Judge strikes down Illinois' 'Amazon tax'

A Cook County Circuit judge ruled against the state of Illinois in its attempt to tax online sales from out-of-state companies. Judge Robert Lopez Cepero ruled that the 2011 law doesn't pass muster because simply having an affiliated company in the state that makes sales or refers customers to an online retailer doesn't create enough of a presence, or nexus, for tax purposes.

He also ruled that the Illinois law is unenforceable because of a federal Internet tax moratorium that runs through 2014. The law, often referred to as the "Amazon tax," was an attempt by Illinois to collect sales taxes from out-of-state online merchants such as Amazon for sales made to customers here. The state estimates about $169 million in potential revenue goes uncollected annually, and traditional retailers have long pressed for taxation of online-only rivals as a way to level the playing field between them.