The US Supreme Court on Friday said it will consider whether businesses have to collect sales taxes on online transactions — a case that will affect how consumers are charged for their purchases on major e-commerce sites such as Wayfair, Overstock, and Amazon. The case, South Dakota v. Wayfair, will revisit a 1992 decision, Quill Corp. v. North Dakota, in which the court ruled remote sellers would have to collect state sales taxes only if they had a physical presence in a state, like a warehouse or an office. The court based its ruling, in part, on the “dormant commerce clause,” a legal doctrine that prevents states from interfering with interstate commerce unless authorized by Congress. The Court’s decision came down before both Amazon (founded in 1994) and eBay (1995) had become a significant presence in American life.
There’s a lot of cash at stake. The Government Accountability Office estimates that state and local governments could have collected up to $13 billion more in 2017 had they been allowed to require sales tax payments from online sellers, as Bloomberg notes. All but five states — Alaska, Delaware, Montana, New Hampshire and Oregon — impose sales taxes, meaning South Dakota v. Wayfair is a national issue.