Illinois Supreme Court Rules Online Sales Tax Law Unconstitutional

October 18, 2013 11:05 a.m.

The Illinois Supreme Court on Friday ruled unconstitutional a state law that sought to levy online sales taxes, the Chicago Tribune reports.

The Main Street Fairness Act, passed in 2011, requires consumers to pay state sales tax for online purchases from online affiliates of brick-and-mortar businesses. According to the Tribune, online retailers like Amazon stopped working with Illinois affiliates, and other online businesses fled Illinois to bordering states after the law passed.

This ruling could be bad news for those pushing for federal legislation concerning online sales tax.

In May, the U.S. Senate passed the Marketplace Fairness Act, which would allow states to collect online sales tax on online purchases, but the House has not taken up the Senate measure.

The House is poised to craft its own online sales tax legislation. Rep. Bob Goodlatte (R-VA), chairman of the House Judiciary Committee, indicated in September that House legislation would not include a small business exemption similar to that in the Senate version.

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