Measure To Expand Online Sales Tax In Illinois Faces Hurdles

Apr 23, 2018

Legislation to expand Illinois’ sales tax for online shopping recently passed the Senate. But it faces several more hurdles before it could become law.

The measure would require more out-of-state businesses to tax internet sales to Illinois resident. But its implementation depends on a case now before the U. S. Supreme Court, challenging a similar law in South Dakota.

In the case, the justices are considering whether to let state governments collect sales taxes from businesses that do not have a physical presence in the state. They heard arguments Tuesday, the same senators approved the measure.

Democratic state Sen. Andy Manar says the goal is to level the playing field between online vendors and brick-and-mortar stores.

“This is about injecting fairness and parity into something that we haven't seen fairness and parity,” he said.

Manar says he's gotten support from some mayors, who say they're seeing dipping sales tax revenue because of the shift to online shopping.

Meanwhile, opponents say the rules would burden smaller online retailers who would have to navigate a complex tax system.

Steve DelBianco is president of NetChoice, a group representing e-commerce companies. He warned about what could happen to small businesses if the court overturns the current precedent, Quill Corp. v. North Dakota.

“If Quill were to fall, any Illinois business with a website would have to know the rates and rules in 12,000 jurisdictions across 46 states,” he said.

Some legal experts say the Supreme Court even hearing the case shows its willing to reconsider years of precedent that says states cannot collect sales tax from businesses located elsewhere.