The justices said they’d take up a fight involving Wayfair
The Supreme Court is set to decide the future of online sales taxes.
The nation’s justices agreed on Friday to hear a battle between South Dakota and the e-commerce site Wayfair over the power that states should have to tax businesses that aren’t located within their borders yet sell goods to local residents.
Tech giants and consumers alike might balk at such taxes — but for cash-strapped state and local governments, the power to levy these fees on more online purchases might have helped them raise as much as $13 billion last year, according to one federal estimate.
To that end, 36 states had joined South Dakota’s legal crusade, urging the Supreme Court to take up the case, which could come before the justices later this spring.
The fight specifically stems from a law, passed by South Dakota in 2016, which levied a 4.5 percent tax on businesses that sell more than $100,000 in goods. That included Wayfair, which does not have a physical presence in the so-called Mount Rushmore state.
In challenging the South Dakota law, however, Wayfair and its allies — including companies like Overstock and NewEgg — argued that a 1992 decision by the Supreme Court expressly prohibits states from levying such fees on remote sellers in the first place. And they have accused South Dakota of running “roughshod” over legal precedent, particularly at a time when Congress is still debating states’ powers to levy online taxes.
The country’s largest online retailer — Amazon — isn’t explicitly involved in Wayfair’s fight. And the company, which has warehouses scattered around the country, pays sales taxes in those localities. Yet it could still be affected by the Supreme Court’s ruling, given that its platform does include third-party sellers.