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Amazon customers to start paying tax Feb. 1

Illinois customers will have to start paying tax on their online purchases, such as through Amazon, starting Feb. 1. | Getty Images

Illinois customers of Amazon and other out-of-state retailers on Feb. 1 will start paying the state’s 6.25 percent use tax on their purchases because of a new state law.

Amazon spokesperson Ty Rogers on Friday confirmed the new transaction charge.

Illinois Department of Revenue spokesman Terry Horstman said Friday that the law covers out-of-state retailers, including Amazon, which had cumulative gross sales of at least $10,000 during the preceding four quarters.

The Illinois Legislature revised the law after the state Supreme Court last October rejected its first effort. Gov. Pat Quinn signed the revised law Aug. 26. The law technically went into effect on Jan. 1, but retailers were given a grace period until Feb. 1 before they were required to begin collecting the tax, because of their preparations for the busy holiday season, Horstman said.

A previous state study estimated that Illinois could have collected an extra $212 million from online purchases alone if those transactions had been taxed in 2013.

Even though Amazon last year agreed to comply with state laws requiring e-commerce companies to collect sales tax, the company would have started collecting it at some point anyway. That’s because Amazon announced last October that it will build a $75 million distribution center in Illinois that will open this year and employ 1,000 people over the next three years. Companies with so-called physical presences in a state must collect the use tax. Amazon also said it plans to build other types of facilities in Illinois by 2017.

Rob Karr, president and CEO of the Illinois Retail Merchants Association, said Friday that the use-tax collection “is the responsible thing to do and we applaud [Amazon] for doing it” because it’s only fair that e-commerce companies collect the tax just as brick-and-mortar retailers must do.