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U.S. Lawmakers Pushing Mandatory Online State Sales Tax

Nick Gale, IRN
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Photo Credit: Thinkstock

Photo Credit: Thinkstock

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SPRINGFIELD, Ill. (IRN) – llinois, facing another year of declining revenue and dwindling cash-on-hand,  is hoping legislation at the federal level will bring some dollars into state coffers.  Just a day after Amazon agreed to collect sales tax in Indiana, Governor Pat Quinn hopes to have some resolution on collecting Illinois taxes for online shopping.

Illinois last year passed a law that required online retailers to collect state tax. Amazon then canceled contracts with Illinois affiliates to avoid having to collect tax. In addition, Amazon questioned the constitutionality of the state’s law. They have long argued that they shouldn’t have to collect the tax because they don’t have a physical presence in Illinois and don’t gain anything from the state.

But Quinn says U.S. Sen. Dick Durbin has legislation that would force the practice of collecting state taxes nationwide. The Marketplace Fairness Act is likely to come up before the end of the year.

Traditional retailers have argued that retailers that don’t collect the tax have a price advantage. The Department of Revenue estimates the state loses out on $153 million annually in uncollected sales tax from online purchases. The tax is owed, but it goes uncollected.

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