Chicago judge rules against Main Street Fairness Act
The Act, enacted in March of 2011, said that online retailers who had affiliates in Illinois were required to pay an online sales tax to the state. It was nicknamed the Amazon tax. Retailers like Amazon.com maintain affiliations with other web sites who post Amazon's product links in exchange for a cut of the profits. The law would require Amazon to pay taxes on such sales.
Judge Cepero ruled that the law was invalid because e-retailers, such as Amazon's affiliates, do not have an established physical presence in the state of Illinois. He also said that the law was in opposition to the 1998 Internet Tax Freedom Act and the commerce clause of the U.S. Constitution. The Tax Freedom Act prohibits certain taxes on web transactions until 2014. The commerce clause grants the federal government jurisdiction over interstate commerce.
The Illinois Department of Revenue was unhappy with the ruling and issued a statement saying, "We need to protect brick-and-mortar stores from an unlevel playing field."