The collection of online sales tax has been building momentum over the last few years, but that drive suffered a setback late last week when the Illinois state supreme court ruled that state’s two-year old law to be unconstitutional. Illinois passed its online sales tax law, the Main Street Fairness Act, in March 2011.
The law expanded the meaning of a merchant's physical presence to include that of affiliate companies. In its ruling the court held that the online sales tax law "violates a federal decree that prevents 'discriminatory taxes on electronic commerce.' State law cannot trump federal law."
No word on whether the state plans to appeal the decision.