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SPRINGFIELD — Illinois stands to benefit from a U.S. Supreme Court ruling Thursday that states can impose their sales taxes on some online purchases.

However, the ruling does not mean an end to the state's financial problems. Illinois already collects sales taxes on many internet purchases, and the court ruling Thursday is expected to generate only about $200 million in additional revenue annually.

In a 5-4 decision, the Supreme Court essentially undid a previous ruling that states can only impose a sales tax on internet sales when a company has a physical presence in the state, as in a brick-and-mortar store. In its decision, the court said that ruling was flawed and that it put brick-and-mortar stores at a competitive disadvantage. It also acknowledged that the world of internet shopping has changed dramatically since the previous ruling.

Illinois lawmakers, anticipating a ruling in the case, had added a provision to the supplementary budget bill that allows Illinois to collect sales taxes on internet sales of tangible personal property under the same provisions of the case decided by the court Thursday. That means the state sales tax can be applied to out of state vendors who sell more than $100,000 a year on the internet or make more than 200 transactions in a year. The collections will start Oct. 1.

The Commission on Government Forecasting and Accountability, which makes financial forecasts for the General Assembly, said the current state budget assumed the state would collect $150 million in additional revenue from a court ruling that allowed the taxation. That assumed it will take the state time to implement the collection process, leaving only nine months of collections. In a full year, the state would get an estimated $200 million, said COGFA Revenue Director Jim Muschinske.

Muschinske said the $150 million was already accounted for in the state spending plan.

Department of Revenue Director Connie Beard said the decision "recognized that the physical presence requirement does not reflect the 21st century marketplace."

"To be clear, this is not a new tax," Beard said in a statement. "Illinois residents are already obligated to pay a Use Tax on out-of-state purchases and this prudent decision will allow states the ability to enforce Use Tax laws that are already in existence ... With this decision, we level the playing field for Illinois brick and mortar retailers."

The Illinois Retail Merchants Association hailed the decision for restoring fairness.

"As IRMA has long argued, regardless of where a sale occurs, a sale is a sale and sales tax should be applied," said IRMA president and CEO Rob Karr in a statement. "This ruling will ensure that Main Street retailers, who employ your neighbors, pay property tax and support local programs, are able to compete on a level playing field."

The federal Government Accountability Office estimated Illinois could see between $383 million and $626 million in new revenue from the ruling. However, Muschinske said the state is already collecting sales taxes from larger online vendors.

"Over the years, larger and larger corporations have voluntarily started to collect and remit this," he said. "I've seen some large values associated with internet sales, but you have to realize that a lot of that already is captured and remitted. What you can really only anticipate in addition are those players who haven't been collecting and remitting it."

Neither COGFA nor the Department of Revenue breaks down sales tax receipts based on internet vs. non-internet sales.

Sen. Andy Manar, D-Bunker Hill, who helped draft the new state budget, said the ruling should help bring economic stability to communities that have seen their local economies undercut by the proliferation of online retailing.

"Out-of-state corporations have been gaming the system for a long time, with alarming consequences for cities like Springfield, Decatur and small towns all over the district I represent," Manar said in a statement. "We've watched storefront after storefront close and retail workers sent to the unemployment line.

"If we don't correct this imbalance, I fear some of our rural communities will be ghost towns in a few years."

In Springfield, the ruling could mean that as much as $325,000 trickles down into city coffers, according to city budget director Bill McCarty. The number isn't based on the amount of sales Springfield residents generate, but rather the portion of the state's use tax allotted to the city on a per capita basis.

McCarty said he saw the ruling as a good first step. The next would be to work with the state legislature to find a way for large online companies to remit taxes based on the point of purchase.

"If the purchases are by our residents in Springfield, (the sales tax) needs to stay here in Springfield," McCarty said.

McCarty estimated that for every dollar spent online, the city sees a penny through the state use tax. However, for every dollar spent at a brick-and-mortar store in Springfield, the city gets 3.25 cents in sales tax.

The city gets back $325,000 "with this ruling today but that's a far cry from the millions (the city) has lost and continues to lose each and every year to e-commerce," McCarty said.

Springfield, and other similar-sized towns, have seen declining sales tax revenues in the past couple of years. About 40 percent of the city's operating budget is funded by sales tax revenue. After years of budget shortfalls, the Springfield City Council followed the example of other central Illinois towns and raised its sales tax rate by a quarter percentage point.

"I don't want cities to become complacent (because of this ruling)," McCarty said. "We have to do more. There's more work to be done."

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