A decision from the U.S. Supreme Court Thursday gives more power to states to collect taxes on Internet sales. It could be a boon to Illinois, but not as much as in other states.
As shopping shifted away from physical stores and onto the Internet, sales taxes began evaporating, too.
But Carol Portman, who runs the Taxpayers’ Federation of Illinois, says the state has been in a relatively good position on this issue.
She says that’s because a lot of internet sellers and mail-order companies have a physical presence in Illinois, and have already been collecting taxes on every purchase.
“Compared to a lot of other states, we have not suffered from as dramatic sales tax revenue fiscal hit because so many of those sellers were here and collecting tax,” Portman says.
Those sellers include Amazon, which has multiple distribution warehouses in the state.
The Illinois Retail Merchants Association issued a statement in which the group's president, Rob Karr, praised the outcome.
“This ruling will ensure that main street retailers — who employ your neighbors, pay property tax and support local programs — are able to compete on a level playing field with out-of-state retailers that use our roadways and other services, but up until now, did not contribute anything to Illinois’ economy,” Karr said.
But Democratic state Rep. Mike Zalewski, chairman of the House Revenue Committee, was more restrained in his assessment: “I would probably be a little more skeptical of the idea that this is going to solve bricks-and-mortar retail’s problems forever only because Amazon — which is obviously the chief antagonist to bricks and mortar — was already remitting sales tax.”
Illinois already has a law on the books anticipating the decision.
Beginning in October, online sellers will have to collect state sales tax if they conduct at least 200 transactions or earn more than $100,000 in Illinois.
Officials estimate Illinois could gain an additional $200 million in annual tax collections. That does not, however, equate to an unexpected windfall — the budget for the new fiscal year already counted on getting an additional $150 million in sales taxes following a favorable ruling (that represents the $200 million annual figure pro-rated to nine months, since the new law doesn't take effect until Oct. 1).