Illinois law requires Amazon to charge sales tax on orders

Illinois law requires Amazon to charge sales tax on orders

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Jeff Neukom, Managing Editor

 

Regular Amazon buyers should notice a small addition to their checkout receipt: an Illinois sales tax.

Previously, one of the big advantages to ordering through Amazon, aside from basement-floor prices, was the ability for customers, even those in Illinois, to avoid the tax.

Now, Illinois has become the 24th state where Amazon will collect a 6.25 percent sales tax because of Amazon affiliates located in the state.

The tax does not apply to all online retailers; only those with taxable presences in the state, such as a physical location or tangible assets, are affected by the tax.

In 2011, the Illinois Department of Revenue estimated that uncollected sales tax from internet transactions would total near $212M in the year 2013. People are required to pay taxes on online purchases when they file tax returns, but a large amount of people do not.

Based on this estimation, it’s safe to conclude that the tax will pay large dividends for state revenue, even despite a possible dip in Amazon transactions.

On Jan. 1 2015, the state of Illinois put into effect a state law that mandates online stores collect sales tax from Illinois shoppers. Amazon agreed to comply starting Feb. 1.

The new state law aims to put online retailers on equal terms with Illinois businesses, and the tax is expected to generate millions of dollars for the state. Even those with Amazon Prime or Amazon Student memberships are subject to the tax.

College students, many of whom shop extensively on Amazon for textbooks and other items, make up one demographic that will provide significant contributions to this income.

What does this mean for students?

Students will still be able to purchase at Amazon’s bottom-dollar prices, but the sales tax may make a significant impact on the final bill.

For individual, inexpensive items, the tax will likely not be a significant sales deterrent. For students ordering a host of expensive textbooks, the tax will prove to be a large addition.

Carole Maso’s Ava, which retails at $11.68 on Amazon, is subject to a mere $0.73 sales tax charge. A more expensive textbook, one that retails at $80 or so, will have a sales tax in the ballpark of $5.

Some text books fall in the $300 range, putting the tax at nearly $20. For more expensive items or bulk purchases, the charge only grows.

“I love shopping Amazon, so I’m kind of bummed about the sales tax, especially since the kind of things I buy on Amazon are things I would end up buying at Target otherwise, which obviously isn’t a local business” said junior Kristen Grisamore. “While I understand the motivation behind the tax, I think it’s kind of unnecessary.”

One demographic set to benefit from the new tax is local businesses. The tax removes convenience and allure of online shopping, creating a level playing field for “brick and mortar” retailers.

“I already prefer local over online shopping. I immediately have my purchase in hand, and I don’t have to pay for shipping,” said senior and Bloomington resident Kyle O’Daniel. “It’s possible that other people will start shopping locally because of the tax, though I doubt a small amount of tax will really deter people from online shopping. Obviously, companies like Amazon have access to a massive variety of goods, a lot of which can’t be obtained in town.”

Some estimate that Amazon sales will decline about 10 percent in Illinois. Some feel the tax is a good thing, others stand at odds with it. Either way, the tax shows that times are changing.