Amazon is fighting sales tax lawsuits on several fronts at once. States are pursuing the company for back taxes on third-party marketplace sales, consumers have filed class actions accusing it of charging tax on exempt items or at the wrong rate, and courts are increasingly willing to treat the platform itself as the legal seller. The most consequential ruling to date came in March 2026, when South Carolina’s Supreme Court held Amazon owes the state $12.5 million for uncollected taxes on third-party sales during a single quarter of 2016 — a decision that opens the door to roughly $277 million more.
South Carolina: Amazon Loses on Third-Party Sales
The South Carolina Department of Revenue audited Amazon Services, LLC and assessed it $12,490,502.15 in unpaid sales taxes, penalties, and interest for products sold by third-party merchants from January through March 2016.1South Carolina Supreme Court. Amazon Services LLC v. South Carolina Department of Revenue, Opinion No. 28319 Amazon argued it was a platform, not the seller. The state’s Administrative Law Court disagreed, the Court of Appeals affirmed in January 2024, and on March 18, 2026, the South Carolina Supreme Court upheld those rulings 3-2.2Sales Tax Institute. South Carolina Holds That Amazon Owes Tax on Pre-Wayfair Third-Party Sales
Writing for the majority, Justice John Cannon Few concluded that Amazon’s control over third-party transactions — pricing, listings, customer communications, payment processing, returns, and disbursement of proceeds — made the company “integrally involved” in those sales and therefore a seller under South Carolina law.3SC Daily Gazette. SC Supreme Court Rules Amazon Must Pay State for Uncollected Back Taxes Justices D. Garrison Hill and George C. James Jr. joined the opinion. Chief Justice John Kittredge and Acting Justice Courtney Clyburn Pope dissented. Amazon filed a petition for rehearing on April 17, 2026, which was still pending in late April.2Sales Tax Institute. South Carolina Holds That Amazon Owes Tax on Pre-Wayfair Third-Party Sales
Another $277 Million Waiting Behind It
The $12.5 million judgment covers only the first quarter of 2016. Two additional South Carolina assessments totaling $277.2 million in back taxes and interest, covering April 2016 through 2019, had been paused in the Administrative Law Court while the first case worked its way up.3SC Daily Gazette. SC Supreme Court Rules Amazon Must Pay State for Uncollected Back Taxes The Supreme Court’s decision that Amazon was a seller during that period gives the state strong precedent going into the larger fight.4News from the States. Ruling by SC High Court Could Result in Amazon Owing $277M in Back Taxes
Florida Class Action Over Tax-Exempt Items
On March 19, 2026, two Florida shoppers sued Amazon in the U.S. District Court for the Western District of Washington, alleging the company charged 7% sales tax on products Florida law exempts. The case is Hopkins, et al. v. Amazon.com Inc., et al., Case No. 2:26-cv-00930.5Top Class Actions. Amazon Class Action Alleges Florida Shoppers Overcharged on Tax-Exempt Items
Plaintiffs Kerrianne Hopkins and Elin Boyd say Amazon collected tax on items Florida specifically exempts: cribs, strollers, safety gates, monitors, children’s clothing for ages five and younger, oral hygiene products, firearm safety equipment, and Energy Star-rated appliances. The complaint brings claims under the Florida Deceptive and Unfair Trade Practices Act along with fraudulent misrepresentation, unjust enrichment, breach of contract, and conversion. The proposed class covers anyone who paid sales tax on exempt items delivered to Florida from March 18, 2021 to the present.5Top Class Actions. Amazon Class Action Alleges Florida Shoppers Overcharged on Tax-Exempt Items
Tennessee: Wrong Rate on Marketplace Purchases
A different consumer theory is being tested in Duke v. Amazon, filed December 12, 2025 in Washington Superior Court for King County. Plaintiff Cullen Duke of Sullivan County, Tennessee alleges Amazon charged him 9.50% sales tax on third-party marketplace purchases when his local rate is 9.25%.6Edge Litigation. Edge and Co-Counsel File Class Action Lawsuit Against Amazon for Charging Excessive Sales Tax
According to the lawsuit, Duke told Amazon about the problem on March 1, 2025, and the company refused to correct the rate or refund the difference. In May 2025, Amazon responded that “when an item originates from within the state of Tennessee, the rate that will be charged is associated with the origin of the shipment,” indicating it was applying an origin-based rate rather than the buyer’s local rate.7The Independent. Amazon Marketplace Sales Tax Tennessee Lawsuit The suit seeks class treatment for an estimated 40 affected Tennessee consumers and asks for restitution, an injunction against further overcharging, and punitive damages. The total alleged overcharge is under $2,500, which Duke’s attorneys say is too small to recover through the Tennessee Department of Revenue’s refund process.
California: A Consumer Can’t Force the State to Pursue Amazon
If you assume that any state agency can be pushed into collecting from Amazon, one California case says otherwise. Fresno camera-shop owner Stan Grosz sued the California Department of Tax and Fee Administration in August 2019, arguing the agency was required by California Regulation 1569 to make Amazon collect billions in back taxes on Fulfillment by Amazon sales.8Forbes. California Lawsuit Says Amazon Should Pay Billions in Back Taxes
The California Court of Appeal rejected that argument in January 2023 in Grosz v. California Department of Tax and Fee Administration, Case No. B309418. The court held that deciding who counts as “a retailer” in a multi-party transaction is a discretionary call for the tax agency, not a duty a private party can enforce through litigation.9California Department of Tax and Fee Administration. Grosz v. California Dept. of Tax and Fee Administration The California Supreme Court declined review in April 2023.10Justia. Grosz v. California Department of Tax and Fee Administration
The StubHub Ruling That Echoes the Amazon Case
A Wisconsin decision from January 2026 is worth noting because it uses almost the same reasoning South Carolina applied to Amazon. In StubHub, Inc. v. Wisconsin Department of Revenue, the Wisconsin Court of Appeals reversed the trial court and held StubHub liable for roughly $8.5 million in back taxes plus a 25% negligence penalty on ticket sales from 2008 to 2013.11Wisconsin Court of Appeals. StubHub Inc. v. Wisconsin Department of Revenue The court found that because StubHub processed payments, charged fees, provided transfer instructions, and guaranteed tickets, it was a “person selling” under Wisconsin law. It also treated Wisconsin’s 2019 marketplace facilitator statute as a clarification of existing law rather than a new obligation, meaning platforms could be held liable for periods before the statute passed.12Bloomberg Tax. StubHub Stuck With $8.5 Million Wisconsin Sales Tax Bill
Canada: An Active Class Action Over Exempt Items
Outside the United States, an active class action in Canada alleges Amazon collected GST, HST, PST, QST, or RST on purchases that should have been zero-rated or exempt under federal and provincial law, including basic groceries and other non-taxable goods.13Consumer Law Group. Amazon Undue Sales Tax Collection Canadian Class Action No settlement has been reached and no claims process has been established.
Why These Cases Keep Coming: Wayfair and Marketplace Facilitator Laws
For decades, the Supreme Court’s 1992 decision in Quill Corp. v. North Dakota shielded online retailers from state sales tax unless they had a physical presence in the state. On June 21, 2018, the Court overturned Quill in South Dakota v. Wayfair, Inc., letting states require out-of-state sellers to collect sales tax based on economic activity — sales volume into the state — rather than physical presence. The Court described the old rule as “a judicially created tax shelter” and cited state revenue losses estimated at $8 billion to $33 billion a year.14Supreme Court of the United States. South Dakota v. Wayfair Inc.
States moved fast. By June 2021, all 45 states with a statewide sales tax, plus the District of Columbia, had adopted remote sales tax laws.15U.S. Government Accountability Office. Remote Sales Tax Nearly all of them then passed marketplace facilitator laws, which move the tax collection duty from individual third-party sellers to the platform. Every U.S. state with a sales tax now has some version of one, though thresholds vary; most set the trigger at $100,000 in annual sales, while states like California and New York use higher bars.16Tax Foundation. Marketplace Facilitator Laws
Those laws answer the going-forward question. The pending litigation answers the harder one: what does a platform owe for the years before the statutes existed, or when it applies the wrong rate, or collects on exempt goods? South Carolina has given one answer. Florida, Tennessee, and Canada may give more. And behind the South Carolina judgment, another $277.2 million is waiting.