Weekly Round-Up: ‘Click Through’ Nexus Law Struck Down in Illinois

The Illinois Supreme Court affirms a circuit court decision voiding the state's "Amazon tax," finding that the federal Internet Tax Freedom Act (ITFA) preempts Illinois from imposing a prohibited, discriminatory tax on electronic commerce, Bloomberg BNA editor Michael Bologna writes in this week's issue of the Weekly State Tax Report. [Performance Mktg. Ass'n Inc. v. Hamer, Ill., No. 114496, 10/18/13]

In a 6-1 decision, the court agreed with arguments made by Performance Marketing Association Inc. (PMA), contending that Illinois Public Act 96-1544, also characterized as the Main Street Fairness Act or the Affiliate Nexus Tax Law, conflicts with the ITFA. The court found PMA's ITFA argument so persuasive it declined to address the association's alternate theory, which asserted Illinois' law also violated the commerce clause of the U.S. Constitution, Bologna writes.

The Illinois Supreme Court's ruling will be read closely around the country in light of the difficulties states have experienced in crafting statutory schemes to capture tax revenues from sales transactions by remote sellers, Bologna writes. The decision marks the first time a court of review in the U.S. has determined the ITFA preempts a state from enacting an affiliate nexus tax law to facilitate the collection of sales taxes by remote sellers, Bologna says.

George S. Isaacson, a partner with the firm Brann & Isaacson in Lewiston, Maine who represented the PMA before the supreme court, said the decision would not have strict precedential value in other states, but the logic behind the court's decision would be useful to marketing companies making similar challenges.

"The extent to which it is a useful reference in other states may depend upon the language in their statutes,'' he said.

Michael Bologna's complete analysis of the Illinois decision can be found in this week's issue of the Bloomberg BNA Weekly State Tax Report.

In other developments…

Michigan expands voluntary disclosure agreement benefits , a new alert by PwC

Dispute Your Tax Bill Quicker Through DOR's New Early Mediation Program , by the Massachusetts Department of Revenue

Multistate Tax Commission Files Amicus Brief in Gillette Case

Compiled by Priya D. Nair
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