The Illinois law, which became effective Thursday, would require all Internet companies that sell products through affiliate agreements with out-of-state companies such as Amazon to start paying the state's 6.25% sales tax.
“This law is very similar to ones passed in North Carolina and Rhode Island, where Amazon also has shut down its affiliate programs,” Jerry Cerasale, senior VP-government affairs at the Direct Marketing Association, told BtoB. “These laws are not working. The states are not going to receive the revenue they anticipated and, in the end, the only ones who get hurt are the state residents who were affiliates.”
Cerasale said the DMA is studying possible responses to the Illinois law. “Legal action is always a possibility,” he said.