Illinois’ Mainstreet Fairness Act Could Hurt Amazon Affiliates

Proponents of House Bill 3659 – the Mainstreet Fairness Bill – say it addresses the long-standing inequity in the retail sales industry between brick-and-mortar retailers and their online-only counterparts.

 

“Illinois’ main street businesses are critical to ensuring our long-term economic stability, which is why they must be able to compete with every company doing business online in Illinois,” said Governor Quinn. “This law will put Illinois-based businesses on a level playing field, protect and create jobs and help us continue to grow in the global marketplace.”

The law, sponsored by Rep. Patrick Verschoore (D-Rock Island) and Senate President John Cullerton (D-Chicago), will require 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).

The bill was a bipartisan initiative that passed both houses of the General Assembly with overwhelming support.

 

Illinois currently collects sales tax revenue from the more than 20,000 retailers with physical locations in the state, including online and catalog sales from these vendors. The 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.

 

The Illinois Department of Revenue (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,” said Brian Hamer, Director of Revenue. “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. Online merchants with affiliates in Illinois should be required to remit the same taxes.”

RILA President Sandy Kennedy commended Governor Quinn for signing the bill and addressed the concern many have over whether Amazon and other online retailers will simply terminate their relationships with Illinois businesses in order to keep their loophole.

“Governor Quinn has taken a bold step today to help level the playing field for retailers in Illinois,” Kennedy said.  “Whether a sale happens in a store or online, the sales tax collected should be the same.  It’s time to end the special treatment given to online-only retailers.

 

“Retailers compete on price 24 hours a day, 7 days a week,” she continued.  That competition needs to be on an even playing field.  Today, online-only retailers selling into Illinois are not required to collect the sales tax, a decades-old loophole that pre-dates the Internet itself and gives them an arbitrary advantage over stores that operate in our communities.”

 
Should Amazon and other online-only retailers choose to fire their affiliates in Illinois to avoid collecting sales tax, the state's brick-and-mortar retailers are ready to step in, said Kennedy.

 

“If Amazon chooses to terminate its relationships with Illinois businesses in order to continue dodging sales tax laws, that’s a short-sighted decision, but its Amazon’s to make,” she said. “America’s largest brick-and-mortar companies are expanding their affiliate programs should Amazon abandon its partners in Illinois.  Main Street retailers employ more than 590,000 workers in Illinois-and we’re not leaving.”

At the request of Governor Quinn, the Alliance of Main Street Fairness (AMSF) has begun a website (www.standwithmainstreet.com) to help Illinois affiliates expand their customer bases. The Illinois Department of Commerce and Economic Opportunity (DCEO) will partner with the Illinois Retail Merchants Association and AMSF to provide growth opportunities, foster an environment to create more Illinois jobs and provide online shopping consumers with greater opportunities to save money.

Retail Industry Leaders Association (RILA) is a trade association of the largest and most successful companies in the retail industry.  Its member companies include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales. RILA members operate more than 100,000 stores, manufacturing facilities and distribution centers, have facilities in all 50 states, and provide millions of jobs domestically and worldwide.