The Supreme Court agreed Friday to take up a challenge to a law preventing states from taxing retailers that don’t have a physical presence in the state, a case that could have major implications for state and federal online sales tax policy.
The case is South Dakota vs. Wayfair, with the state seeking to impose state taxes on the online retailer.
It is a challenge to a 1992 Supreme Court decision that a state cannot tax a business unless it has a substantial physical presence in the state.
South Dakota and other states have called for a review of the ruling, portraying it as an obstacle to managing their finances.
The issue of online sales taxes has roiled Congress in recent years, pitting brick-and-mortar stores and big online retailers against online companies they argue are unfairly advantaged by being able to skirt taxation.
“Retailers have supported this case since the beginning, and believe it is the right case to correct the constitutional course set more than 50 years ago — well before the advent of e-commerce — that today gives online-only retailers an unfair commercial advantage at the expense of local retailers,” said Retail Industry Leaders Association general counsel Deborah White.
Some conservatives oppose allowing governments to tax out-of-state retailers on the grounds that it would amount to a power grab.
President Trump has occasionally called for an Internet sales tax as retribution for Amazon. The company already pays applicable state taxes, although some sellers on its platform may not.