The U.S. Supreme Court freed states and local governments to start collecting billions of dollars in new sales taxes from online retailers, overturning a ruling that had made much of the internet a tax-free zone and put traditional retailers at a disadvantage.
News of the ruling caused shares of Internet retailers including Amazon.com Inc. and Wayfair Inc. to fall.
The court’s 1992 decision involving catalog sales had shielded retailers from tax-collection duties if they didn’t have a physical presence in a state. Writing for the 5-4 court Thursday, Justice Anthony Kennedy said that ruling was obsolete in the e-commerce era.
Broader taxing power will let state and local governments collect an extra $8 billion to $23 billion a year, according to various estimates. All but five states impose sales taxes.
Wayfair plunged as much as 9.5 percent on the news, and was down 1 percent to $115.13 at 1:25 p.m. in New York trading. Amazon.com dropped as much as 1.9 percent; EBay Inc. dropped as much as 12.6 percent and Etsy Inc. fell as much as 5.7 percent.
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04.26.2025