Measure will help stabilize rural communities as consumer shopping habits evolve

ManarPharmacy2017 350SPRINGFIELD – An effort to protect rural and downstate communities by ensuring distant online retailers are playing by the same rules as local brick-and-mortar retailers advanced out of the Senate Tuesday.

The measure requires out-of-state retailers that do business with Illinois customers to collect a use tax under two conditions: their cumulative gross receipts exceed $100,000 or they have more than 200 separate transactions with customers in Illinois.

State Senator Andy Manar (D-Bunker Hill) is a chief cosponsor of the initiative, Senate Bill 2577. It passed the Senate 39-10 with bipartisan support.

He represents central Illinois communities that have been hard hit by job losses and declining sales tax revenue for road and sewer projects as long-standing brick-and-mortar retailers have shuttered because of online competition and changing consumer habits.

“Out-of-state corporations are gaming the system. It’s hurting the small and mid-size retailers our communities rely so deeply upon for goods, services, jobs and revenue,” Manar said. “Online shopping, while good and convenient for rural consumers, has contributed to a tidal wave of brick-and-mortar store closures, job losses and sales tax declines that have local mayors and county boards extremely concerned. I share their worries.”

Federal law requires retailers with a physical storefront to collect the sales tax required by the jurisdiction where the business is located. If the retailer has a physical presence in a state, it must collect applicable state and local sales tax from customers, regardless of where the sales originates.

However, if it does not have a presence in a particular state, it is not required to collect sales taxes.

As consumer shopping habits shift online, local governments are finding their sales tax collections – money often used for local infrastructure improvements – on the decline or stagnant.
Manar stressed that SB2577 is an effort to level the playing field, not a tax hike.

“As the economy and consumer habits change, it’s vital that state government is vigilant and changes with them,” Manar said. “If we don’t try to rectify this imbalance, I don’t want to imagine what some of our rural communities will look like in a few years.”

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