How Tax Ruling Would Help Amazon.com Inc. (NASDAQ:AMZN) & eBay Inc.(NASDAQ:EBAY)
In what could be counted as a huge positive change in tax liabilities faced by internet based retailers and e commerce portals like Amazon.com Inc. (NASDAQ:AMZN) and eBay Inc.(NASDAQ:EBAY), the Illinois Supreme Court has ruled that a state law that levied additional taxes on specific Internet based transactions will have to be abolished. The law which has gained notoriety as “Amazon tax” since it was primarily targeting online transactions was struck down as being discriminatory in nature against online business.
The 7 member bench ruled 6 to 1 in favor of winding up the tax sighting the existence of a federal law which has summarily banned taxes on “electronic commerce.” Illinois state “department of revenue” has stated that it will appeal the “State Supreme Court decision” in U.S. Supreme Court.
The law had necessitated online retailers which were based outside the state of Illinois to pay state taxes on sales originating from e portals and warehouses based out of Illinois. The tax would come into effect on all sales exceeding $10 K falling under the category sighted above.
This Illinois Supreme court ruling comes as a big boost for Amazon.com’s ongoing legal battle in New York Court of Appeals. In March, a NY court had upheld the imposition of similar tax like “Amazon Tax” in the state. The pioneering web retailer has gone on appeal against the March verdict. Analysts believe that Amazon will have a greater chance to get the NY court ruling turned down post the Illionis Supreme Court order.
Other e commerce dependent companies like eBay (EBAY) are watching from the sidelines on how these legal battles will work out. Analysts feel post the Illinois Supreme court verdict the e retailers could join forces and increase their lobbying with the federal government to enact laws which will prevent unfair targeting of their business model.