Amazon.com Tangles With States

Seems Amazon has gotten a bit tangled up in its shorts over a recent move by the state of Illinois to attempt to snag a few more sales tax shekels from the big online retailer.

We hear that just this week, Illinois Governor Pat Quinn (no relation) signed some

long-simmering legislation which would require Internet retailers to start collecting the state’s 6.25% sales tax if those retailers have “affiliate” sellers in the state.  Some time ago, as we get it, the state legislature passed the “Mainstreet Fairness Bill” which the Gov has been stewing over.  The more traditional “brick and mortar” retailers support the measure because they have to pay the Illinois sales taxes (due to their physical presence in the state) while the “virtual” sellers have not had to – a fundamental bit of unfairness, some say.

Hawaii, North Carolina and Rhode Island have already enacted similar laws, and of course, our friends to the west (California – never having seen a tax it didn’t like) is considering a similar measure.

But back to Illinois – Amazon has already started the process of severing its relationships with its Illinois affiliates.  Quoth an email message recently sent to all, Amazon notes, “We had opposed this new tax law because it is unconstitutional and counterproductive.  It was supported by national retailing chains, most of which are based outside Illinois, that seek to harm the affiliate advertising programs of their competitors.”

The Wall Street Journal reports that there are something like 9,000 Amazon “affiliates” in Illinois, which generated $611 million in advertising revenue in 2009 and tax revenue of $18 million.  And according to Rebecca Madigan, director of an affiliate trade organization named the Performance Marketing Association, it is estimated that the state will lose 25% to 30% of that tax revenue because the affiliates will lose business, cut jobs, or move to a more tax friendly state.

So let’s see what Jerry B. does – similar action in California might be the best thing that could happen for economically sagging Nevada!

And from our “let the judge beware” department comes word this week from the U.K. that there really is a breaking point for most folks, when it comes to all of these tax shenanigans.  Seems hundreds of protestors actually stormed a courtroom and tried to make a “citizens arrest” of all things, of a judge in support of a chap who was challenging a tax bill!  The cops prevailed, and stopped the nasty scene, but didn’t shut up Roger Hayes, the bloke who was protesting the tax exaction.  Quoth Mr. Hayes, “The judges are breaking the law in their own courts.  I asked him if he was serving under his oath of office.  I asked three times for him to confirm this and he refused, so I civilly arrested the judge and I called upon some people in the court to assist me in this.”

“Today was day one.  This is going to happen again and again and again.  We have sent a message to this court as one nation and one voice until change comes,” noted one of the other protestors.

So far, at least, we’ve heard of nothing similar happening on this side of the pond…..

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.  Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He can be reached at 775-831-7288, welcomes comments below, and invites readers to view his other commentaries at www.taxlawtips.com.