The Illinois Supreme Court finds the “Amazon Tax” invalid, agreeing that affiliate marketing does not give rise to tax obligations.
Although intended to level the playing field between online merchants (who would presumably collect and pay IL sales taxes under the law) and “brick and mortar” retailers, online retailers instead opted to end relationships with affiliates in IL. The result: no increase in IL sales taxes from affiliate sales. And affiliates, many of whom are – or were – small businesses in IL, lost millions of dollars in advertising revenue and paid less state income tax as a result, downsized or went out of business. Read the full story at https://thepma.org/press-release-illinois-supreme-court-upholds-pma-suit/…
You could argue that people who would have purchased through ads placed by those affiliates instead went to their local business, thereby driving up sales tax revenue in IL. But if the buyer’s intent was to purchase online, it’s much more likely they just went somewhere else online, increasing the bottom line of a business outside Illinois.
So now what happens? Will Amazon again offer affiliate marketing to IL-based businesses?
One thing’s for sure, the convenience of online shopping will continue to be attractive to consumers.
The decision is just one more reason for local “brick and mortar” retailers make sure their own online marketing is attractive, compelling, and up-to-date. Effective use of photos, video, social media and email can help to promote the benefits of shopping locally with someone you know and trust, who can answer questions and can provide after-sale service. Making the sale easy is another way to help keep sales local – is your website easy to use? If you sell online, are the catalog, shopping cart and checkout easy to use?
Photo credit https://www.flickr.com/photos/stormkatt/.