FatWallet’s Move Heralds Another Loss For Illinois

FatWallet.com just announced today that it will be leaving Illinois for Wisconsin as a direct result of the recent tax legislation passed in that state last month. FatWallet made the initial announcement that it would leave if the “Amazon Tax” Bill passed in January. As of today FatWallet made it official that the company will be leaving for Wisconsin after losing many of its relationships with advertisers as a result of Governor Quinn’s ill-conceived passage of the “Amazon Tax”.

The company will be relocating to Beloit, Wisconsin as of April 8th. The company has stated that at least a dozen retailers have told FatWallet they would cut ties with them because Illinois now requires 6.25 percent tax as a way to preserve profits. FatWallet is the second large affiliate company to decide to leave Illinois following CouponCabin’s recent announcement.

FatWallet was expecting an annual loss of 4 million dollars as a result of this legislation. “I think there is a little bitterness,” Brent Shelton FatWallet spokesman told the Hearld News. “The way the taxation has gone in Illinois, they are not making it a lucrative choice.”

Attorney for FatWallet Ian Linnabary stated, “what it effectively does is make FatWallet uncompetitive.” He added that he believes advertisers will give their contracts to other marketers outside of Illinois. None of the bordering states have affiliate tax laws.

Illinois is the fourth state to adopt the “Amazon Tax” law. Amazon.com also cut ties to partners in Rhode Island and North Carolina after those states enacted similar tax legislation. Illinois Revenue Department has estimated the law, which is effective as of July 1, would generate $170 million for Illinois. However such estimates overly-optimistic since many of the retailers the law is meant to target have already severed ties. Amazon cut ties immediately with Illinois affiliates after the law’s passage. Overstock and other online retailers have likewise followed suit.

Brie Callahan of Gov. Quinn’s office defensively pointed out that before Quinn signed the law; the governor established a program to connect partners with other retailers that both had a physical and online presence in the state, like Walgreens, in an attempt to keep the estimated 9,000 partners from leaving Illinois. About 150 partners have signed up for the program.

FatWallet discussed joining the program, but Shelton said the company could not afford to do it, “With 30 percent of our revenue being challenged that was not an option for us.”

7 Responses to FatWallet’s Move Heralds Another Loss For Illinois

  1. Pat Grady says:

    yo Illinois, you can’t run roughshod over the hard working people whose taxes PAY your bills and whose intellect and efforts bring a myriad of other benefits to your state and its citizens. they were happy to pay your high state and local sales taxes, high property taxes and high income taxes (that were just raised 66%), but you just couldn’t get enough – you aimed your harm cannon at their biz partners and fired away. you thought they’d be placated by being offered to sign up for your help via partner connect program? they don’t need your help dolts, they have proven their ability to do business without requiring any govt help – they just need you to stop shooting intentionally aimed harm directly at them.

  2. I think all states should enact these laws. It would take away the argument that it makes the companies uncompetitive, and allows the states a better ability to collect state sales taxes. These laws would of course not be needed if everyone paid the sales tax on items they purchased online. However, it has been proven that most people do not pay the sales tax due when they receive their items, so the states need to do what they can.

    • There is a Streamlined Sales Tax Project (http://www.streamlinedsalestax.org/) that has gained some momentum over the last two years and is supported by the Performance Marketing Association as well as most affiliates. Such a unified tax would “level the playing field”.

      The tax that Quinn passed is not nearly the same thing. It was part of a proxy war between big box retailers like Wal-mart and Amazon. It targets one form of advertising while leaving out others. It will not increase revenue for Illinois or help small business in Illinois. It will only hurt small affiliates and cause larger publishers like FatWallet to leave the state.

  3. […] Wisconsin as a direct result of the recent tax legislation passed in that state last month” [source]. Governor Walker welcomes FatWallet assuring they “are not going to raise taxes as it would […]

  4. […] one week after the law passes in Illinois several major affiliates like FatWallet, who projected $4 million in lost revenue due to the tax, were forced to move out of […]