On March 10, 2011, Illinois Governor Pat Quinn signed a new law that online retailers with a physical presence in the State of Illinois are required to collect sales taxes.

The immediately effective Main Street Fairness Act has direct consequences on online merchants like Amazon and Overstock.com. All companies that have only a contract with an affiliate located in Illinois come under this law.

For instance, Amazon has several ties to Illinois affiliates and therefore has to pay sales taxes. But Amazon has already started to circumvent this tax by ceasing their relationships with Illinois based affiliates.

“The affiliate business can be borderless. If a web shopper is looking for a coupon, they don’t care if they get it from Illinois-based affiliate or an Indiana-based affiliate” said the President of Salt Lake City based Overstock.com J.E. Johnson.

Governor Quinn, however, stated “this law will level the playing field between online retailers and brick-and-mortar stores.” Moreover the Illinois Department of Revenue estimates that the state could get $ 153 million to $ 170 million in new revenue.

It will be interesting to see which states will follow Illinois and pass similar laws. Also, will online merchants pursue their aim to cancel the ties to Illinois-based affiliate avoiding sales taxes? Check back on our blog and website for further updates.

(c) Pictures: nuttakit – http://www.freedigitalphotos.net/images/Retail_and_Sales_g195-Blue_Sale_Button_p29366.html