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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.
States are already empowered to levy fees on businesses located within their states — to the detriment of consumers, perhaps — but a decades-old Supreme Court decision generally bars them from targeting sellers without a physical presence there.
For cash-strapped state and local governments, though, the power to impose online sales taxes on remote sellers might have helped them raise as much as $13 billion last year, according to one federal estimate. To that end, 36 states have joined South Dakota’s legal crusade, urging the Supreme Court to reverse its earlier ruling.
Arguments are likely to be heard 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 — pointed to the Supreme Court’s prohibition in 1992 while arguing that Congress is still debating states’ powers to levy online taxes on all sellers.
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.
This article originally appeared on Recode.net.
