Illinois Supreme Court Considers “Amazon Tax”

The Illinois Supreme Court heard arguments on Wednesday in case challenging the state's so-called "Amazon tax."

The decision could change the way Illinois websites make money online. Brian Mackey reports.

When you click a product link on a website -- like if a blogger links to a book she's reviewing -- the blogger can make a deal with the retailer to get a cut of the sale.

Those are called "affiliate marketing links," and Illinois passed a law to collect sales taxes on such purchases. It's often called the "Amazon tax," and it was declared unconstitutional by a Cook County judge.

The state appealed that decision to the Illinois Supreme Court.

George Isaacson, representing the affiliate marketers, argued the tax treats different kinds of online businesses differently. He said the tax has been bad for Illinois.

"There's no indication that this legislation has been successful in raising additional revenue," Isaacson said. "But it has resulted in the termination of Illinois Web affiliates."

A spokeswoman for the Illinois Department of Revenue said taxes collected under the "Amazon" law are not tracked separately, so there's no way of saying whether Illinois has lost money.

The case comes as Congress is considering legislation that would settle questions about how to tax online sales across the country. 

A measure that passed the U.S. Senate would let states force online retailers to collect taxes for all purchases within their borders. But it faces an uphill climb in the House.