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Illinois Governor Signs "Amazon Tax" Bill Into Law

States are exploring a variety of methods to improve their collection of tax revenues from purchases made by their residents from out-of-state online and mail-order retailers.

As we have blogged about before, states are exploring a variety of methods to improve their collection of tax revenues from purchases made by their residents from out-of-state online and mail-order retailers. Today, Illinois became the latest state to enact such laws, when Governor Pat Quinn signed HB 3659. The new Illinois law follows the model that New York State set with its so-called Amazon Tax (currently in the midst of a court challenge): it extends the definition of "nexus," presence for sales tax liability purposes, to include in-state members of a retailer's affiliate program. As with New York, there are exemptions for retailers who have sales below $10,000 per quarter over the previous four quarters.

Publishers and affiliate marketers alike must now be prepared to comply with this law, and it is not yet clear how (if at all) Illinois will clarify some of the issues such as the permissible extent of site promotional activities, pay-per-click, required reporting, etc. The attorneys of our firm's Internet law practice will be watching these issues very closely.

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