Additionally, independent businesses on websites like Etsy and Ebay would be included in a rewritten sales tax law, as well as third party merchants that operate in Amazon's global marketplace, which totaled almost two-thirds of the company's gross merchandise volume at $313.4 billion.
The counter argument is that it is very hard for retailers to maintain sales tax accounts in all states they ship to.
Large retailers say the rule puts them at a competitive disadvantage.
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This law was challenged by the state of South Dakota as it seeks to collect sales taxes from out-of-state internet retailers.
The Supreme Court is hearing a case this week that could affect how much customers pay for online purchases.
South Dakota-along with the dozens of other states who have signed on to the case as allies-argues that the current "physical presence" requirement has become antiquated in an age where far more businesses maintain a strictly online presence.
The case is especially timely since President Donald Trump has publicly blasted Amazon for not collecting sales taxes, even though it does so on its own sales.
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In 1992, during the era of mail-order catalog shopping, the Supreme Court ruled that retailers can only be required to collect taxes in states where the company has an actual store or physical presence. The National Retail Federation, which supports the state, has a membership list that includes Walmart Inc and Target Corp, as well as Amazon.
Overturning the ruling while not replacing it with a new national framework "is really going to be a negative move in terms of e-commerce", Bieron added. "These online companies have taken advantage of a bygone decision in order to evade the tax collection duties that their brick and mortar competitors perform every day". "A retailer today can transact a significant amount of business in a state without ever being physically present in the state".
"Things have changed a lot since 1992". State legislators knew the measure was unlawful under the 1992 precedent.
According to the Government Accountability Office, online marketplaces could have collected between $3.9 billion and $6.2 billion in state sales tax.
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