The case on Tuesday focuses on businesses' collection of sales tax on online purchases. North Dakota that upheld earlier rulings limiting states and localities to collecting sales taxes from only those retailers with a physical presence in their jurisdictions.
The case now before the Supreme Court could affect those third-party Amazon sellers and many other sellers that don't collect taxes in all states - sellers such as jewelry website Blue Nile, pet products site Chewy.com, clothing retailer L.L. Bean, electronics retailer Newegg and internet retailer Overstock.com.
Sellers who want the court to keep the current rule say free or low-priced software touted as a cure for the challenges of tax collection isn't accurate. State officials need the Supreme Court's backing for that law to stick. For example, marketplace facilitator laws require marketplaces to collect the appropriate sales tax, taking the sales tax collection responsibility out of the hands of retailers and ensuring tax collection even if the retailers are not involved. Treasury Secretary Steve Mnuchin told a Congressional hearing in February that Trump believes sales tax should be paid on all purchases, whether they are made in a brick-and-mortar store or online.
Amazon probably comes to mind immediately, but that company actually charges sales tax in nearly every state now. A total of 35 other states have weighed in on South Dakota's side.
Overstock.com has a small but unmistakable advantage for anyone looking to buy a 3-cup Cuisinart Mini Prep Plus Food Processor for shipment to Germantown, Maryland: Purchasers don't have to pay the 6 percent sales tax they'd owe at a local store. The court could make its decision very specific to South Dakota, which would require these other states to carefully examine their laws to ensure they won't face additional court challenges. They could also do something in between, granting the states more authority while imposing a number of restrictions. It's time to bring the way we collect and remit sales taxes into the modern age.
In a court filing supporting South Dakota, more than 40 states said the retroactivity concern is overblown.
The ruling won't have a direct impact in five other states - Alaska, Delaware, Montana, New Hampshire and OR - because they have no statewide sales tax. Thanks to the Supreme Court, their cause may finally be addressed. Sellers on eBay and Etsy, which provide platforms for smaller sellers, also don't collect sales tax nationwide.
"Our second-most shipped state is California, because people try to avoid paying sales tax from this major competitor", Primerano said. They say they're losing out on "billions of dollars in tax revenue each year, requiring cuts to critical government programs" and that their losses compound as online shopping grows.