In March 2011, Illinois passed a law that requires large e-commerce retailers to collect and remit state sales taxes if they generate more than $10,000 in sales a year through sales affiliates based in Illinois. The law was challenged in court by a trade association representing online marketers.  In April 2012, a lower court ruled that the law was unconstitutional.  The state has appealed.  The Illinois Supreme Court is expected to hear arguments in the Spring of 2013. (A similar law has been challenged and so far upheld in New York.)

______

The following is an excerpt from Public Act 096-1544.

1.1. Beginning July 1, 2011, a retailer having a contract with a person located in this State 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. The provisions of this paragraph 1.1 shall apply only if the cumulative gross receipts from sales of tangible personal property by the retailer to customers who are referred to the retailer by all persons in this State under such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December.

1.2. Beginning July 1, 2011, a retailer having a contract with a person located in this State under which:

A. the retailer sells the same or substantially similar line of products as the person located in this State and does so using an identical or substantially similar name, trade name, or trademark as the person located in this State; and

B. the retailer provides a commission or other consideration to the person located in this State based upon the sale of tangible personal property by the retailer.

The provisions of this paragraph 1.2 shall apply only if the cumulative gross receipts from sales of tangible  personal property by the retailer to customers in this State under all such contracts exceed $10,000 during the preceding 4 quarterly periods ending on the last day of March, June, September, and December.