The new Internet Tax bill HB 3659 with Amendment 3 is suddenly blazing through the Illinois House and Senate. This new bill will cause hundreds of online merchants to terminate their affiliate programs in Illinois, causing thousands of small businesses, individuals and non-profit organizations to lose all or part of their income.

The tax bill is supposed to generate more revenue for the state, but the reality is that many web-based businesses will leave the state, resulting in less income for Illinois. This bill is all pain and no gain. I have already received an email from Amazon telling me that it will terminate my affiliate account if Governor Quinn signs this bill into law. 🙁

I just faxed the following letter to the Office of the Governor.

Dear Governor Quinn,

I am writing to you to urge you to PLEASE VETO the tax provision included in Senate Amendment 3 to HB 3659 (also known as the Amazon Tax). The provision would require out-of-state retailers to collect Illinois sales tax if customers were referred by any website operated by Illinois businesses or residents.

What typically happens when a state passes a provision like this is that online retailers simply cancel their affiliate programs in that state. This leaves small businesses and others who derive income from this work (including non-profit organizations who have on their website affiliate links to retailers like Amazon) with a reduced or no income.

The state earns no additional tax benefit and in fact loses income as the affiliates are left with a reduced taxable income themselves. Over 200 merchants terminated affiliate programs in New York, North Carolina, and Rhode Island, where similar measures passed.

Over a dozen other states have considered essentially identical legislation but have rejected these proposals largely because of the adverse impact on their states’ residents.

Please veto this amendment or my small business and that of thousands of other online marketers and affiliates in Illinois will be devastated.

Thank you for your consideration.

If you’re an affiliate in Illinois that will be affected by this awful law, please write to Governor Quinn and urge him to veto this bill. You can find more information and contact details here.

For more information see:

• Illinois Affiliate Tax Will Harm Small Businesses and Reduce Tax Revenue
• Web businesses say they’ll flee Illinois if sales tax is OK’d
• Internet Tax Bill Passed in Illinois – Internet Affiliate Jobs Will Be Lost; No Revenue Gained for State
• Clarification on new affiliate tax bill
• Performance Marketing Association, Inc.