The Illinois provision mirrors the South Dakota law at the center of the Supreme Court case, and is scheduled to go into effect on October 1.
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.
The 1992 court ruling in Quill v. For states, the big win will come if they are ultimately able to collect the millions they say they've lost in sales tax dollars. Among other technical and practical reasons cited by the majority for its decision was the argument that no-sales-tax rules hurt state revenues supporting schools and services. The National Retail Federation, for one, heralded the decision as a "major victory" that levels the playing field between online and physical retailers, according to a press release emailed to Retail Dive.
Brick-and-mortar retailers had argued that they were at a disadvantage under the previous law because they have to charge sales tax at the time of purchase, while online retailers did not in states where they had no physical presence or warehouse.
"Each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", wrote Justice Anthony M. Kennedy, who delivered the opinion for the court.
Justices John Roberts, Stephen Breyer, Elena Kagan, and Sonia Sotomayor dissented in the ruling. In preparation, state lawmakers included language in this' year's budget bills that would let the legislature move forward quickly in collecting sales tax from more online purchases.
Walmart also praised the Supreme Court for "closing a loophole" that "produced an uneven playing field for main street businesses". It sent the law back to South Dakota's highest court to be revisited.
For Parham, the decision is a big win for local businesses.
Under the ruling Thursday, states can pass laws requiring out-of-state sellers to collect the state's sales tax from customers and send it to the state. Amazon does charge sales tax in all states but does not collect taxes for most independent merchants selling on its platform. She says the court decision will "level the playing field for IL brick-and-mortar retailers". When Amazon opens a fulfillment center in a state, it starts collecting sales tax, noted the report. The decision means that South Dakota can now dictate some of the business operations of firms that have no representation in the South Dakota legislature.