Illinois shoppers using the nation’s most popular online marketplace will soon find their orders 6.25% more expensive beginning Sunday.
Last year, the Illinois Legislature passed a bill that would require online merchants, such as Amazon, to begin collecting sales tax on all purchases made by Land of Lincoln residents. The law was slated to become effective with the start of the new year, but the enforcement of the sales tax was pushed back a month to give retailers time to comply.
The new law takes place of a similar bill that the Illinois Supreme Court struck down in 2013. Laws similar to the new one in Illinois have been appearing around the nation, dating back to 2011. Online retailers have previously been exempt from the Illinois Sales Tax as long as the merchant did not have a physical presence, such as a distribution center, in Illinois. The closest Amazon distribution center is around 250 miles east in Whitestown, Indiana.
Proponents of online sales tax laws have cited several reasons for the online sales tax mandate, including generating revenue, and allowing brick-and-mortar stores a fairer chance at competition, due to the fact that physical stores would have higher prices caused by sales tax collection. Detractors have cited drops in online sales, including figured produced by an Ohio State University study that showed states with an online sales tax see 10% fewer proportional sales than states without the tax.