Amazon.com’s war with the states over sales taxes has a new battleground. The company has cut ties to its online affiliates in Illinois — people who refer traffic to its site in exchange for a sales commission — after the enactment of a law saying that those relationships give Amazon enough of a presence in the state to require the company to collect sales taxes on purchases there.

In a letter to its Illinois affiliates, quoted by the Wall Street Journal, called the law “unconstitutional and counterproductive,” and said it regretted needing to cut ties with them.

A group called the Alliance for Main Street Fairness, which backs traditional brick-and-mortar retailers, issued a statement criticizing Amazon’s decision. “Amazon.com had a choice, and instead of competing on a level playing field it decided to stand against Illinois small businesses and jobs,” it reads, in part. “Amazon could have chosen to collect the sales taxes as Illinois retailers do every day, but instead they opted to protect their special loophole at any cost.”

Via email, an Amazon spokesperson tells us this morning that the law “was supported by national retailing chains, most of which are based outside Illinois, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue.”

Amazon last month decided to close a distribution facility in Texas, and cancel plans to expand in the state, in the midst of a tax battle with regulators there.

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