Durbin Announces Legislation to Level the Playing Field for Illinois Retailers

[SPRINGFIELD] – Main Street businesses in Springfield and across the country should no longer be at a disadvantage against companies that sell the same products online, U.S. Senator Dick Durbin (D-IL) said today. The Main Street Fairness Act, legislation which Durbin intends to introduce in the U.S. Senate following the April recess, aims to level the playing field between online and “bricks and mortar” merchants by allowing states to require sellers to collect sales taxes that are already owed under current law regardless of whether the seller has a physical presence in the state.


“Why should out-of-state companies that sell their products online have an unfair advantage over Main Street bricks-and-mortar businesses here in Springfield?” Durbin said.

“The Main Street Fairness Act doesn’t ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed,” Durbin said. “Between 2009 and 2012, states across the country, including Illinois, are expected to lose as much as $37 billion in uncollected state and local taxes on internet and catalogue sales. From 2005 to 2010 the state of Illinois estimated it lost $153 million each year.”

Currently, states are prohibited from requiring sellers to collect sales tax in states unless they also have brick-and-mortar stores or other physical presence in the state. The burden falls to consumers who are required to report to state tax departments any sales taxes they owe for online purchases. As a result, local retailers are at a competitive disadvantage because they must collect sales taxes while out of state retailers, including many large online and catalog retailers, in effect give their customers a discount by collecting no state or local sales taxes. And, consumers are left with the responsibility of reporting the sales taxes owed on online purchases on their tax returns.

“Why should consumers face the burden of reporting all of their online purchases? Main Street retailers collect sales taxes on behalf of consumers. Why shouldn’t online retailers do the same?” Durbin said.

Under current law, only sellers with a physical presence in a state are required to collect that state’s sales taxes. In March, Illinois passed legislation, also called the Main Street Fairness Act, requiring online retailers who own warehouses, factories or maintain affiliate companies in the state to collect sales taxes on purchases made by Illinois residents. Under Durbin’s proposed federal law, all businesses must collect state sales tax on all purchases, whether or not the business has a physical presence in that state. The law does not impose a uniform state sales tax, but rather requires the seller to collect the sales tax for all purchases based upon where the buyer is located.

Specifically, the Main Street Fairness Act:

  • certifies the Streamlines Sales and Use Tax Agreement, a comprehensive interstate system to streamline and harmonize sales tax rules and administrative requirements;
  • provides states with the clear authority to require all retailers to collect sales taxes;
  • does not create a new tax, but provides a necessary tool to collect an existing tax in a simple and fair manner;
  • releases consumers from tax remittance obligations;
  • treats all retailers with equal sales tax collection responsibilities; and
  • reduces collection costs and provides compensation for all sellers required to collect sales taxes.

The Main Street Fairness Act is supported by the National Governors’ Association, National Conference on State Legislatures, National Retail Federation, International Council of Shopping Centers, and Retail Industry Leaders Association.