By Andrew Thomason   Illinois Statehouse News

 

SPRINGFIELD – Illinois is losing millions of dollars through cracks in the World Wide Web, but lawmakers are hoping that will soon change.

The Illinois House of Representatives overwhelmingly approved a measure Thursday to try and collect a portion of the $150 million in sales tax believed lost to online commerce in the state. The Illinois Senate approved the plan Wednesday, and it now heads to Gov. Pat Quinn’s desk for his signature.

 

“Governor Quinn supports measures that will generate revenue. The governor plans to review the legislation when he receives it from the General Assembly,” said Annie Thompson, a spokeswoman for Quinn.

 

Internet retailers like Amazon.com and Overstock.com would be required to charge customers in Illinois the 6.25 percent retail sales tax and hand that money over to the state if Quinn signed the bill. Right now, the state can only get sales tax from a business that has a physical presence in the state.

 

“This issue also relates to the growth of Internet sales and, over the last year, 20 percent increase in some of these large companies Internet sales. That’s again money that’s leaving our state and the sales tax that can go to help us with the desperate financial situation that we have here,” said Rep. Harry Osterman, D-Chicago.

 

State coffers would get an approximately $70 million injection in sales tax revenue through the plan, according to Rep. Pat Verschoore, D-Milan, who sponsored the measure in the House. But that is still only about half of the online sales tax owed in the state.

 

Companies like Amazon allow third-party vendors to sell through its Web site. If Amazon stopped dealing with Illinois businesses to avoid the law, the multi-billion-dollar company wouldn’t be legally bound to pay the tax. That prospect concerns Rep. Dave Winters, R-Shirland.

 

“A company in my district has a relationship with Amazon. If they move three miles north to Wisconsin, they’re not subject to Illinois law anymore. They could then say ‘you know what, this tax is a great tax but we’re not paying it. We moved out of state, and we’re moving all those jobs with us,’” Winters said.

 

Having online retailers charge the same tax that brick-and-mortar stores doing business in the state is a matter of fairness, according to Osterman. He said business owners in the state support the measure.

 

“The business community is squarely behind this. They want to make sure that Illinois businesses are treated fairly and that they are not put at a competitive disadvantage,” Osterman said.

 

If the legislation becomes law, it will likely be tied up in the court system, if cases in other states with similar laws are any indication.

 

Until the new measure is official, it falls to the individual shopper to report their online purchases and hand over the tax money to the state.

 

As Illinois faces a deficit in the billions of dollars, every option for bringing in more money is being explored. The Illinois Department of Revenue has been running a campaign to educate people about the current system of self-reporting.

 

A new line has even been put on the state’s personal income tax form to make it easier for people to claim their online purchases. It came in conjunction with a law that gives delinquents until Oct. 15 to pay up.

 

The general idea of trying to bring in taxes owed the state is a good idea, but the timing is wrong, said Rep. Chapin Rose, D-Mahomet.

 

“Before we even begin to talk about this bill or any other tax bill, we ought to get the reform bills passed, get the cut bills passed, and then sit down and talk about this. And that includes having the governor agree to eliminate his ridiculous attempt to collect back taxes that no one in the entire state of Illinois knows what they paid,” Rose said.