Judge Declares Illinois’ ‘Amazon Tax’ Unconstitutional

affiliate-marketingIn 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.

(Stock image via Shutterstock.com. Used under license.)

Related Topics: Affiliate Marketing | Amazon | Channel: Retail | Legal: General | Top News

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About The Author: is Editor-In-Chief of Marketing Land. His news career includes time spent in TV, radio, and print journalism. His web career continues to include a small number of SEO and social media consulting clients, as well as regular speaking engagements at marketing events around the U.S. He recently launched a site dedicated to Google Glass called Glass Almanac and also blogs at Small Business Search Marketing. Matt can be found on Twitter at @MattMcGee and/or on Google Plus. You can read Matt's disclosures on his personal blog.

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    Finally, someone with a brain ruled justly on the disgusting display of extortion known as the nexus tax. We can only hope this creates a ripple effect on all of the other states.

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  • http://twitter.com/celwell Chris Elwell

    Agreed! But in this environment the tax-free status of internet sales seems like too attractive a target for states to ignore.

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