Illinois will join a new trend of states requiring online retailers to collect and remit sales taxes Sunday.
The largest of those e-tailers, Amazon, will start collecting sales tax from Illinois purchases when the law takes effect Feb. 1, according to the Chicago Tribune. The law was supposed to require e-tailers with a taxable presence in the state to collect the state’s 6.25 percent sales tax starting Jan. 1, but was extended one month to begin after the holiday shopping season.
Currently, Amazon lists 23 states that are subject to sales tax. Illinois will become the 24th state Sunday.
According to Amazon, “If an item is subject to sales tax in the state to which the order is shipped, tax is generally calculated on the total selling price of each individual item. In accordance with state tax laws, the total selling price of an item will generally include item-level shipping and handling charges, item-level discounts, gift-wrap charges, and an allocation of order-level shipping and handling charges and order-level discounts.”
Regardless of the law, Amazon would eventually have had to collect Illinois sales tax, as it is in the process of building several distribution facilities in the state, according to the Tribune. The first is set to be completed this year, and the entire project is expected to finish by 2017. E-tailers with facilities in a state are required to collect and remit state sales tax by federal law.
Uncollected sales tax from e-commerce transactions costs states millions each year, according to the Tribune. In Wisconsin, officials estimate the state will collect an additional $30 million in sales tax each year as a result of Amazon recently building a distribution center there, thus requiring it to collect the taxes.
This month Michigan’s Gov. Rick Snyder signed a bill that will require e-tailers to collect sales tax from Michigan buyers starting Oct. 1. A federal bill, the Marketplace Fairness Act of 2013, would have required state sales tax collection for online purchases across the country, but didn’t pass the House of Representatives last year.
