Chicagoist reports that Illinois’ attempt to force out-of-state, online-only retailers to collect and remit use tax where they advertise online with an “affiliate” based in-state has proved to be a massive failure:
When House Bill 3659, otherwise known as the “Amazon Tax,” was first passed in January of last year, state Sen. John Cullerton (D-6th), who co-sponsored the bill with state Rep. Pat Verschoore (D-Milan), boldly stated that “Illinois would generate an additional $150 million in much-needed revenues” under the new law. Skeptical of that huge amount of money (which would have been a more than 50% increase in use tax collected), we looked at the numbers and determined it was way off.
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Following a pattern already established in other states that passed similar laws, large online retailers like Amazon.com and Overstock.com simply terminated all affiliate agreements in Illinois, opting themselves out of having to collect the tax.
[…]
The result? An actual decrease in use tax collected of over $11 million. Numbers given to Chicagoist by the Illinois Department of Revenue show that, in the period of January 2011 through June 2011, IDOR collected approximately $139 million in use tax. After the law went into effect on July 1, the total amount collected between then and the end of the year was approximately $127 million.
Looks like the Land of Lincoln may need to plot out a plan B.
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