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Governor Signs Law To Collect Online Sales Taxes

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Gov. Pat Quinn (AP Photo/Seth Perlman)

Gov. Pat Quinn (AP Photo/Seth Perlman)

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SPRINGFIELD, Ill. (CBS) – Internet shoppers in Illinois will soon find themselves having to pay sales tax on some purchases they make online, under a new state law signed by Gov. Pat Quinn on Thursday.

The legislation, approved by state lawmakers in the final days of the previous legislative session in January, requires online retailers to collect sales taxes if they have any affiliates based in Illinois. The law is effective immediately.

Previously, state law required websites like Amazon.com to collect sales taxes only if they had their own warehouse, factory or office in Illinois. Otherwise, Illinois consumers were required to pay sales taxes for online purchases directly to the state, but the state rarely enforced that law.

Officials estimated that the state has lost between $153 million and $170 million a year in sales tax revenue that had gone uncollected from online purchases.

Supporters of the new law have said the legislation creates a level playing field between online retailers and brick-and-mortar stores that already were required to collect sales taxes.

“Illinois’ main street businesses are critical to ensuring our long-term economic stability, which is why they must be able to compete with every company doing business online in Illinois,” Quinn said in a written statement after signing the legislation. “This law will put Illinois-based businesses on a level playing field, protect and create jobs and help us continue to grow in the global marketplace.”

The Illinois Retail Merchants Association also supported the legislation.

“This puts Illinois as a national leader in restoring fairness – fairness for retailers, fairness for the economy but most importantly, fairness for taxpayers,” The group’s president, David Vite, said. “Thanks to the leadership of the legislature and the Governor’s action today, we can all rest easier knowing that the right policy prevailed and everyone is now on an even playing field.”

But opponents have said the new law will drive businesses out of state. Some Internet businesses, including Amazon, have threatened to shut down or fire their Illinois affiliates to avoid collecting sales taxes from Illinois customers, which could lead to hundreds of layoffs.

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