Illinois court throws out ‘Amazon tax’ online sales law

The Illinois State supreme court ended up having to school the Illinois State legislature on where the state borders end on taxes, by throwing out their “Amazon Tax” on online sales.  Amazon cut their affiliate program in the state of Illinois as a result of this law passed in 2011, and rightly so – all state legislatures understand the concept of tax nexus. Now many are very creative in defining exactly what that is, but what it has always meant was a physical presence within a state. It is quite simple – if you aren’t there, the state cannot demand you pay taxes. It is the same reason why US online retailers and catalogers do not collect VAT (value added tax) when shipping to European customers, even though many European countries demand it.