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Illinois Click-Through Legislation Preempted by Federal Law

TaxConnections Blog Post The Supreme Court of Illinois recently affirmed a lower court’s ruling that the state’s click-through nexus legislation was preempted by a federal law governing taxes placed on electronic commerce.

In 2011, the Illinois General Assembly enacted Public Act 96-1544,1 which added new click-through nexus legislation and sought to tax a common contractual arrangement known as “performance marketing.” In performance marketing, an online retailer contracts with an individual to place hyperlinks for a retailer’s website in consumer-targeted or high-volume areas, as a means for creating online presence and directing potential customers to the retailer’s website. Illinois’s legislation sought to establish nexus with retailers making more than $10,000 per year through performance marketing relationships.

The Performance Marketing Association, Inc. (“PMA”) filed a complaint against the representative for the Illinois Department of Revenue, seeking declaratory and injunctive relief from the click-through nexus element in Public Act 96-1544. The circuit court of Cook County sided with PMA, finding that the click-through nexus legislation was preempted by the Internet Tax Freedom Act (ITFA), 2 which prohibits “multiple discriminatory taxes on electronic commerce.” Accordingly, the circuit court granted PMA’s motion for summary judgment.

On October 18, 2013, the Supreme Court of Illinois affirmed the circuit court’s denial of summary judgment to the Department of Revenue, and its grant of summary judgment to PMA.3


Jeremiah T. Lynch, Principal – Ryan, LLC

1 Illinois Public Act 96-1544 (effective March 10, 2011).
2 47 U.S.C. § 151 note (2000).
3 Performance Mktg. Ass’n v. Hamer, 2013 IL 114496 (October 18,

In accordance with Circular 230 Disclosure


Mr. Lynch is a frequent speaker on tax topics. He has spoken for the following organizations: American Electronics Association, Association of American Publishers, Council On State Taxation, Georgetown State and Local Tax Conference, Institute for Professionals in Taxation, National Institute on State and Local Taxation, New York University, Institute on State and Local Taxation, Tax Executives Institute.