In a big victory for affiliate marketers, an Illinois judge has declared that a state law allowing Illinois to collect sales tax on online sales by out-of-state companies — a law sometimes called the “Amazon tax” — is unconstitutional.
According to a news release from the Performance Marketing Association (PMA), the judge ruled that having affiliates in Illinois doesn’t establish a legal presence, or nexus, inside Illinois for tax purposes. The judge also agreed with the PMA’s position that the 2011 state law is premature because of a federal moratorium on Internet taxes that runs through 2014.
Rebecca Madigan, the PMA’s executive director, tells Crain’s Chicago Business that the law had a big impact on the estimated 9,000 affiliate marketers in Illinois.
We figure a third went out of business, a third went out of state and a third saw their revenue decline. These businesses should be able to come back or rebuild their businesses.
An Illinois spokesperson tells Crains that it’s reviewing its appeal options and disagrees with today’s ruling.