Chicago Chapter Hosts E-Commerce Meeting with Governor Gilmore, Illinois Director of Revenue.

On May 16, TEI's Chicago Chapter welcomed Virginia Governor James Gilmore, chairman of the federal Advisory Commission on Electronic Commerce, and Illinois Director of Revenue Glen Bower to an afternoon presentation on the taxation of Internet commerce (e-commerce). TEI General Counsel and Director of Tax Affairs Timothy J. McCormally also attended the meeting, together with members of various Illinois tax organizations, legislators, and tax practitioners. This diversified and informed audience of approximately 115 people made for an outstanding meeting.

The Governor opened his remarks with a birthday greeting to Judith P. Zelisko, Chicago Chapter Representative and a member of the Institute's Executive Committee, and then discussed his view that the five-year moratorium prohibiting new of e-commerce business is so important to this country. Governor Gilmore called e-commerce the "Second Industrial Revolution" and explained that, if handled properly, it will create more jobs, wealth, and commerce for the United States than any other activity, past or present. The Internet is real and the potential is huge, he stated. The Governor and a majority of the members on the Commission want to ensure that government and its administrators do not destroy this potential during e-commerce's infancy period.

Governor Gilmore said that so long as the state and local governments insist on their rights to establish sales tax rates and complex rules, small Internet businesses will not be able to survive. Even large companies have difficulty complying with the onerous rules in this area. If the states were to agree to simplify the rules and requirements, the Governor stated, the issue of taxation of e-commerce could be re-evaluated.

When questioned about the apparent unfairness of competition between e-commerce businesses and those small businesses that invested in "bricks and mortar," the Governor challenged the group to consider the "playing field." A small business operating in one or two locations has relatively simple administrative sales tax concerns; one or two returns should satisfy their filing requirements. In contrast, an Internet business may have to file with hundreds of jurisdictions in any one month, and its filing requirements could change on a month-to-month basis. Just getting the forms and sending the funds to the government would be a tremendous task, the Governor said. Then there would be the follow up correspondence from these agencies...