Amazon.com Inc. (AMZN) will start collecting sales taxes from Minnesota customers from Oct 1. This will put an end to the cost benefit Amazon has been enjoying over brick-and-mortar retailers in the state.

Last year, Amazon took various measures to avoid collecting sales taxes in Minnesota. It severed all ties with Minnesota-based affiliates (bloggers, deal sites and online reviewers) just before a new state law, which required online merchants to collect sales taxes from affiliates in the state, was enforced.

Amazon made identical moves in about 10 other states to avoid the collection of sales taxes. However, at present, it does collect sales tax in 21 states.

What Prompted the Change?

According to Minnesota’s tax rules, online retailers are required to collect sales tax if they have physical presence or an affiliated business in the state.

The decision by Amazon to collect sales tax has led to a lot of speculation that the company might be opening a warehouse, data center or some other operation in the state or buying an existing firm.

However, Amazon is not worried about losing its cost advantage over local competitors Target Corp. and Best Buy Co. Inc. It believes that it offers the best price, regardless of the sales tax.

Amazon currently has a Zacks Rank# 4 (Sell).

Other Stocks that Warrant a Look:

Better-ranked stocks in this industry include Mercadolibre, Inc. (MELI), World Energy Solutions, Inc. (XWES), and PetMed Express, Inc. (PETS). While Mercadolibre and World Energy Solutions sport a Zacks Rank #1 (Strong Buy), PetMed Express holds a Zacks Rank #2 (Buy).

Read the Full Research Report on PETS
Read the Full Research Report on AMZN
Read the Full Research Report on MELI
Read the Full Research Report on XWES


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