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March 18, 2026 Get Citation Alerts Download PDF Add Note

Amazon Services v. SCDOR

Supreme Court of South Carolina

• Citations: None known

• Docket Number: 2024-000625

• Opinion

• Authorities (11)

• Cited By (0)

• Summaries (0)

• Similar Cases (12.9K)

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Syllabus

This appeal arises from an administrative action filed by Amazon Services, LLC challenging the South Carolina Department of Revenue's assessment of $12,490,502.15 in unpaid sales taxes, penalties, and interest for the first three months of 2016. The Department made the assessment based on its claim that Amazon Services was obligated to collect and remit sales taxes for retail sales to South Carolina customers for products sold by third-party merchants on Amazon.com. The administrative law court found the Department correctly determined Amazon Services owed the taxes and lawfully imposed the penalties and interest. We affirm.

Combined Opinion

THE STATE OF SOUTH CAROLINA
In The Supreme Court

Amazon Services, LLC, Petitioner,

v.

South Carolina Department of Revenue, Respondent.

Appellate Case No. 2024-000625

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

Appeal from the Administrative Law Court
Ralph King Anderson, III

Opinion No. 28319
Heard May 14, 2025 – Filed March 18, 2026

AFFIRMED

Robert N. Hochman and Neil H. Conrad, Chicago, Illinois,
and Carter G. Phillips, Washington D.C., all of Sidley
Austin LLP; John C. Von Lehe, Jr. and Bryson Moore
Geer, Charleston, and C. Mitchell Brown, Columbia, all of
Nelson Mullins Riley & Scarborough, LLP, for Petitioner.

Chad Nicholas Johnston and Tracey Colton Green, of Burr
& Forman LLP, Columbia; Lauren Acquaviva, of Viva
Law Firm, Charleston; John William Roberts, of JJE
Capital Holdings LLC, Columbia; Jason Phillip Luther, of
South Carolina Department of Revenue, all for
Respondent.

Jennifer Butler Routh, of McDermott Will & Emery, LLP,
of Washington, DC, as Amici Curiae for Tax Law
Professor Hayes R. Holderness and National Retail
Federation. Joshua Madison Tyler Felder, of Greenville
and Kay Miller Hobart, of Raleigh, NC, both of Parker Poe
Adams & Bernstein, LLP, as Amici Curiae for Council on
State Taxation. Stephen M. Cox, of Rock Hill and Erik R.
Zimmerman, of Chapel Hill, NC, both of Robinson,
Bradshaw & Hinson, P.A., as Amici Curiae for The
Chamber of Commerce of the United States of America,
Business Roundtable, NetChoice, The South Carolina
Chamber of Commerce, and the Greater Columbia
Chamber of Commerce. Samantha Katherina Trencs, of
Washington, DC, Nikki E. Dobay, of Sacramento, CA,
and Katy Stone, of San Francisco, CA, all of Greenberg
Traurig, LLP, as Amici Curiae for the Institute for
Professionals in Taxation. Robert T. Bockman and Clinton
G. Wallace, of The Law Center, of Columbia, as Amici
Curiae for Tax Law Professors Tessa R. Davis and Clinton
G. Wallace.

JUSTICE FEW: This appeal arises from an administrative action filed by Amazon
Services, LLC challenging the South Carolina Department of Revenue's assessment
of $12,490,502.15 in unpaid sales taxes, penalties, and interest for the first three
months of 2016. The Department made the assessment based on its claim that
Amazon Services was obligated to collect and remit sales taxes for retail sales to
South Carolina customers for products sold by third-party merchants on
Amazon.com. The administrative law court (ALC) found the Department correctly
determined Amazon Services owed the taxes and lawfully imposed the penalties and
interest. The court of appeals affirmed. Amazon Servs., LLC v. S.C. Dep't of
Revenue, 442 S.C. 313, 898 S.E.2d 194 (Ct. App. 2024). We affirm the court of
appeals.
I. Background

Amazon Services, LLC—a subsidiary of Amazon.com, Inc.—operates the online
marketplace website Amazon.com. There are three categories of sellers on
Amazon.com: (1) Amazon Services sells Amazon Prime memberships, (2) Amazon
affiliates list their products for sale, and (3) third-party merchants—not affiliated
with Amazon Services—list products they own for sale. Sales taxes for products
sold on Amazon.com by Amazon Services and its affiliates are not at issue in this
case because Amazon Services began collecting taxes on those sales and remitting
the taxes to the Department in 2016. The only issue in this case is whether Amazon
Services was obligated under law in 2016 to collect and remit taxes owed for sales
of products by third-party merchants.

When Amazon Services began operating Amazon.com over twenty years ago, states
were not permitted under federal law to impose taxes on sales to their residents
unless the seller had some physical presence in the state. See Quill Corp. v. N.
Dakota, 504 U.S. 298, 317, 112 S. Ct. 1904, 1916, 119 L. Ed. 2d 91, 110 (1992)
(holding the dormant commerce clause requires a business have a physical presence
in a state to be subject to the state's sales tax laws), overruled by S. Dakota v.
Wayfair, Inc., 585 U.S. 162, 188, 138 S. Ct. 2080, 2099, 201 L. Ed. 2d 403, 426
(2018). At that time, Amazon Services had no physical presence in South Carolina.
For this reason, Amazon Services was not obligated to collect or remit taxes on any
sales made on Amazon.com to our residents.

In 2011, our General Assembly enacted Act 32, which was designed to recruit online
sellers like Amazon Services to build and operate sales and distribution facilities in
South Carolina. Act No. 32, 2011 S.C. Acts 109 (effective June 8, 2011) (codified
at S.C. Code Ann. § 12-36-2691 (2014)). Act 32 provided a temporary sales tax
exemption for businesses and business affiliates that built facilities in the state that
satisfied the requirements outlined in section 3 of the Act. The same year, Amazon
Services' affiliate Amazon Fulfilment Services, LLC built a fulfillment center in
South Carolina and satisfied the requirements of section 12-36-2691. Amazon
Services and its affiliates qualified for the sales tax exemption and thus paid no sales
tax for any sales made in the state from 2011 to the end of 2015.

Beginning in January of 2016, Amazon Services collected and remitted taxes on
products it sold and its affiliates sold on Amazon.com. However, it did not collect
or remit any taxes on products sold by third-party merchants to residents of this State.
The record before us indicates there were approximately 2.5 million active third-
party merchants on Amazon.com at that time, and approximately 50% of the sales
transactions that occurred on Amazon.com were made by third-party merchants.
After an audit, the Department determined Amazon Services was required by law to
collect and remit sales tax on these third-party transactions and issued Amazon
Services an assessment of $12,490,502.15 in unpaid sales taxes, penalties, and
interest.

Amazon Services requested a contested case hearing before the ALC. Following a
three-day hearing, the ALC issued an order affirming the Department's assessment.
Amazon Services appealed the ALC's order and the court of appeals affirmed.
Amazon Servs., 442 S.C. at 320, 340, 898 S.E.2d at 197, 208. We granted Amazon
Services' petition for a writ of certiorari to review the court of appeals' decision.

II. Subsection 12-36-910(A)

There is no question sales taxes were due on third-party merchants' sales made on
Amazon.com involving residents of this State. The only question is whether
Amazon Services was required to collect and remit them. The answer to the question
is found in the South Carolina Sales and Use Tax Act, S.C. Code Ann. §§ 12-36-5
to -2695 (2014 & Supp. 2025), particularly in the text of subsection 12-36-910(A).
Subsection 12-36-910(A) provides, "A sales tax, equal to five percent of the gross
proceeds of sales, is imposed upon every person engaged or continuing within this
State in the business of selling tangible personal property at retail."

We focus on the language "engaged . . . in the business of selling." The word
"engaged" is not defined in the South Carolina Sales and Use Tax Act. Therefore,
we "interpret the term in accord with its usual and customary meaning." Branch v.
City of Myrtle Beach, 340 S.C. 405, 409-10, 532 S.E.2d 289, 292 (2000). Merriam-
Webster defines "engaged" as "involved in activity" and "greatly interested."
Engaged, WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY (1988); see also
Engage, BLACK'S LAW DICTIONARY (11th ed. 2019) (defining "engage" as "[t]o
employ or involve oneself"). Section 12-36-20 defines "[b]usiness" to include "all
activities, with the object of gain, profit, benefit, or advantage, either direct or
indirect. Subactivities of a business which produce marketable commodities, used
or consumed in the business, are taxable transactions." "Selling" is the present
participle of the verb "sell," which means "to offer for sale." Sell, WEBSTER'S NINTH
NEW COLLEGIATE DICTIONARY (1988). Section 12-36-100 defines the word "[s]ale"
in relevant part as "any transfer, exchange, or barter, conditional or otherwise, of
tangible personal property for a consideration." Thus, a person is "engaged . . . in
the business of selling" when they are integrally involved in a "[s]ale" to obtain
"gain, profit, benefit, or advantage, either direct or indirect."
Amazon Services' relationship with third-party merchants is governed in
comprehensive detail by a "Business Solutions Agreement" all third-party merchants
are required to sign. The Business Solutions Agreement in effect in 2016 tightly
controlled every third-party merchant transaction. For example:

• Amazon Services regulated a third-party merchant's ability to set the price of
a product listed on Amazon.com; 1
• Amazon Services established criteria for how third-party merchants listed
products on Amazon.com;
• Amazon Services controlled notification of third-party merchant products
purchased on Amazon.com;
• Amazon Services notified Amazon Payments, Inc. when to charge a customer
for a particular transaction through the customer's chosen payment method;
• Amazon Services notified customers of order shipment;
• Amazon Services dictated how third-party merchants communicated with
customers;
• Amazon Services handled returns involving third-party merchant products;
and
• Amazon Services dispersed funds from these transactions to third-party
merchants after retaining any applicable fees.

Amazon Services purposefully crafted a business model that made the involvement
of Amazon Services integral to every third-party transaction. Thus, we hold Amazon
Services was "engaged . . . in the business of selling."

The parties, ALC, and court of appeals reference the statutory definition of "seller"
found in subsection 12-36-70(1)(A). Amazon Services argues that because it is not
a "seller" of any of these products, it is not subject to any obligation to collect or
remit sales taxes under subsection 12-36-910(A). As the word "seller" does not
appear in the subsection, we disagree. The question posed by subsection 12-36-
910(A) is not whether Amazon Services was a "seller," but whether Amazon
Services was "engaged . . . in the business of selling." The ALC correctly
determined it was.

1
If a third-party merchant offered a product elsewhere, the price listed on
Amazon.com had to be lowest price or the same as the lowest price where the
product was offered elsewhere, ensuring Amazon.com was competitive with other
purchasing platforms.
Amazon Services also argues that focusing on whether a person is "engaged . . . in
the business of selling" when determining tax liability under subsection 12-36-
910(A) "contains no principled stopping point." Under Amazon Services' theory,
"payment processors, credit card companies, banks, delivery companies, advertisers,
and more" are all businesses that receive profits for providing services "from the sale
of property owned by others" and, therefore, would be required to remit sales tax
under subsection 12-36-910(A). We disagree.

As discussed above, Amazon Services structured its business model in a way that
provided it with comprehensive control over third-party transactions. This control
was so significant that a third-party transaction could not occur on Amazon.com
without actions taken by Amazon Services. In contrast to Amazon Services' integral
role in each transaction, other companies such as payment processors, credit card
companies, banks, delivery companies, and advertisers provide services that are
incidental to the transaction. These companies may aid in the facilitation of a sale,
but there is nothing requiring a specific company's involvement for a particular sale
to occur. The phrase "engaged . . . in the business of selling" both encompasses
Amazon Services' business model and differentiates Amazon Services from other
incidental service providers. Thus, the "stopping point" is found in the plain
language of subsection 12-36-910(A) and is illustrated in its application to a
potential taxpayer's business model.

Because subsection 12-36-910(A) is unambiguous, we simply apply the text as
written, and we do not need the rules of statutory construction. See Centex Int'l, Inc.
v. S.C. Dep't of Revenue, 406 S.C. 132, 139, 750 S.E.2d 65, 69 (2013) ("When a
statute's terms are clear and unambiguous on their face, there is no room for statutory
construction and a court must apply the statute according to its literal meaning."
(quoting Sloan v. Hardee, 371 S.C. 495, 498, 640 S.E.2d 457, 459 (2007))).
However, Amazon Services attempts to avoid this straightforward application of an
unambiguous statute by relying on "the settled principle that any substantial doubt
in the application of a tax statute must be resolved in favor of the taxpayer." Alltel
Commc'ns, Inc. v. S.C. Dep't of Revenue, 399 S.C. 313, 318, 731 S.E.2d 869, 872
(2012); see also Cooper River Bridge v. S.C. Tax Comm'n, 182 S.C. 72, 76, 188 S.E.
508, 509-10 (1936) ("[W]here the language relied upon to bring a particular person
within a tax law is ambiguous or is reasonably susceptible of an interpretation that
will exclude such person, then the person will be excluded.").

Amazon Services' "reasonable" interpretation focuses on the statutory definition of
"Sale." It does not dispute that third-party transactions were sales subject to
subsection 12-36-910(A). Rather, Amazon Services argues it did not conduct a
"sale" because it did not receive consideration "for" transferring tangible personal
property and, therefore, was not "engaged . . . in the business of selling." However,
the plain language of subsection 12-36-910(A) does not require the taxpayer to
receive consideration "for" the sale subject to the statute. Again, it is the phrase
"engaged . . . in the business of selling" and the statutory definitions of "[b]usiness"
and "[s]ale" together that determine who is required to remit these sales taxes.
Because Amazon Services' interpretation of the statute relies on words the statute
does not contain—sale and seller—we find its interpretation is not "reasonable"
under Alltel.

Based on the unambiguous language of subsection 12-36-910(A) as applied to
Amazon Services, we hold Amazon Services was "engaged . . . in the business of
selling" and was required to remit sales tax on third-party transactions.

III. Travelscape

Amazon Services also argues the court of appeals' reference to Travelscape, LLC v.
S.C. Dep't of Revenue, 391 S.C. 89, 705 S.E.2d 28 (2011), is incorrect because
(1) Travelscape does not indicate subsection 12-36-910(A) can be interpreted
"broadly" as "the words 'broad' or 'broadly' do not appear in Travelscape" and (2)
the court of appeals' discussion is inconsistent with "the settled principle that any
substantial doubt in the application of a tax statute must be resolved in favor of the
taxpayer," Alltel, 399 S.C. at 318, 731 S.E.2d at 872. See Amazon Servs., 442 S.C.
at 331-32, 898 S.E.2d at 203-04 (court of appeals' discussion of Travelscape). We
agree that Travelscape does not indicate subsection 12-36-910(A) may be
interpreted broadly. To the extent the court of appeals read Travelscape to require
a broad interpretation of tax statutes, the court of appeals erred. We clarify that our
holding in Travelscape does not indicate the South Carolina Sales and Use Tax Act
may be interpreted broadly. Rather, courts must engage in a thorough analysis of
the Act based on ordinary principles of statutory interpretation. See Multi-Cinema,
Ltd. v. S.C. Tax Comm'n, 292 S.C. 411, 413, 357 S.E.2d 6, 7 (1987) ("The usual rules
of statutory construction apply to the interpretation of tax statutes."). Our opinion
in Travelscape speaks for itself and we find it unnecessary to address it further in
this case. See Books-A-Million, Inc. v. S.C. Dep't of Revenue, 437 S.C. 640, 652,
880 S.E.2d 476, 482 (2022) (James, J., dissenting) ("Our holding in Travelscape was
narrow and tailored to the facts of that case . . . .").
IV. Due Process

In 2019, the General Assembly adopted Act 21, amending the South Carolina Sales
and Use Tax Act "to further inform Marketplace facilitators," such as Amazon
Services, "of their requirements" to remit sales tax on online sales involving third-
party merchant products. Act No. 21, 2019 S.C. Acts 101 (effective Apr. 26, 2019)
(codified at S.C. Code Ann. § 12-36-71 (Supp. 2025)). Amazon Services now
argues that requiring it to remit sales tax for third-party transactions violates the
South Carolina Constitution's and the United States Constitution's due process
requirement of "fair notice" because it "effectively subjects Amazon Services to [Act
21] retroactively." We disagree.

"A fundamental principle in our legal system is that laws which regulate persons or
entities must give fair notice of conduct that is forbidden or required." F.C.C. v. Fox
Television Stations, Inc., 567 U.S. 239, 253, 132 S. Ct. 2307, 2317, 183 L. Ed. 2d
234, 245 (2012). Here, the Department applied the South Carolina Sales and Use
Tax Act as written in 2016 to Amazon Services' business model when it issued its
determination. The determination was issued a year before the General Assembly's
legislative debate and subsequent enactment of Act 21. Thus, the Department could
not have applied Act 21 retroactively because the Act did not exist when the
determination was issued. We hold there was no due process violation.

V. Conclusion

For the reasons explained above, we affirm the court of appeals.

AFFIRMED.
JAMES and HILL, JJ., concur. KITTREDGE, C.J., dissenting in a separate
opinion in which Acting Justice Courtney Clyburn Pope, concurs.
CHIEF JUSTICE KITTREDGE: With great respect for the majority, I dissent.
Both parties present good faith arguments as to the proper interpretation of section
12-36-910(A) of the South Carolina Code (2014). I find both parties' arguments to
be reasonable interpretations of the statute. 2 As a result, I believe our precedent
requires us to rule in favor of Amazon. See, e.g., Alltel Commc'ns, Inc. v. S.C.
Dep't of Rev., 399 S.C. 313, 318, 731 S.E.2d 869, 872 (2012) ("[A]ny substantial
doubt in the application of a tax statute must be resolved in favor of the taxpayer."
(citing Cooper River Bridge, Inc. v. S.C. Tax Comm'n, 182 S.C. 72, 76, 188 S.E.
508, 509–10 (1936) ("Where the language relied upon to bring a particular person
within a tax law is ambiguous or is reasonably susceptible of an interpretation that
will exclude such person, then the person will be excluded, any substantial doubt
being resolved in his favor." (cleaned up)))); S.C. Nat. Bank v. S.C. Tax Comm'n,
297 S.C. 279, 281, 376 S.E.2d 512, 513 (1989) ("In the enforcement of tax statutes,
the taxpayer should receive the benefit in cases of doubt.").
I additionally note the majority glosses over the court of appeals' erroneous
interpretation of Travelscape3 and its resulting decision to read the South Carolina
Sales and Use Tax Act 4 (the Act) "broadly." While acknowledging the error, the
majority does not analyze how that error impacted the court of appeals' flawed
interpretation of section 12-36-910(A). To me, the court of appeals' improper

2
More specifically, the majority correctly sets forth the Department of Revenue's
interpretation at length in its opinion, and I agree this is one reasonable interpretation
of section 12-36-910(A). However, I likewise find merit in Amazon Services's
(Amazon) position: Amazon did not receive "consideration" or "proceeds" from
buyers for third-party sales but, instead, merely served as a conduit for transferring
money from buyers to third-party sellers. Of course, the third-party sellers did pay
Amazon, but those payments allegedly were not consideration for particular sales
but, rather, fees that encompassed Amazon's provision of various services to the
third-party sellers, including advertising. Because there is some doubt as to whether
Amazon received consideration for any particular third-party sale—and, thus,
whether Amazon was "engaged" in the "business of selling tangible personal
property" within South Carolina—I believe both parties' readings of the statute are
reasonable.
3
Travelscape L.L.C. v. S.C. Dep't of Rev., 391 S.C. 89, 705 S.E.2d 28 (2011).
4
S.C. Code Ann. §§ 12-36-5 to -2695 (2014 & Supp. 2025).
interpretation of Travelscape is inextricably linked with its erroneous conclusion
that the statute is unambiguous.

I therefore respectfully dissent.

Acting Justice Courtney Clyburn Pope, concurs.