Amazon (AMZN) and other e-commerce stocks fell Thursday, following a closely watched U.S. Supreme Court decision saying states can collect taxes from retailers that do not have a physical presence there.
Georgia residents will have to pay sales tax on almost all online purchases following a U.S. Supreme Court decision Wednesday in a South Dakota case. Online retailers sued over the scheme, and the Supreme Court allowed the case to proceed.
In a 5-4 decision, the court overturned decades-old decisions blocking states from taxing online purchases if the vendor had no "physical presence" in that state, according to The Associated Press. She says the court decision will "level the playing field for IL brick-and-mortar retailers".
"They will lose some share in the near term, and local stores may see some of that volume but customers will adjust over time", Kodali said.
The decision paves the way for states to force online merchants to collect sales tax on orders from residents, regardless of where the company itself exists. It will leave shoppers with lighter wallets but is a big financial win for states.
The decision is largely viewed as a victory for states and local businesses.
The chamber is a long-time advocate for online sales tax collection.
Shopping centers, department stores and major retail outlets have laid off thousands of workers and are struggling to remain open as consumers turn to internet home delivery for an ever-increasing array of goods and services.
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The cases the court overturned said that if a business was shipping a product to a state where it didn't have a physical presence, such as a warehouse or office, the business didn't have to collect the state's sales tax.
Only five states do not collect a statewide sales tax. "Each year, it becomes further removed from economic reality and results in significant revenue losses to the States".
Nellen said it's also possible Congress will step in and "tone down" the ruling, or "require states to do something to make it easier". They have brick-and-mortar stores nationwide and already generally collect sales tax from their customers who buy online.
In Florida, the sales tax has been applied to a wider range of internet sales over the last few years.
"Any state with sales taxes already has some sort of variance when it comes to exemptions and reporting rules", he said.
South Dakota's suit stemmed from a law requiring sales taxes for any out-of-state seller that delivers more than $100,000 worth of goods. Even President Donald Trump has railed against the unfairness of online companies' sales tax exemption. Marketplace sellers weren't previously required to automatically collect sales tax on their sales, and the ruling may hurt their sales.
On Thursday the Supreme Court reversed more than half of a century of precedent.