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State Can’t Collect Web Purchase Taxes To Fill Budget Gap

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A Man Uses A Computer Mouse. (AP Photo)

A Man Uses A Computer Mouse. (AP Photo)

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SPRINGFIELD, Ill. (CBS) — Illinois has big budget problems, but filling the gap with money from Internet revenue is a plan that just is not working.

As WBBM Newsradio’s Felicia Middlebrooks reports, tax money from Internet sales theoretically could be used to plug the state’s multi-million-dollar budget hole.

LISTEN: WBBM Newsradio’s Felicia Middlebrooks reports

But the idea isn’t exactly catching on.

Crain’s Chicago Business reports taxpayers have only anted up $10.2 million so far, after a reminder was placed on income tax forms asking those who had made Internet or out-of-state purchases to pay up.

But only 4.6 percent of taxpayers complied with the voluntary request, Crain’s reported.

Meanwhile, attempts to collect sales taxes from Internet retailers has hit a dead end.

In March, Gov. Pat Quinn signed legislation requiring online businesses to collect sales taxes on any purchases made from sites such as Amazon.com and Overstock.com, if they have any affiliates in Illinois.

Affiliates are businesses that refer customers to Amazon and get paid commissions on purchases. If a company has no affiliates in Illinois, the state cannot collect taxes from the company.

Soon after the law was passed, Amazon cut ties with its Illinois affiliates. Overstock did the same, Crain’s reported.

Now the state will have to find other means to fix the budget.

(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS Radio and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.)

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