Illinois 'click-through nexus' law held unconstitutional.

• Author: Nevius, Alistair M.

The Circuit Court for Cook County in Illinois issued a bench decision and order that declared Illinois's "click-through nexus" law unconstitutional (Performance Marketing Ass'n v. Hamer, No. 2011 CH 26333 (Ill. Cir. Ct. Cook Cty. 5/7/12)).

The order found that the law (35 Ill.Comp. Stat. 105/2), which expanded the definition of retailers obligated to collect sales tax to those having a contract with a person located in Illinois who refers potential customers through a link on the Illinois person's website (a so-called click-through connection), violated the Commerce Clause and (by violating the federal Internet Tax Freedom Act, P.L. 105-277) the Supremacy Clause of the U.S. Constitution.

Performance Marketing Association

Performance Marketing Association (PMA), the plaintiff in the case, is a national trade association whose members are in the performance marketing business, which the PMA defines as marketing and advertising programs in which the person (called a publisher or affiliate) displays an advertisement (in this case, on the internet) and is paid, usually when there is a sale. The PMA also states that there is usually no other connection between the advertiser and publisher.

According to the PMA, Illinois premised its tax collection on this slim connection. PMA's complaint alleged two Commerce Clause violations: (1) that the law violated the requirement under the Commerce Clause that there be substantial nexus or a minimum connection between an out-of-state retailer and the state before the state may impose the obligation to collect sales tax; and (2) that the law improperly burdened...