Both House and Senate lawmakers this week approved House Bill 3659, which now heads to the governor's desk. Dubbed the "Amazon Tax," the legislation requires major online retailers, such as Amazon.com and Overstock.com, to collect the state's 6.25 percent sales tax from Illinois customers.
The state can now collect sales tax from online sales of a business that has an actual brick-and-mortar presence in the state.
But the proposed legislation considers Amazon and Overstock's partnerships with local retailers as their extending arms, and is projected to bring in about half of the $150 million in sales tax the state is now losing out on.
Amazon.com has sent a letter to Illinois-based affiliates stating that it would terminate its partnership once Gov. Pat Quinn signs the bill.
Chicago-based BradsDeals.com, a coupons publisher, says the bill will push e-commerce businesses out of the state.
"Amazon will have the responsibility starting on July 1 to charge sales tax to shoppers in Illinois as long as they're working with small businesses in Illinois," said Brad Wilson, BradsDeals founder. "Unfortunately, preserving the lack of sales tax to consumers is more important to Amazon than working with us."
Other Illinois-based online retailers such as CouponCabin.com and FatWallet.com could lose up to a third of their revenues. And some are actually considering moving their business to another state — a thought not far from the corporate mind of FatWallet.com.
"That could account for a large percentage of our revenue, in order to keep our business going because we make pennies on a dollar," said FatWallet spokesman Brent Shelton. "We'd probably be forced to move the business to another state, where Amazon and Overstock would still be willing to work with us."
A spokesman for the Illinois Department of Revenue predicts lawsuits from major online retailers if the proposal is put in place. But Mike Clemons says the new law will not create a loss of local jobs.
"I think this is legislation that will retain jobs in Illinois, and create jobs in Illinois, because it will level the playing field between your local brick-and-mortar retailer, who has to unfairly compete with the Amazons and the Overstocks of the world," Clemons said.