Amazon has uneven gross sales tax levies in cities in Illinois

With 5,100 and 8,100 inhabitants respectively, the southern suburbs of Monee and Crete have a lot in common. Just a few miles apart in Will County – University Park separates them – are both home to many professionals, many of whom are minority groups. They even share a high school district.

But there is a big difference. As Crete Mayor Mike Einhorn recently wrote in an email to state lawmakers, Crete took in $ 142,490 in sales tax revenue in June, while the smaller Monee received $ 1,231,115. Crete and other cities are “starving”, wrote Einhorn.

What works? Welcome to the transparent world of Illinois sales tax law, an amazingly complex maze of rules and regulations where even the best of intentions eventually fade into the background. The crux of the matter is – you guessed it – Amazon, the retailer whose ability to disrupt the normal course of business almost anywhere is still baffling.

Specifically, it is about what the President of the Taxpayers’ Federation of Illinois, Carol Portman, calls “sales tax collection”, a mild and crooked-sounding term, but which in her opinion leads to bitter “where’s mine” disputes in almost every state has led. “It’s a bone of contention across the country,” says Portman, “although Illinois is probably the most complex.”

Once upon a time you paid sales tax in the store or business where you bought your product. Some of the money went to the state or other regional governments, such as the county. Other funds went to the community where the store or mall was located. This is called a point-of-sale collection.

Enter Amazon and the internet.

For a while, Amazon and other internet service providers often refused to pay local sales taxes, giving them an edge over local retailers and indignant mayors in need. Their argument was that they had no physical location or “nexus” in a state so that they could not be buried. At some point, however, Amazon realized that its customers wanted their goods to be delivered today and not tomorrow, so they had to have warehouses almost everywhere – “Wish Fulfillment Center” in Amazon language. And then, in the 2018 Wayfair case, the US Supreme Court effectively dismissed the nexus rule, claiming that businesses would have to pay.

As part of Wayfair, the Illinois Legislature and Treasury Department passed new rules for the allocation of funds. But as Brad Cole, the head of the Illinois Municipal League, puts it, these changes have moved the state from point-of-sale distribution to point-of-delivery like at your home address.

In the case of Amazon, if you buy something through them, but they are just an intermediary, your home address – the delivery location – determines who receives the sales tax. If you live in Crete, Crete gets the tax. On the other hand, when Amazon fills out its order at one of its wish fulfillment centers, the village where the center is located gets the dough. And Amazon just has a wish fulfillment center in Monee.

Well, I suspect Monee Mayor Therese Bogs probably sees it differently. As a former president of the Monee Chamber of Commerce, for example, she could argue that Crete should attract its own Amazon branch. Or compare the current mouth with the days when some cities had big malls and others didn’t. But she didn’t call back and emailed that she was too busy to possibly call back this week. Maybe she’s busy counting sales tax receipts.

Cole’s group remains neutral as it has members on both sides of the issue. But one of the MPs that Einhorn contacted, Rep. Anthony DeLuca, D-Chicago Heights, says the mayor is right and that he is interested enough that he asked the legislature to draft a language for a cleansing bill that he would later do could bring in this year. In his opinion, the likely answer is: some form of revenue sharing.

Your fighting words. But then there is a lot of money at stake here. I remember when Northwestern University Evanston bought a new fire truck a few years ago instead of paying property taxes. Perhaps Bogs could see if Einhorn needs some nice new gear as a peace offering.