US tudge strikes down state law on online tax collection

A Cook County judge has struck down an Illinois state law that required Amazon.com and other internet companies to collect sales taxes on transactions with Illinois customers.

Judge Robert Lopez Cepero ruled yesterday that the law was not enforceable due to a federal internet tax moratorium through 2014. Cepero also found that the mere presence of an associate in Illinois did not mean it had enough presence for tax purposes.

Under the Illinois law, called the Main Street Fairness Act, internet retailers without stores in Illinois were liable to collect the state's 6.25-per cent sales tax on purchases from web-based partners that had operations locally.

Previously, those Amazon or Overstock.com partners - or affiliates were not required to collect the state sales tax, like other local stores selling the same product, creating a price advantage for the online retailer.

The 2011 law resulted in some affiliates of websites such as Amazon.com to relocating out of Illinois.

The lawsuit had been brought by Los Angeles-based trade group Performance Marketing Association. The group termed the ruling ''a victory'', while Illinois Department of Revenue said it ''respectfully'' disagreed with the judge's ruling and was in the process of reviewing appeal options.