Suit: Online Retailers Evaded Taxes

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The Illinois attorney general's office last week sued 62 online retailers on charges that they failed to pay sales taxes on items sold over their Web sites despite having a physical presence in the state.


According to the complaint, the retailers claimed that their online divisions were separate corporate entities located outside Illinois, when the divisions did have a presence. The attorney general's office is using a 2002 whistleblower's report, which includes documents showing that items bought online could be returned to bricks-and-mortar stores in Illinois.


Companies sued include some of the nation's best-known brands: Barnes & Noble, Blockbuster, Bally Total Fitness, Urban Outfitters, Hallmark, The Athlete's Foot, 1-800-Flowers, Borders, PETsMART, Gateway, Speedo and Guess? An estimate of how much the attorney general's office thinks the 62 retailers owe in sales taxes was not disclosed.


In January, the state attorney general sued five other retailers with online presences, including Wal-Mart, Target and Viking Office Products, on similar charges. Those cases are still in litigation, the attorney general's office said.


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