Internet business now will be subject to taxation in Illinois. On March 10, Gov. Pat Quinn signed the Mainstreet Fairness Bill, which requires all companies doing business in Illinois to collect and remit the legally required sales taxes.

The law requires all online retailers who contract with an "affiliate" in Illinois to collect sales tax on customer purchases and remit it to the Illinois Department of Revenue (IDOR). Illinois currently collects sales tax from more than 20,000 retailers with physical locations in the state, including online and catalog sales from those vendors. "Illinois retailers are crucial components of our state economy and our local communities," said state Senate President John Cullerton, D-Chicago, one of the bill's sponsors. "We need to ensure that those businesses are not at a disadvantage in our modern marketplace. I believe this law is an important step in leveling the playing field for Illinois businesses."

Illinois law currently requires taxpayers and businesses to report and pay sales tax on items purchased from retailers that do not collect sales tax on their behalf. IDOR estimates that between $153 million and $170 million in sales tax revenue per year goes uncollected, as individuals and businesses are unaware of or avoid their obligation to pay sales tax on such items. "It's a matter of fairness. Stores and businesses located in Illinois employ Illinois workers, support community programs, and, through the property, income and sales taxes they pay, allow us to provide vital public services," said the state's Director of Revenue Brian Hamer. "Online merchants with affiliates in Illinois should be required to remit the same taxes."

The law is effective immediately. Read Quinn's press release on the Mainstreet Fairness Bill.

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