The Illinois Supreme Court ruled 6-1 that the US Constitution,
which makes federal laws supreme over state law, and
federal “Internet Tax Freedom Act”, 47 U.S.C. § 15 ff.,
prohibit new state Retailers Occupation Tax and Service
Use tax sections (35 ILCS 105/2(1.1) and 35 ILCS 110/2(1.1).
These changed the definition of what it meant to have a
taxable physical presence in Illinois to include “affiliate
marketers”, or “performance marketers”, who get paid
to refer traffic to otherwise out of state sellers. Discrimination
against electronic commerce was disallowed, since catalog and
print ads and other conventional marketing with performance
based results would not result in taxability under the Illinois
statute. The case name is Performance Marketing Association,
Inc. v. Hamer, 2013 IL 114496, Oct. 18, 2013,
Practice Tip: States like Oregon do not have sales taxes, so
customer shipments from warehouses there may have a price advantage
over those in states, counties, and cities that impose high sales taxes.
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