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The Illinois Attorney General has filed a complaint against an online retailer under the Illinois Whistleblower Act. The complaint claims that the online retailer failed to collect Illinois use tax on its sales to Illinois customers. This comes two months after a prior complaint was dismissed by the Illinois circuit court. The prior complaint was filed under the same Whistleblower act by a law firm against Target, Wal-Mart, Office Depot and other online retailers. The original complaint was dismissed for a lack of subject matter jurisdiction. (Prior complaint was “State of Illinois, ex rel. Beeler, Schad, and Diamond, P.C. v. Target Corp”)


Even though a tugboat company passed three out of four prongs of the Commerce Clause test under the U.S. Supreme Court test used in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), the tax apportioned by the state was found in violation of interstate commerce laws. The four prong test includes substantial nexus with the state, fair apportionment, non discrimination against interstate commerce, and a fair relationship to the services provided by the state. These criteria must be met so that a state taxing scheme or particular state exemption does not interfere with interstate commerce. Although the tugboats spent more than half of their time pushing barges in Illinois waters, they did not receive any services from the state while using Illinois waterways. The taxation of fuel and supplies loaded onto tugboats outside the state violated the U.S. Constitution Commerce Clause since all four prongs were not met successfully. (American River Transportation Company v. Glen L. Bower, Docket No. 2-02-1290, July 21, 2004)



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