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Illinois expands sales tax for online purchases

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Kai Ryssdal: Amazon's just about done with the state of Illinois. You can still buy stuff from the online retailer if you live there. But if you make your living as one of Amazon's Illinois-based associates, you're out of luck.

Amazon's cutting ties with websites in that state that have been selling Amazon's goods by way of advertising links. Amazon says it would rather do without the ads than be forced to collect sales taxes under a newly signed Illinois law. Our senior business correspondent Bob Moon explains.


Bob Moon: It's not just Amazon that's resisting growing pressure from budget-strapped states to collect sales taxes.

Jonathan Johnson heads Utah-based Overstock.com. He argues the U.S. Supreme Court has already let companies with no physical presence in a state off the hook.

Jonathan Johnson: Overstock doesn't have any employees, any warehouses, any goods in Illinois. That's why we don't have to collect sales tax.

Johnson says Overstock just notified its Illinois-based affiliates that sell or promote its goods on their websites that those relationships are being terminated. The reason? The state contends they make Overstock liable for collecting taxes.

Rebecca Madigan represents the affiliates who get paid sales commissions in what's known as "performance marketing." She says Amazon and Overstock don't want to be burdened with collecting taxes.

Rebecca Madigan: It becomes much more expensive for them than any sort of revenue that they're getting from these affiliate websites.

Jason Brewer represents brick-and-mortar members of a trade group that includes Wal-Mart and Best Buy. He says their online sites collect sales taxes in all states, and their rivals aren't being honest about their unfair advantage.

Jason Brewer: Clearly at this stage, they've built a business model around not collecting that sales tax, so I think it's rather disingenious of them to suggest that it doesn't matter.

Chicago-based movie critic Roger Ebert is one of those who supports his website with Amazon sales links. Last night, he tweeted that he also supports the new law, but because Amazon has decided to evade what he called "fair and just Illinois taxes," he has only "20 more days to make a fortune." Then he sent another tweet, linking to an Amazon sale for Levi's.

In Los Angeles, I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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