In a deal announced this week, Illinois state officials said that Amazon will be building a distribution center in the state. Under the plan, Amazon has promised to create more than 1,000 full-time jobs and to invest more than $75 million in Illinois. The question now is when and if the retailer will be collecting and remitting sales tax to the state. In addition, state officials have confirmed that it’s expected Amazon will be receiving tax credits from the state.
According to Susan Hofer, a spokesperson for the Illinois Department of Revenue, expectations are that Amazon (and other similar remote retailers) will begin collecting sales tax sometime in the first quarter of 2015; however, this change was not triggered by the planned Amazon distribution facility. Amazon, like many other remote retailers, will be obligated to collect and remit sales tax under an e-fairness state law that went into effect in August. The law, which revises an affiliate nexus law that had been struck down by the Supreme Court of the State of Illinois, requires remote retailers with any kind of in-state referral system — including online affiliates — to collect and remit sales tax.
Technically, the sales tax law goes into effect on January 1, 2015, but the Department of Revenue usually provides merchants that are new to collecting in the state some leeway regarding when they begin collection, Hofer told BTW. “Starting right in January can be problematic for retailers,” she said, noting that merchants rarely have time to put new tax collection systems into place over the busy holiday season.
Though Amazon will be required to collect and remit sales tax in 2015, the retailer is expected to benefit from some sort of tax credit from the state. The only question is how much. The amount of the incentive will not be known until the scope of the project and the location of its facilities are fleshed out, according to Dave Roeder, spokesperson for the Illinois Department of Commerce and Economic Opportunity. “We expect there will be tax credits,” Roeder told BTW, “but none have been offered or solicited yet.”
As details of the deal were becoming known, on Tuesday, October 28, both Illinois Gov. Pat Quinn and U.S. Sen. Dick Durbin (D-IL) — one of the sponsors of the Senate’s Marketplace Fairness Act, a bill that would give states the right to require remote retailers to collect and remit sales tax in their state — hailed Amazon’s decision to come to Illinois.
"It’s been my pleasure to work closely with Amazon on my Marketplace Fairness Act,” Durbin said in a press statement, “and I couldn’t be more pleased that the company has chosen to make this substantial investment in our state, announcing 1,000 jobs with good benefits right off the bat and an opportunity to expand in the future.”
The state’s deal with Amazon comes a year after the Supreme Court of the State of Illinois affirmed a lower court’s ruling that the state’s original affiliate nexus law is invalid. The law required remote retailers with a broad network of online affiliates doing business in the state to collect and remit sales tax in the state.