Illinois Adopts Click-Through Nexus Law


On March 10, 2011, Illinois Governor Patrick Quinn (D) signed Public Act 96-1544 (H.B. 2659) into law, adding Illinois to a growing list of states that have adopted an "Amazon tax" or "click-through nexus" law.1 Starting July 1, 2011, a retailer will be considered to maintain a place of business in Illinois, and therefore be expected to collect use tax on sales to Illinois purchasers, if:

1.the retailer has a contract with a person located in Illinois under which the person, for a commission or other consideration based upon the sale of tangible personal property by the retailer, directly or indirectly refers potential customers to the retailer by a link on the person's internet website; or,

2.the retailer has a contract with a person located in Illinois under which the retailer sells the same or substantially similar line of products as the person located in Illinois and does so using an identical or substantially similar name, trade name or trademark as the person located in Illinois, and the retailer provides a commission or other consideration to the person located in Illinois based upon the sale of tangible personal property by the retailer; and, in either instance,

3.the cumulative gross receipts for sales of tangible personal property to customers referred to by all persons in Illinois with whom the retailer has such contracts exceed $10,000 during the preceding four quarterly periods ending on the last day of March, June, September and December.2

The law also applies to a remote "serviceman" selling tangible personal property incident to the performance of a service.3

Governor Quinn signed Public Act 96-1544, which he has dubbed the "Mainstreet Fairness Bill", despite a vow by Amazon that it would terminate its Illinois affiliate relationships, upon enactment of the bill. In fact, late yesterday, in an email message sent by Amazon to its Illinois affiliates, it terminated its relationships with Illinois affiliates, stating:

"We had opposed this new tax law because it is unconstitutional and counterproductive.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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