The Supreme Court is about to decide how your online purchases are taxed

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.