Illinois Amazon Tax

Illinois Amazon Tax: Gov. Quinn Signs Controversial Measure Taxing Online Updated: 03/11/11 01:20 PM

On Thursday, Governor Quinn signed a measure he called the “Mainstreet Fairness Act,” levying a new set of taxes on online retailers. Depending on who you ask, the law, known colloquially as the “Amazon Tax,” will be a massive windfall in state revenues, or a set of empty promises that will cause companies to flee the state and revenues to drop.

The bill passed both houses of the state legislature with sweeping majorities. It would require Amazon to collect sales tax on all purchases made in Illinois, by claiming that the company has a presence in the state through so-called “affiliates.” Those affiliates direct users to sites like Amazon to make purchases, and earn money when they do. As such, the new law states, those sites are actually located in part in Illinois, and therefore must charge Illinois sales tax on all purchases made by buyers in the state. Until now, residents of Illinois were required to report all purchases from out-of-state sites like Amazon and pay the sales tax voluntarily along with their income taxes, according to the Illinois Department of Revenue. But few taxpayers even know that fact, and since enforcement is difficult if not impossible, it was rarely paid.

Senate President John Cullerton was one of the chief proponents of the new law; when the bill passed, he issued a press release praising its benefits. “Under this proposal, Illinois would generate an additional $150 million in much-needed revenues in our efforts to prevent millions of dollars in cuts to public safety, health care, and education that would occur without action,” Cullerton wrote. He also said the bill “will help spur economic activity and job growth within the state by leveling the playing field for Illinois’ small businesses” — brick-and-mortar stores that have to collect sales tax face unfair competition from retailers like Amazon that don’t charge the tax, the argument goes.

And some Democrats in Congress tried to enact similar legislation on a national level last summer.

But critics of the measure in Illinois cite the examples of previous states that have tried to pass similar Amazon taxes. In those cases, Amazon followed through on a threat it’s made in Illinois as well: to simply terminate its contracts with all the affiliates in those states, thereby avoiding the requirement to pay the tax. That happened in Colorado almost exactly a year ago, as it did in North Carolina and Rhode Island, three other states with similar measures on the books.

Providence Business News reported after the tax was passed there:

Officials at the R.I. Department of Revenue “do not believe that there has been any sales tax collected as a result of the Amazon legislation,” said Paul L. Dion, who heads the department’s revenue-analysis office.

Indeed, Amazon,, and several other online retailers have promised to cut off Illinois affiliates similarly if the law went through. And the Chicago Tribune quoted the owner of one of the affiliates,, saying that he wouldn’t simply roll over and take it.

“The reality is that as a business owner with 52 employees, we’re not going to just get shut down because of a law Illinois passes,” CEO Tim Storm said. “Our customers don’t care whether we’re in the state of Illinois.”

Still, after weighing both sides, Governor Quinn signed the bill into law Thursday afternoon. “This law will put Illinois-based businesses on a level playing field, protect and create jobs and help us continue to grow in the global marketplace,” he said in a press release.

Google Makes Major Algorithm Changes to Improve Search

Google Tries To Bury Low-Quality Content With Major Search Algorithm Changes

NEW YORK — Google has tweaked the formulas steering its Internet search engine to take the rubbish out of its results. The overhaul is designed to lower the rankings of what Google deems “low-quality” sites.

That could be a veiled reference to such sites as Demand Media’s, which critics call online “content farms” – that is, sites producing cheap, abundant, mostly useless content that ranks high in search results.

Sites that produce original content or information that Google considers valuable are supposed to rank higher under the new system.

The change announced late Thursday affects about 12 percent, or nearly one in every eight, search requests in the U.S. Google Inc. said the new ranking rules eventually will be introduced in other parts of the world, too. The company tweaks its search algorithms, or formulas, hundreds of times a year, but most of the changes are so subtle that few people notice them. This latest change will be more difficult to miss, according to Google engineers.

“Google depends on the high-quality content created by wonderful websites around the world, and we do have a responsibility to encourage a healthy web ecosystem,” Google fellow Amit Singhal and principal engineer Matt Cutts wrote in a blog post. “Therefore, it is important for high-quality sites to be rewarded, and that’s exactly what this change does.”

Google makes significant adjustments to its search formula on the same scale as the latest change four or five times a year, Singhal said in a statement Friday.

What makes the new revisions so notable is that Google spent about a year trying to come up with a way to judge the quality of the content posted on the site.

That focus could hurt Demand Media, which depends on search engines for about 41 percent of the traffic to its websites, with most of those referrals coming from Google, according to documents filed last month after the company completed an initial public offering of stock.

Demand Media, based in Santa Monica, assigns roughly 13,000 freelance writers to produce stories about frequently searched topics and then sells ads alongside the content at its own websites, including and, and about 375 Internet other destinations operated by its partners. Articles range from the likes of “How to Tie Shoelaces” to “How to Bake a Potato” and more.

Many of the ads appearing alongside those articles are sold by Google, which accounts for about one-fourth of Demand Media’s revenue of $253 million last year.

Demand Media said it doesn’t consider itself a “content farm” or “content mill,” but rather as a more responsive approach to addressing topics on people’s minds.

“We believe that our platform for satisfying today’s consumer demand is the most comprehensive and effective of any online publisher,” Demand Media CEO Richard Rosenblatt told analysts earlier this week after the company announced the first quarterly profit in its four-year history. “The standards we put in place, the process that we follow, and most important, the qualified professionals we rely on to create and copy at the solution are unprecedented in traditional and new media.definition.”

In a Friday blog post, another Demand Media executive said the company applauds search engine changes that “improve the consumer experience.” Google’s revisions caused some of Demand Media’s articles to rank higher and other to rank lower in search results, wrote Larry Fitzgibbon, Demand Media’s executive vice president of media and operations.

“It’s impossible to speculate how these or any changes made by Google impact any online business in the long term – but at this point in time, we haven’t seen a material net impact,” Fitzgibbon wrote.

Investors seemed uncertain how Google’s move would affect Demand Media. After falling nearly 5 percent in earlier trading, Demand Media’s shares rebounded to close at $22.96, up 36 cents for the session.

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