COLUMBIA, S.C. — Picture this: a conservative state’s highest court, a $277 million tax bombshell, and a courtroom where even the justices admit they’re baffled by the fine print of modern e-commerce.

On May 14, the South Carolina Supreme Court heard oral arguments in what might be the most consequential sales tax case of the decade — and it has Amazon on the defensive.

At stake? Whether the e-commerce giant owes the Palmetto State $277.2 million in back taxes and interest for failing to collect sales tax on third-party marketplace transactions between 2016 and 2019 — the exact period after a state-issued tax break expired and before new laws clarified what, exactly, an online “retailer” is.

But beyond the staggering dollar signs lies a question that could reshape the rules of digital commerce: Was Amazon just a platform — or was it, for all intents and purposes, a store?

“I Bought It From Amazon… Or Did I?”

The hearing kicked off with a little show-and-tell — courtesy of Justice John Few, who revealed he’d purchased fishing gear from Amazon the day before. It was, as he said, a typical Amazon purchase: click, pay, done.

Then he hit Amazon’s lawyer with the zinger:
“Who did I buy it from?”

That’s the heart of the entire case. Amazon says: Not us. You bought it from an independent seller. We just provided the website, the cart, the payment system, the shipping, and the customer service.

South Carolina says: Come on. To the consumer, it was Amazon — and Amazon is the only entity with the power to collect tax at checkout.

And the justices? Well, they weren’t exactly buying what Amazon was selling.

A Decade in the Making

The case traces back to 2016, when a five-year tax deal between Amazon and South Carolina expired. That deal had lured Amazon to build warehouses in the state, and once it ended, Amazon started collecting tax on items it sold directly.

But for third-party sellers using its marketplace? Amazon kept its hands off.

South Carolina’s Department of Revenue cried foul. In their view, Amazon was the storefront, regardless of whose inventory sat in the virtual aisle. They hit Amazon with an audit — and then a bill for $12.5 million for just one quarter of 2016. Amazon appealed.

Fast forward through a fiery ruling from an administrative court, a stinging loss at the state Court of Appeals, and the tab ballooned to $277 million as more quarters got tacked on.

Cue the state’s Supreme Court — the final showdown.

The Slippery Slope Argument

In court this week, Amazon’s legal team stuck to its story: the company is not a “seller” under the old law. The real sellers were the thousands of merchants who listed products on Amazon’s platform. Amazon didn’t own the goods, didn’t transfer title, and didn’t have clear legal responsibility — at least not before 2019, when new laws changed the game.

But Justice Few wasn’t having it. He pressed Amazon’s lawyer to admit that, to the average shopper, it feels like buying from Amazon — not from some mystery vendor in Peoria.

Amazon’s attorney responded with corporate precision: “From one perspective, yes, but the receipt names the actual seller.”

Then came the what-if barrage — hypothetical scenarios designed to test the logic.
“If we say Amazon’s a seller because it facilitates the sale, what about credit card companies? Or shipping services? Are they sellers too?”

This is Amazon’s favorite card: the slippery slope. The company warned that if courts stretch the definition of “seller” to include Amazon, it opens the door to taxing anyone who touches a transaction — from Visa to UPS.

South Carolina’s attorney, though, had an answer locked and loaded:
“Amazon doesn’t just touch the transaction. It orchestrates it.”

A Billion-Dollar Precedent?

The courtroom tension on Wednesday went beyond South Carolina’s borders. Across the country, states have watched this battle unfold — and so have other mega-platforms like Walmart, eBay, and Etsy.

Back in 2019, most states passed “marketplace facilitator” laws that made it explicit that platforms like Amazon must collect tax on behalf of third-party sellers. Amazon now complies everywhere.

But this case asks a scarier question: Was Amazon already liable before those laws passed?

If South Carolina wins, it could set a precedent that states have always had the power to go after platforms for past sales — opening the door to audits, lawsuits, and tax assessments across the board.

If Amazon wins, it shores up a wall of legal protection for the pre-2019 era — and lets tech giants breathe easier, knowing they won’t be held responsible for laws that hadn’t caught up to their business models yet.

The Waiting Game Begins

The justices asked sharp questions but didn’t tip their hand. A ruling is expected later this year — and it will almost certainly be the last word. Even if Amazon wanted to take it to the U.S. Supreme Court, federal justices rarely wade into state tax interpretation fights like this one.

For now, Amazon has paid the $12 million for that first quarter under protest. The other $265 million — and maybe the future of how we tax online commerce — hangs in the balance.

Stay tuned. The justices may have been talking tax code, but make no mistake: this is a battle about power, money, and who really controls the checkout button in the 21st century.