Dive Brief:
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A new Illinois law requiring that e-retailers collect the state's 6.25% sales tax goes into effect Feb. 1.
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With that, the state is the 24th to require that online retailers collect sales tax. Eight of the nation’s 10 most populous states now have a similar requirement.
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That means that nearly three quarters (73.8%) of the country’s population is subject to sales tax when ordering from e-retail giant Amazon.
Dive Insight:
Efforts to require online retailers to collect state sales tax have not been able to pass the U.S. House of Representatives. Because of a series of court rulings, the only retailers obligated to collect state taxes on Internet orders are those with a physical presence in those states.
As more states have moved to have online retailers collect sales tax and as Amazon—the most affected retailer because it's so big and is online-only—has established more fulfillment centers, this has increasingly become a non-issue for Amazon. Still, other online retailers are fighting the requirement, and general anti-tax sentiment in the House has helped stymie passage of a bill.
Many have speculated, however, that Alibaba’s growth could revive interest in and increase support for making state sales tax collection by online retailers the rule for the whole country.
