North Dakota, which says retailers only have to collect sales tax in states where they have a physical presence.
It does seem fair, because as it now stands, certain retailers have an unfair advantage over others.
But e-commerce retailers argue that collecting sales taxes in all 50 states would present complex issues for corporations, requiring them to keep track of 12,000-plus tax jurisdictions within thousands of counties, cities, and even airports that have their own tax requirements. States say they're losing out in billions of dollars in tax revenue. State legislators knew the measure was unlawful under the 1992 precedent.
On Tuesday, the justices will hear arguments in South Dakota v. Wayfair Inc.
The Supreme Court is hearing a case this week that could affect how much customers pay for online purchases. Numerous sales on Amazon's and Walmart's sites are actually done by smaller retailers using those sites as their platform.
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"Today's online giants do not need or deserve the special tax treatment that the Court gave mail order catalog companies a half century ago", Deborah White, General Counsel for the Retail Industry Leaders Association, said in a statement last month. Something brick-and-mortar have argued will level the playing field.
"Online retailers are omnipresent today - on consumers" smart phones, laptops, tablets, and computers - in a way that was inconceivable in 1967 or 199", she continued.
A ruling favoring South Dakota could help small brick-and-mortar retailers compete with online rivals while funneling up to $18 billion into the coffers of the affected states, according to a 2017 federal report. "For small businesses on tight margins, these costs are going to be fatal in many cases", Andy Pincus, who filed a brief on behalf of eBay and small businesses that use its platform, told the Associated Press. If they have to start complying with the complexities of collecting and remitting sales taxes nationwide, many could be forced to abandon that part of their business.
This law was challenged by the state of South Dakota as it seeks to collect sales taxes from out-of-state internet retailers.
That practice stems from a 1992 Supreme Court decision.