said.
“I started (my business) in Wisconsin, but moved to Illinois because it is home,” said Storm, whose website is based in Rockton. “I can literally see Wisconsin from my window – it’s five miles away. If I have to move, I will.”
Scott Kluth, CEO of CouponCabin, joined Storm in urging a veto. Kluth’s website operates the same way as FatWallet. It employs 54.
* The Chicago area is home to several of these companies…
Chicago is quickly becoming a U.S. hub for online coupon and deal companies, and the trend started long before wildly successful Groupon was even conceived. Today, the Chicago region is headquarters for dozens of coupon and deal websites.
Sites include some of America’s biggest, such as Groupon.com and CouponCabin.com. They include some of the oldest, such as FatWallet.com, circa 1999, and MrRebates.com, 2002. They include newbies started this year by a single person and another launched this year by one of the largest coupon companies in the world.
“Chicago is the cradle of civilization for the daily-deal industry,” said Dan Hess, chief executive of Local Offer Network and Chicago-based deal aggregator Dealradar.com. “It gained an early lead and continues to lead the pack.”
Among daily-deal group-buying sites, similar to Groupon, Chicago is the No. 1 city, with 43 such headquarters. That beats New York and San Francisco, according to Dealradar.com.
* That CouponCabin.com company is growing super fast. From a press release…
CouponCabin.com, a premier online coupon resource, marked two significant milestones in the first month of 2011: CouponCabin now features more than 150,000 coupons and deals for 3,000+ stores.
CouponCabin.com has enjoyed strong traffic in 2011, building off an extremely strong holiday shopping season. According to online research firm comScore, in November 2010, CouponCabin.com enjoyed a 400% increase in traffic over October with 8.8 million visitors, only 12% behind Groupon.com.
Thoughts?
posted by Rich Miller
Tuesday, Mar 8, 11 @ 12:13 pm
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A sales tax is a tax on sales. If you sell in Illinois, you owe the tax. I wish the feds would correct this egregious loop hole that was intended to help the fledgling on-line industry take root.
I think it’s safe to say on-line retailing is no longer in need of public incentives like this. I would guess almost every state would support a federal solution to this sales tax loop hole.
Comment by 47th Ward Tuesday, Mar 8, 11 @ 12:18 pm
Sears is making the same push as WalMart
http://www.wthr.com/story/14184048/sears-aims-to-poach-amazon-affiliate
Comment by OneMan Tuesday, Mar 8, 11 @ 12:24 pm
I am an affiliate marketer and have received pitches from Walmart and Borders. However, the problem is that neither offers most the items that I promote through Amazon.com. In fact, I am already affiliated with both and rarely promote them because of lack of products that fit my niche or their poor commission structure.
In the end, if Governor Quinn signs the legislation, I will lose business because Amazon.com and others will drop me in order to avoid collection the tax. I don’t agree with Amazon’s actions and do think that sales tax collection should be fair and equal among online and brick and mortar businesses, but this legislation simply won’t work because companies have an easy way around it by dropping their affiliates. That will result in harm to numerous small online businesses in Illinois. As another commentator noted, what really is needed is federal action to require uniform tax collection nationwide. That is the correct way to fix the problem.
In the meantime, I have explored incorporating in a nearby state should the legislation pass in order to be able to keep my business with Amazon. I would prefer to incorporate in Illinois (I am currently a sole proprietor), but I’ll have to look elsewhere should Quinn sign the legislation.
Comment by CC Tuesday, Mar 8, 11 @ 12:38 pm
With both sellers and consumers used to not paying sales tax, and with the easy relocatability of these types of business, I’m not sure this tax makes sense at the state level.
How about charging fedex, ups, purolator etc a per package tax (to be passed on to consumers of course)? Then the only loophole would be electronically deliverable stuff.
Comment by cermak_rd Tuesday, Mar 8, 11 @ 12:45 pm
@ Cermak - Because UPS, FedEx, etc. also deliver packages from businesses that already pay the appropriate taxes. And they deliver from my grandmother to me. There would be no way to track it. And why should it be the delivery company’s burden anyway? Amazon and the online companies just need to “man up” and do business the right way. In the end we will all benefit. Until then, maybe what the citizens of Illinois need to do is boycott purchasing from Amazon and the others threatening to leave. You don’t want to pay you fair share? Fine, we’ll take our money elsewhere - like maybe one of those old-fashioned brick and mortar stores owned independently by your neighbor who supports your son’s Little League team!
Comment by Both Sides Now Tuesday, Mar 8, 11 @ 12:55 pm
I understand wanting to collect a sales tax from retailers like Amazon. However, as CC notes above, implementing a sales tax at the state level is not going to do that, as Amazon has already threatened to cease working with their affiliates in this state, thus the state of Illinois won’t see a dime from Amazon.
One of the downsides of this legislation is that it will affect all affiliate marketers in the state of Illinois, such as me. I am small potatoes in the larger scheme of things, but if I am unable to work with Amazon, then I am unable to pay taxes to the state based on that income. Thus nothing is gained but something is definitely lost.
I urge Governor Quinn to veto this bill.
Comment by Lisa Tuesday, Mar 8, 11 @ 12:57 pm
Without federal legislation to solve the problem of online/mail order retail, I don’t think we’re going to ever find an equitable solution. Let’s just abolish the sales tax altogether and increase the income tax to offset. Then we don’t have to worry about it.
Comment by tired Tuesday, Mar 8, 11 @ 12:58 pm
===Let’s just abolish the sales tax altogether and increase the income tax to offset. Then we don’t have to worry about it.===
Yeah. All we’ll have to worry about then is the populace burning the Statehouse to the ground.
Comment by Rich Miller Tuesday, Mar 8, 11 @ 1:02 pm
==A sales tax is a tax on sales.==
Some use the same logic for taxing retirement income. “An income tax is a tax on income.” Simplifying the tax code is an applause line for both parties, but these are the realities of simplifying the tax code. Special treatment for segments of income or sales are removed.
Comment by TD Tuesday, Mar 8, 11 @ 1:18 pm
How hard is it to collect and remit the tax? These guys work on computers, right?
The online retailers are being unreasonable.
Comment by wordslinger Tuesday, Mar 8, 11 @ 1:22 pm
=== How hard is it to collect and remit the tax? These guys work on computers, right? The online retailers are being unreasonable. ===
(a) Agree; but
(b) If neighboring states will allow them to be unreasonable it might not be prudent for IL to stick its neck out.
A federal solution is needed.
Comment by Bill White Tuesday, Mar 8, 11 @ 1:25 pm
Why can’t the US Congress just work out a deal that is much like buying a car in Illinois. If you buy online, you pay the tax of where you live. That would be easier, might not be so simple, but I find it hard to believe it can’t be done.
Comment by Ahoy Tuesday, Mar 8, 11 @ 1:31 pm
Ahoy, you really think this Congress is gonna raise taxes? Really?
Comment by Rich Miller Tuesday, Mar 8, 11 @ 1:34 pm
The comments about online retailers need to man up is just a bad way to look at this. The problem is that this needs to be a Federal law/tax- not a state issue. It is basically putting the Illinois companies that advertise on performance at a competitive disadvantage.
I hate the fact that this legislation is forcing me to move to another state in order to just stay in business. A business that has employees and pays taxes. It just doesn’t make sense to me.
Comment by Chris C Tuesday, Mar 8, 11 @ 1:36 pm
Abolishing the sales tax is not just a bad idea politically. My readings tell me that the states weathering these tough times the best are the ones with a good balance between income, property and sales taxes.
Comment by yinn Tuesday, Mar 8, 11 @ 1:39 pm
It should be noted here that the issue for Illinois affiliates is not an unwillingness to collect tax or any sort of unreasonable or unfair behavior. We are not retailers. We do not stock products, do not handle customer money, and do not take care of sales in any way. We cannot physically collect tax. We simply run advertisements for the products of companies like Amazon, who then pay us a commission for referrals. What the legislation does is attempt to require companies like Amazon (who are not physically in IL) to collect sales tax by creating a nexus to the state through affiliates in the state. But instead of collecting the tax, Amazon and others simply cancel their contracts with their affiliates in order to get around the law. So the State never collects anything and the affiliates in Illinois lose business unless they relocate to a state that does not have this kind of tax nexus legislation. This has been played out in other states, and sales tax did not end up collected, affiliates lost business, and the State got to defend a lawsuit as well. So, it doesn’t work and ends up actually costing the State money. Ultimately it is legislation that sounds appealing on the surface, which is why lawmakers in cash strapped states tend to buy into it, but it really isn’t good for anyone.
Comment by CC Tuesday, Mar 8, 11 @ 1:47 pm
Yep, now is the time for Illinois to be raising taxes. I have all the confidence in the world that these fine folks who got us into this mess, will spend those taxes wisely and will help encourage business growth in Illinois.
Flash!!!! Pigs seen flying over Springfield! Quinn promises details to spur business growth. Details to follow.
Comment by Justice Tuesday, Mar 8, 11 @ 1:52 pm
The onlines developed in a niche based on a tax loophole that worked for them. Now the state (and probably every others state) is looking at loopholes where they could gain some tax dollars. Not exactly like tax loopholes have never been changed in the past. What are these guys going to do? Keep running somewhere else?
Comment by zatoichi Tuesday, Mar 8, 11 @ 1:59 pm
“How hard is it to collect and remit the tax? These guys work on computers, right?
The online retailers are being unreasonable.”
Doesn’t matter - these folks have other business options. The most stupid part of this entire issue is than the business entities most affected are in a great many cases not going to be large scale enterprises, but it’s going to be all the small folks out there.
One tiny shop runs a battery / flashlight / small specialty fastener business out of their detached garage they built on their property. Probably 85 to 90 percent of the goods they sell you couldn’t get from any storefront, and certainly no big box.
In fact, from what I see, at least 60% of their items are all “Made In The USA”, with minimal amounts made in China. They’ll most likely move elsewhere.
A couple of out-of-work neighbors started up a spare parts business over the web for appliance components (components not readily available). They figured maybe a few hundred bucks in sales per month. Hit that their first week in business, and haven’t looked back.
They like it here, but through extended family involvement they have the option to relocate their business location outside of IL and still stay here. Just the business location would relocate.
But again, these are all small entrepreneurial operations. You can’t push entrepreneurial businesses to form with one hand at the same time you are trying to tax them out of existence with the other hand.
Comment by Judgment Day Tuesday, Mar 8, 11 @ 2:02 pm
I guess I am a little fuzzy on this concept.
I have purchased items online and paid Illinois sales tax. I have purchased items online and paid no Illinois sales tax. I guess there is a reason why some charge and others don’t?
It doesn’t really matter to me that much. I don’t consciously figure the savings on sales tax into my purchases. A lot of times it is an item that I either can’t find in a brick and mortar store, or it is easier and cheaper to look on line than run all around the country trying to find it in a brick and mortar store. And let’s face it most people enjoy having things delivered to their door. So it isn’t going to bother me if I have to pay sales tax on every online purchase.
So I guess the issue is that Amazon, etc. doesn’t want to be involved in collecting and passing on the taxes it collects. I guess that is their choice.
So the bottom line, I take it, is does Illinois want to lose the jobs these businesses create or do we want the taxes that would be generated by passing the bill. I don’t think the growth in this industry is going away, I think it will only increase. So you can’t even use today’s figures to estimate the impact. While I agree with 47th ward that sales tax should be on all sales, it might be prudent to take a pass on this and hope that somehow the field is leveled in the future.
Comment by Irish Tuesday, Mar 8, 11 @ 2:04 pm
The Amazon approach is small potatoes. Why not go after all internet transactions?
In the early 90s SCOTUS ruled—in Quill v. North Dakota—that states can’t require merchants who don’t have an in-state physical presence to collect sales tax. Thus, it’s not that sales tax is not owed, just that there’s no practical way to collect it. The ruling theorized that it would be too burdensome to require a far-flung merchant to comply with a myriad of local tax rates/laws. However, that rationale no longer apples; for many years, mail order/internet companies that have an in-state presence have solved the compliance problem (presumably with software solutions). Ironically, Amazon knows this because it has been collecting sales tax for Target’s on-line business.
The current situation further enhances the decline of goods-based sales tax. It’s regressive because low-income folks frequently don’t have the ability to make on-line purchases. Worst of all, it disadvantages companies who have a physical presence and thus contribute jobs and various types of tax revenue to our state and local economies.
What about a frontal assault on Quill? In other words why not pass a broad internet tax law and see what happens with SCOTUS?
Comment by Think Big Tuesday, Mar 8, 11 @ 2:07 pm
Walmart is not just a store. They are also trying to be a banker. Taking advantage of the strange, out of no where Durbin amendment on swipe fees, as the NYTimes calls them….article yesterday or so…. Walmart seems to want to wipe out some financial institutions and do that work themselves. If Walmart is for it, be sure to analyze it. Gov. Quinn should not side with Walmart on this either.
Comment by amalia Tuesday, Mar 8, 11 @ 2:08 pm
I for one welcome our Wal-Mart overlords.
Comment by just sayin' Tuesday, Mar 8, 11 @ 2:30 pm
I like the idea of eliminating the sales tax and increasing the income tax.
Comment by Tom Smith Tuesday, Mar 8, 11 @ 2:30 pm
Doesn’t Amazon have an in state presence on my computer? It ain’t brick and mortar, but it is right in front of my eyes.
Time for the Congress to help the states get their fair share of sales taxes and stop letting the Amazons lord it over us.
And how is that voluntary compliance with reporting purchases from out of state on the new IL tax form going?
Comment by vole Tuesday, Mar 8, 11 @ 2:35 pm
This tax collection legislation is redundant (or duplicative) now that all us consumers of online goods are paying our state sales/use tax with our IL-1040s.
Comment by Cheswick Tuesday, Mar 8, 11 @ 2:41 pm
SCOTUS pointed out in Quill that Congress has the power to require out-of state merchants to collect sales tax. Quill is a 1992 decision.
Comment by Think Big Tuesday, Mar 8, 11 @ 2:42 pm
Quill notwithstanding, it takes a high degree of testicular brazenness to try to tax sales taking place in another state. And it’s not going to be successful until we get to a total surveillance society, which does seem to be coming fast. Chalk another one up for the commerce clause, I guess.
Comment by Excessively Rabid Tuesday, Mar 8, 11 @ 2:51 pm
The issue did not start with internet sales, but with a far larger lobby, catalog companies. I’m not sure if this goes for Illinois, but most states the sales tax is actually a “sales and use” tax. If one buys a car in another state, one usually pays a tax on where it’s owned.
Comment by jacketpotato Tuesday, Mar 8, 11 @ 2:59 pm
==You can’t push entrepreneurial businesses to form with one hand at the same time you are trying to tax them out of existence with the other hand.==
This isn’t a new tax. They aren’t being asked to pay the tax personally. They are being asked, however, to operate like any other legitimate business that sells things and to collect the existing sales taxes that are due. It should not be that difficult. If you are not willing to operate by the rules then I say good riddance - either close or move.
Comment by Anonymous Tuesday, Mar 8, 11 @ 3:00 pm
Sorry . . . that was me above.
Comment by Demoralized Tuesday, Mar 8, 11 @ 3:00 pm
Vole said it best:
Doesn’t Amazon have an in state presence on my computer? It ain’t brick and mortar, but it is right in front of my eyes.
Comment by Think Big Tuesday, Mar 8, 11 @ 3:01 pm
ummm Fatwallet and Groupon are not making sales in IL.
ALSO I used fatwallet when I puchased my dell laptop….AND I paid Sales TAX!!! so mu purchases through fatwallet require I pay sales tax for many of the compnaies they have listed already… so where is the beef?
Groupon I used a clock through from them once, to target, which collected sales tax on my puchase!!!
So once again I am not sure I see the issue here.
Comment by Ghost Tuesday, Mar 8, 11 @ 3:06 pm
I almost forgot… The mone fatwallet and groupon receve is a kick back on the ultimate sale for going through them…which is a referall service fee on their end of the line.
Comment by Ghost Tuesday, Mar 8, 11 @ 3:10 pm
I think that the real issue with requiring online retailers like Amazon to charge sales tax is the number of sales tax jurisdictions nationwide. Do you think the municipalities are going to be happy missing out if the states start collecting sales tax for online sales? My understanding is that if you count local governments there are over 10,000 sales tax jurisdictions in the US. And like every other jurisdictional boundary they aren’t that easy to define.
I’d put this back on the states. Get NCSL or some other organization to create legislation for a common sales tax rate for online sales regardless of jurisdiction. Then the “burden” of collecting & remitting the sales tax becomes minimal.
Comment by BCross Tuesday, Mar 8, 11 @ 3:25 pm
– So once again I am not sure I see the issue here.–
The issue is that the current situation provides a competitive disadvantage to bricks-and-mortar retailers that sell stuff here. Frequently, on-line merchants sell stuff with free shipping. Sans sales tax, this gives on-line merchants a big price advantage over IL merchants that generate all sorts of IL tax revenue and provide in-state jobs.
In the past year, I bought a camera from a NY-based internet retailer. I also bought a pair of running shoes from a CA-based internet retailer. I paid sales tax on the (cheap) running shoes but not on the (expensive) camera. This is because RoadrunnerSports.com opened bricks-and-mortar stores in IL. I suspect that they thought long and hard about opening stores here because now all of their IL internet transactions are subject to sales tax (creating a price disadvantage vis-à-vis their competitors). Why should we disadvantage businesses that want to create jobs (and pay taxes) in IL?
Comment by Think Big Tuesday, Mar 8, 11 @ 3:34 pm
===Vole said it best===
Actually, CC at 1:47 said it better: if Quinn signs this, Illinois won’t collect an extra nickel in sales taxes but we will lose some pretty good jobs.
Quinn should kill this bill and lobby Kirk and Durbin to fix it. Then he should use his DGA post to get some other states to do the same. Senators used to represent states, it’s about time they did so again, especially on this issue.
Comment by 47th Ward Tuesday, Mar 8, 11 @ 3:39 pm
==It should be noted here that the issue for Illinois affiliates is not an unwillingness to collect tax or any sort of unreasonable or unfair behavior. We are not retailers. We do not stock products, do not handle customer money, and do not take care of sales in any way. We cannot physically collect tax. We simply run advertisements for the products of companies like Amazon, who then pay us a commission for referrals.==
CC has performed a valuable service here for those who clearly do not fully understand what an “Amazon affiliate” is. Unfortunately, a number of comments after CC’s 1:47 post suggest people still do not get it. I think a lot of folks here are talking past each other. I wonder if Quinn even understands what being an affiliate is, as opposed to an online seller.
Comment by Responsa Tuesday, Mar 8, 11 @ 4:15 pm
I love not paying sales tax when I buy online. I think like I’m getting one over on the MAN. However, it is a sales tax. We have been paying sales taxes for decades - it is how gov’ts raise money to pay for the services gov’t provides. Now, I don’t always agree with what the gov’t does with my $ but that is a different subject althogether.
Amazon.com is p!$$!ng and moaning - a bunch of whiners. I can see many, if not most, states passing similar laws that would box Amazon into a corner. Then what do they do? Like wordslinger said, they all got computers - they can figure out a program that will make it easy peasy. The wild west of the internet is over - the ranchers have lost the range war. Time to mend the fences and plant the corn, by gum!
Comment by dupage dan Tuesday, Mar 8, 11 @ 4:55 pm
Quinn should veto this bill. 47th Ward is right get Kirk & Durkin to do the heavy lifting. Quinn
must be getting his advice from Cullerton.
Comment by mokenavince Tuesday, Mar 8, 11 @ 5:03 pm
I wonder how much the State of Illinois and other governmental agencies buy thru Amazon. Could a bill be passed that said in order to sell to Illinois you have to also collect Illinois sales tax?
Comment by JimF Tuesday, Mar 8, 11 @ 5:11 pm
We need an image of Mr. Illinois - we could put him in a chair under the Welcome To Illinois signs and he could hold a tin cup and a poster “Homeless, Unemployed, Spendaholic, and Broke please donate.” Enough with the More Taxes crusades - Stop spending, NOW!
Comment by A Citizen Tuesday, Mar 8, 11 @ 5:16 pm
OK. Here’s a brain teaser.
Say the Amazon affiliate is a blog site whose owner is based in Illinois. The blog owner has an Amazon widget link on the right side of the blog page. That widget takes a blog reader (if he chooses to click on it) directly to Amazon in order to buy a book or shirt or whatever. The blog owner/affiliate gets a very small commission paid to him by Amazon on any completed sale that originated through his blog and that widget. Ok so far?
Now, what if the blog reader who used that widget on the Illinois blog happens to live in California, and Amazon ships the product to Cali, and the credit card bill to pay for it goes to California.
Which state should be entitled to the sales tax revenue? Surely not both. Even if the purchaser AND the affiliate happen to both be in Illinois, why should the affiliate ever be considered relevant other than he owes some income tax on the commission income?
Comment by Responsa Tuesday, Mar 8, 11 @ 5:25 pm
With 9,000 affiliates in Illinois that earned $78M in revenue and paid $2.3M in tax dollars in 2008, we are not talking here about a insignificant community. Those jobs and the tax dollars they generate for Illinois hang in the balance.
http://www.lakeshorebranding.com/company/blog/new-proposed-tax-will-terminate-thousands-of-jobs/
Comment by Chris C Tuesday, Mar 8, 11 @ 6:08 pm
I’m trying to wrap my small-mind around this. Are bricks-and-clicks like Walmart and Sears collecting and remitting the tax on their online sales and clicks-only Amazon.com are not?
–With 9,000 affiliates in Illinois that earned $78M in revenue and paid $2.3M in tax dollars in 2008, we are not talking here about a insignificant community.–
Well, that averages out to about $8,666 in sales and $255 in taxes. Obviously, that’s not where the big money is.
Why are these guys, the affiliates, even in the picture? If they’re selling through Amazon.com and such, why are they on the hook?
If the tax will go after these small fry while letting the big dogs run free, forget it. We need a better plan.
Comment by wordslinger Tuesday, Mar 8, 11 @ 6:26 pm
I’m not sure how this affects Groupon. Why would I pay a sales tax on a discount coupon? Especially as so much of the Groupon stuff I see (and buy) relates to services, not products.
Comment by soccermom Tuesday, Mar 8, 11 @ 6:49 pm
=== If they’re selling through Amazon.com and such, why are they on the hook?===
The affiliates aren’t selling anything. they are referring customers to Amazon, and therefore, are the Amazon “nexus” that links to Illinois. The bill before Quinn says that because of this “nexus,” Amazon must collect/pay sales taxes for Illinois sales.
Amazon is almost certainly going to respond by cancelling all affiliate contracts in Illinois, thus removing its “nexus” and therefore, scot free under this law. The affiliates will be dumped, and no sales taxes will be collected.
I’m not sure if that’s clear, because frankly I don’t understand it very well. Seems like some e-tailers collect sales tax and pay Illinois and others don’t. I know I’ve paid sales tax on some on-line purchases, but not others. I also know I have never volunteered this info to the IL Dept. of Revenue either.
But have you seen Amazon dot com lately? You can buy almost anything there, way more than books and music. No wonder Walmart is on the other side of this debate. Amazon is totally exploiting this because its business model is based on the sales tax discount for consumers.
Comment by 47th Ward Tuesday, Mar 8, 11 @ 6:59 pm
No big deal folks. People that work at WalMart generally qualify for medicaid and all of the other assorted goodies paid for by the Illinois taxpayers. Lets welcome a WalMart expansion for sure!!!
Comment by Bond_player Tuesday, Mar 8, 11 @ 7:01 pm
@Noman:
You are really full of it if you think the budget can be cut 25% without impacting essential services. Proves you have no understanding of the budget. I would like you to prove your obscene statement with a detailed budget showing me how you can accomplish this task you believe is so easy. Come on . . . I’m waiting . . .
Comment by Demoralized Tuesday, Mar 8, 11 @ 9:53 pm
Clearly some don’t understand the most basic fact in this situation - that this is not a tax on Amazon. Sales tax is paid by the buyer. When you vote or rally to support this tax, you are taxing yourself. How about the state starts spending less instead?
This is an attempt to make a retailer outside the state do paperwork and collections for the state. Interstate tax laws aren’t loopholes, they are constitutional protection against interstate tariffs. It was put in place at the founding of this country specifically to prevent restraint of trade. Trying to redefine that law by redefining nexus is an attack on the constitution and America itself. The result will be lower income tax collected from resident affiliates and loss of businesses that move out of state. I’m an affiliate, and while Amazon is a very small part of my affiliate earnings, increasing income and sales tax, property tax and fees with zero service increase from the state have me looking to relocate regardless of this outcome.
As far as WalMart and Sears go, neither offers the same benefit to affiliates or buyers as Amazon. Amazon offers a price alternative, and larger selection over overpriced brick and mortar book sellers, not just a sales tax discount. In fact, sales tax and shipping are often comparable on many items. Buyer may seek lower taxes on higher priced items, but generally they are seeking lower prices than in-state retailers offer.
Using an affiliate program offered by a local retailer has a major drawback - the customers just goes to the store and buys the item instead of buying online. That’s a loss of revenue for the small business affiliate and a gain for the mega corporation. When did tax and spend liberals start backing major corporations?
Comment by OutsideChgo Tuesday, Mar 8, 11 @ 11:34 pm
=== This is an attempt to make a retailer outside the state do paperwork and collections for the state ===
LOL. What paper work do you think is involved, exactly?
We have these things called “computers” now. If Amazon.com can recommend books my friends are reading to me, they can pretty easily calculate sales tax.
Look, I haven’t set foot in a Wal-Mart store since 1987, but at least they are paying property taxes and other revenue to support state government.
Amazon’s threat to cut ties with local affiliates is a pretty clear confession that their tax loophole advantage is the core of their business model and their sole competitive advantage, and that’s a perversion of capitalism.
Comment by Yellow Dog Democrat Wednesday, Mar 9, 11 @ 5:30 am
Actually we’re talking about millions of transactions per year that have to have sales tax records stored for years. Reports that have to be filed at least monthly, deposits that have to be made weekly or even daily. Home rule rates applied by hundred of counties and cities within IL and varying tax rates that have to be applied to different types of items. Staff that has to be hired to manage the process and interact with the state, including legal. Servers that have to be purchased and maintained.
This law exempts small business specifically because imposing it on them would put them out of business. It’s a burden.
With the final windup being that if this excessive taxation model continues, IL taxpayers will eventually end up paying sales tax to every state in the union and IL businesses will be expected to collect and manage that. The only people that think taxes are wonderful are those living off the tax.
Not to mention that Amazon will be required to submit detailed customer data to the state as proof when asked. And that they will not be compensated for this in any fashion. Were I Amazon, I’d do the same.
The reality is that Amazon will still be able to sell to IL without affiliates, and IL will still not be collecting tax.
WalMart pays taxes because they operate in the state. The state has to manage them, provide roads for their trucks, etc. Sellers outside the state don’t place a burden on taxpayers, so they shouldn’t be taxed. The state doesn’t have an inherent right to taxes. Taxes are what the residents of the state pay for services that must be provided by their government. When the government starts expanding their service, they ask for more money. That isn’t a cycle that can be allowed to expand endlessly. There’s a reason property taxes in the Chicago area are ten times what they are in rural areas and it because of isn’t necessary services.
The tax the minority model has to change. Taxing tanning salons is easy because one a small percentage of the pop goes there. If every little sector is taxed that way it’s death of a thousand cuts.
Comment by OutsideChgo Wednesday, Mar 9, 11 @ 10:32 am
I’d add that the Amazon affiliate arrangement is fundamentally an advertising arrangement. The affiliate is the publisher and Amazon is the ad buyer. The affiliates do not handle product or orders in any fashion.
It very much like buying something thru mail order or over the phone from an out of state retailer that advertises on TV or in the Chicago Tribune. Does the Trib form a nexus for these sellers? Do TV ads establish a nexus? Does the postman establish a nexus by dropping a mail order piece in your mailbox?
Amazon is not breaking any laws now. Quite the opposite, it’s illegal for them to collect tax that isn’t due. An the supreme court ruling in the Quill case made it illegal for the states to require Amazon to report. What the state is trying to do is create an alternate way to collect use tax that isn’t being paid by residents who buy from out of states.
Comment by OutsideChgo Wednesday, Mar 9, 11 @ 10:57 am
Gov Quinn has signed the bill and Amazon has already issued termination notices to its affiliates. $2.5 million in income tax lost and more jobs, income tax and sales tax will be lost as affiliate companies move out of Illinois.
Illinois residents continue to owe the use tax they are not paying on their purchases.
Comment by OutsideChgo Thursday, Mar 10, 11 @ 5:55 pm