Thursday, June 14, 2012
Court says no to affiliate nexus in Illinois
Last month, an Illinois state court ruled that Illinois' affiliate nexus law that can cause a vendor with people in the state posting ads on their websites for the vendor to have sales tax nexus, is unconstitutional. There are some aspects of the Illinois law that differ from other states with such laws. Most notably, the Illinois statute does not include a rebuttable presumption and limited its application to posts on websites (not in other media). These reasons likely helped the court find commerce clause issues. It certainly led the court to find that the provision violated the Internet Tax Freedom Act by having a special and unfavorable treatment for e-commerce.
I have a short article explaining affiliate marketing, the Illinois statute and ruling, and possible next steps. You can find it in the AICPA Tax Insider for June 14, 2012 - "Court says no to affiliate nexus in Illinois." There are links to the ruling and to my affiliate nexus website in the article.
What do you think?