The state of Illinois has lost a lawsuit against the state’s attempt to collect sales tax from out-of-state, online retailers — a law often called the “Amazon tax.”

The Performance Marketing Association, which represents affiliate marketers such as those working with Amazon, had challenged the 2011 law that created the  Illinois Affiliate Nexus Tax. A Cook County Circuit judge ruled the law unconstitutional because, according to Crain’s Chicago Business, “simply having an affiliated company in the state that makes sales or refers customers to an online retailer doesn’t create enough of a presence, or nexus, for tax purposes.”

The judge also said the law was unenforceable because of a federal Internet tax moratorium that is in place through 2014.

Crain’s reports the law caused several affiliates to relocate to neighboring states. Executive Director Rebecca Madigan of the PMA, which brought the suit on behalf of affiliate marketers, said in a statement, ““We are thrilled with the outcome of today’s proceeding and believe it paves the way for internet marketing affiliates to get back in business in Illinois.”

The state says it loses about $169 million in potential tax revenue each year.

[via Mashable]

Previously:, Nevada reach agreement on sales tax collection

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  • C. Jeff Dyrek

    I am one of those affiliates that was dropped from the Amazon program. The actions of Illinois Governor, Pat Quinn, in forming the Illinois Internet Sales Tax law was a very good thing for our whole country. As the internet takes over sales on many items, state companies do indeed have a disadvantage in competition with these companies. The large national companies are not paying their fair share of taxes and the rest of us pay this difference in other ways, so we are still paying the taxes, but not through the sales tax program. With these large corporations making record profits, they should pay state sales taxes. Sales taxes pay for so many things in the state of Illinois that the revenue still has to come from somewhere so the new world of internet sales also should pay their sales taxes. This is only fair and it is something that will help all states in our country with their fiscal crises. C. Jeff Dyrek, Webmaster, Disabled Vet.

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