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Affiliate Tax Law Thrown Out By Illinois Supreme Court

On October 18th, the Illinois Supreme Court ruled in the case of Performance Marketing v. Hamer to support a lower court decision throwing out a 2011 Illinois state law that established affiliate nexus in the state. Performance Marketing, an advocacy association for affiliate marketers, had been suing the state on behalf of Illinois-based affiliates who had been harmed by the law.

“Affiliate nexus” laws – also called the Amazon tax after its most high profile target – use members of an online retailer’s affiliate program to establish the physical presence that activates the requirement of the company collecting sales tax in that state. The intent of state legislatures in enacting the laws is to collect more sales tax by forcing online retailers to collect if they have affiliates in the state. However, in the 12 states that have enacted the laws to date the opposite has happened, as most retailers have opted to terminate their local affiliates rather than collect sales tax because of their activities. Continue Reading →

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