Internet Sales Tax Fairness — Click-Through Nexus — Illinois

Date: 10 Mar 2011 | posted in: Retail | 0 Facebooktwitterredditmail

In Aug. 2014, Illinois passed a law that requires out-of-state sellers to collect and remit state sales taxes if they generate more than $10,000 in sales a year through sales affiliates based in Illinois. The law went into effect in Feb. 2015. It’s a revised version of a 2011 state law that the state Supreme Court struck down, on grounds that it conflicted with the federal Internet Tax Freedom Act. To bring the law in line with federal law, on its second try, the Illinois legislature broadened the law to apply not only to Internet sellers, but also to catalog and mail-order retailers. Additionally, it included language allowing businesses to rebut the “presumption” that a nexus constitutes an in-state presence.

______

The following is an excerpt from Public Act 098-1089.

1.1. A Beginning July 1, 2011, a retailer having a contract with a person located in this State under which the person, for a commission or other consideration based upon the sale of tangible personal property by the retailer, directly or indirectly refers potential customers to the retailer by providing to the potential customers a promotional code or other mechanism that allows the retailer to track purchases referred by such persons. Examples of mechanisms that allow the retailer to track purchases referred by such persons include but are not limited to the use of a link on the person’s Internet website, promotional codes distributed through the person’s hand-delivered or mailed material, and promotional codes distributed by the person through radio or other broadcast media. The provisions of this paragraph 1.1 shall apply only if the cumulative gross receipts from sales of tangible personal property by the retailer to customers who are referred to the retailer by all persons in this State under such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December. A retailer meeting the requirements of this paragraph 1.1 shall be presumed to be maintaining a place of business in this State but may rebut this presumption by submitting proof that the referrals or other activities pursued within this State by such persons were not sufficient to meet the nexus standards of the United States Constitution during the preceding 4 quarterly periods.

1.2. Beginning July 1, 2011, a retailer having a contract with a person located in this State under which:

A. the retailer sells the same or substantially similar line of products as the person located in this State and does so using an identical or substantially similar name, trade name, or trademark as the person located in this State; and

B. the retailer provides a commission or other consideration to the person located in this State based upon the sale of tangible personal property by the retailer.

The provisions of this paragraph 1.2 shall apply only if the cumulative gross receipts from sales of tangible personal property by the retailer to customers in this State under all such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December.

Follow Stacy Mitchell:
Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance, and directs its Independent Business Initiative, which partners with a wide range of allies to implement policies that counter concentrated power and strengthen local economies.