Media contact: Diana Rickert (312) 607-4977

Media Alert: Cook County Circuit Judge Robert Lopez Cepero strikes down "Amazon tax" law in Illinois

WHAT: This law was signed by Gov. Quinn in March 2011 and went into effect in July 2011. It was meant as a revenue grab but instead drove technology-based jobs out of Illinois, most notably, FatWallet.com and CouponCabin.com.

The law required out-of-state online retailers such as Amazon.com to collect and remit sales taxes on purchases made by Illinois residents if the online retailer had a physical presence in Illinois.

The law expanded the definition of “physical presence” beyond a factory, warehouse, store or office to include affiliate companies in Illinois –– typically coupon or deal websites, whose operators earn commissions for driving shopping traffic to an online retailer. Many of these website operators were small businesspeople in Illinois who saw online affiliate marketing as a way to earn extra money or as an opportunity to be an entrepreneur.

Judge Lopez Cepero ruled the law unconstitutional on two grounds: 1) it violated the Commerce Clause of the United States Constitution, which limits what entities a state can tax; and 2) it conflicted with the federal Internet Tax Freedom Act, which prohibits states from directly targeting and taxing internet commerce.

WHY THIS MATTERS: The Illinois Policy Institute, Performance Marketing Association and others have been fighting the "Amazon tax" for more than a year. In October the Illinois Policy Institute supported legislation that would repeal the "Amazon tax."

This law was billed as a revenue grab but instead drove technology-based jobs out of the state. FatWallet.com moved from Illinois to Beloit, Wis. CouponCabin.com moved from Illinois to Whiting, Indiana.

The Performance Marketing Association estimated that Illinois had 9,500 affiliate advertisers who generated $744 million in advertising revenue in 2010. These affiliates paid $22 million in state income tax in 2010.

MEDIA AVAILABILITY: Lawrence J. McQuillan, Ph.D chief economist with the Illinois Policy Institute, is available for interviews in Chicago and by phone for outlets elsewhere. Spokespeople also are available in person in Springfield, Ill.  

WHERE: Illinois Policy Institute offices are at 190 S. LaSalle St. in Chicago, at the corner of Adams and LaSalle. To schedule interviews please call Diana Rickert (312) 607-4977.

Media contact: Diana Rickert (312) 607-4977