Summary of the Performance Marketing Association’s Legal Challenge to Illinois House Bill 3659
Performance Marketing Association, Inc. v. Hamer,
Federal District Court for the Northern District of Illinois, case no. 1:11-cv-03690
Overview: On June 1, 2011, the Performance Marketing Association (“PMA”) filed a lawsuit in Federal District Court in Chicago against the Director of the Illinois Department of Revenue, Brian A. Hamer, challenging the constitutionality of a new Illinois law that targets the business of online performance marketing as a basis for unlawfully expanding Illinois’ regulatory authority beyond its borders.
Illinois House Bill 3659 (“HB 3659”), enacted in March 2011, violates the Commerce Clause of the United States Constitution, and the federal Internet Tax Freedom Act (“ITFA”), by using the relationships between Illinois publishers of online advertisements and out-of-state advertisers as grounds for imposing use tax collection and reporting obligations on Internet retailers located outside the state. The enactment HB 3659 has damaged thousands of Illinois publishers through the loss of advertising contracts with Internet retailers.