Illinois Enacts Online Tax Law


Illinois’ Main Street Fairness Act, recently signed into law, requires online retailers with a business presence in Illinois to collect and remit state sales tax on every online sale made in the state.  The law took effect on March 10th and has already had an impact in Illinois. Several major online retailers, including Amazon, have dropped their Illinois affiliates since the law was signed.

Under the new law, any company with “a contract with a person located in [Illinois] under which the person, for a commission or other consideration based on the sale of service by the serviceman, directly or indirectly refers potential customers to the serviceman by a link on the person’s Internet website” must collect and remit sales tax on a purchase. The law exempts any company with cumulative gross receipts totaling less than $10,000 over the prior year.

This law further underscores the recent trend in aggressive state taxation of online and out of state purchases in an effort to increase tax revenues. Several other states have passed similar legislation.

Amazon has challenged such laws in New York and North Carolina, and the Digital Marketing Association won an injunction against the enforcement of analogous legislation in Colorado based on the finding that that state’s law interfered with interstate commerce.

It’s unclear whether such enterprises as prepaid card providers selling to Illinois distributors or the public through the Internet fall under this new law.

Clients with questions regarding this advisory should contact Charles H. Helein at 703-714-1301 or

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