Janet Novack, Forbes
After two-months of fence-sitting, Illinois Governor Pat Quinn today signed controversial legislation requiring Internet retailers likeAmazon.com andOverstock.com to collect Illinoisâ€™ 6.25% sales tax if they have affiliate sellers in the state. House Bill 3659, the Mainstreet Fairness Bill,Â was passed by the stateâ€™s lame duck legislature in early January. Since then, the bill has been the subject of fierce lobbying by traditional bricks and mortar retailers, who supported it, and Illinois-based Internet-only businesses, who warned that if Quinn didnâ€™t veto it some of them would flee the state. Had Quinn done nothing, the bill would have become law tomorrow without his signature.
Amazon has already said it will terminate its Illinois affiliates, just as it has said it will drop 10,000 California based â€œassociatesâ€ if similar legislation pending in that state becomes law. Affiliates are paid a fee by Amazon and other retailers for sales brought in through advertisements and links on the affiliatesâ€™ web sites. In an escalating PR war,Â Wal-Mart,Sears,Â Best Buy and Barnes & Noble have all issued public invitations to Amazonâ€™s spurned associates to join their affiliate marketing programs instead. Yesterday, the Alliance for Main Street Fairness, a bricks and mortar retailers organization, even announced a newÂ web site to connect affiliates â€œabout to get thrown under the busâ€ by online-only sellersÂ with retailers who already collect sales taxes on line.Â Quinnâ€™s office said today that the affiliate matchmaking service had been launched at his request.
In a statement, Scott Kluth, founder and CEO of Chicago-based CouponCabin.com called the Governorâ€™s approval of the bill â€œdeeply disappointingâ€ and said he is â€œactively exploringâ€ moving his seven year-old business to Indiana. Kluth, a long time resident of Chicago, had previously threatened such a move,Â telling Forbes, â€œI can see Indiana form the roof of our business.â€
But Quinn, a Democrat, described the law as necessary to put the stateâ€™s â€œmain street businessesâ€ on â€œa level playing fieldâ€ with online retailers and to protect main street jobs. In a statement issued by Quinnâ€™s office, David Vite, president of the Illinois Retail Merchants AssociationÂ praised the law as a matter of â€œfairness for retailers, fairness for the economy but most importantly, fairness for taxpayers.â€
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