Marketplace Facilitators with Integral Transaction Control Are “Engaged in the Business of Selling” Under S.C. Code § 12-36-910(A)

Amazon Services, LLC v. South Carolina Department of Revenue (S.C. Sup. Ct. Mar. 18, 2026) — Opinion No. 28319 (Few, J.)

New operational rule from the Opinion: Under S.C. Code Ann. § 12-36-910(A), an entity can be required to collect and remit South Carolina sales tax on third-party marketplace transactions—even if it is not the statutory “seller” and does not itself transfer title—when its business model makes it integrally involved in each retail transaction (e.g., controlling core terms and execution of the sale). The “stopping point” is the distinction between integral control and merely incidental facilitation.

I. Introduction

This case concerns whether Amazon Services, LLC (“Amazon Services”), the operator of Amazon.com’s marketplace infrastructure, had a legal obligation in early 2016 to collect and remit South Carolina sales tax on retail sales to South Carolina customers made by third-party merchants listing goods on Amazon.com.

After an audit, the South Carolina Department of Revenue (“Department”) assessed Amazon Services $12,490,502.15 in unpaid sales taxes, penalties, and interest for the first three months of 2016, asserting Amazon Services was “engaged . . . in the business of selling” within the meaning of S.C. Code Ann. § 12-36-910(A). The Administrative Law Court (ALC) upheld the assessment, and the court of appeals affirmed in Amazon Servs., LLC v. S.C. Dep't of Revenue, 442 S.C. 313, 898 S.E.2d 194 (Ct. App. 2024). The Supreme Court of South Carolina granted certiorari and affirmed.

Contextually, the dispute arose in the pre-S. Dakota v. Wayfair, Inc. era of evolving state authority over remote commerce. But the decisive question here was not constitutional nexus; it was the meaning of South Carolina’s own statutory phrase “engaged . . . in the business of selling” as applied to a marketplace platform’s operational control of third-party transactions.

Key issues

  • Statutory liability: Did § 12-36-910(A) require Amazon Services to collect/remit tax on third-party merchants’ retail sales to South Carolina customers in 2016?
  • Interpretive framework: Is the statute unambiguous (so “literal meaning” controls), or is there “substantial doubt” requiring a taxpayer-favorable construction?
  • Role of precedent: What, if anything, does Travelscape, LLC v. S.C. Dep't of Revenue imply about interpreting the Sales and Use Tax Act?
  • Due process/fair notice: Did later “marketplace facilitator” legislation (Act 21 of 2019) make imposing 2016 liability an unconstitutional retroactive application?

II. Summary of the Opinion

The Court held that § 12-36-910(A) is unambiguous and that Amazon Services was “engaged . . . in the business of selling” because it designed and operated a marketplace system that made it integral to each third-party transaction. The Court emphasized the extensive control Amazon Services exercised through its Business Solutions Agreement, including price-related constraints, listing criteria, customer notifications, payment triggers, shipment communications, returns, and the disbursement of funds (after Amazon retained fees).

The Court rejected Amazon Services’ argument that only a statutory “seller” can be liable under § 12-36-910(A), reasoning that the word “seller” does not appear in that subsection and the inquiry is instead whether the taxpayer is “engaged . . . in the business of selling.”

The Court also clarified that Travelscape, LLC v. S.C. Dep't of Revenue does not stand for interpreting the Sales and Use Tax Act “broadly,” and reaffirmed that “usual rules of statutory construction apply” to tax statutes.

Finally, the Court rejected a due process challenge, holding that the Department applied the statute “as written” in 2016 and did not retroactively apply Act 21 of 2019.

Dissent

Chief Justice Kittredge dissented, concluding both parties offered “reasonable interpretations” of § 12-36-910(A). Under South Carolina tax-law precedent, he would have resolved the resulting “substantial doubt” in favor of Amazon Services.

III. Analysis

A. Precedents Cited

1. Constitutional and commerce-background cases

The majority referenced Quill Corp. v. N. Dakota and its overruling by S. Dakota v. Wayfair, Inc. to set historical context: early Amazon operations benefitted from the former physical-presence rule, while modern doctrine recognizes broader nexus standards. Critically, these cases did not decide the statutory meaning of “engaged . . . in the business of selling”; they explain why Amazon previously had no obligation absent physical presence, and why states later modernized approaches to taxing e-commerce.

Quill Corp. v. N. Dakota … overruled by S. Dakota v. Wayfair, Inc..

2. Ordinary meaning and definitional method

The Court anchored “engaged” in ordinary meaning, citing Branch v. City of Myrtle Beach for the principle that undefined statutory terms are interpreted by their “usual and customary meaning.” This reinforced the majority’s approach: start with statutory text, consult common meaning, and integrate statutory definitions (“business,” “sale”) already supplied by the Act.

“interpret the term in accord with its usual and customary meaning.” — Branch v. City of Myrtle Beach

3. Textual clarity versus construction

To justify stopping at the statute’s text, the Court invoked Centex Int'l, Inc. v. S.C. Dep't of Revenue (quoting Sloan v. Hardee) for the rule that when statutory terms are “clear and unambiguous,” courts apply the “literal meaning” and do not resort to construction. This citation functions as the majority’s gatekeeping move: once the Court labels § 12-36-910(A) unambiguous, taxpayer-friendly canons are treated as inapplicable unless ambiguity is first found.

“When a statute's terms are clear and unambiguous on their face, there is no room for statutory construction…” — Centex Int'l, Inc. v. S.C. Dep't of Revenue (quoting Sloan v. Hardee)

4. Taxpayer-favorable doubt canon (majority’s limitation; dissent’s centerpiece)

Amazon relied heavily on the “substantial doubt” principle, citing Alltel Commc'ns, Inc. v. S.C. Dep't of Revenue and Cooper River Bridge v. S.C. Tax Comm'n. The majority did not dispute the canon’s existence; it rejected its application by concluding Amazon’s proposed reading was not “reasonable” because it relied on words not present in § 12-36-910(A) (“seller,” and a requirement that the taxpayer receive consideration “for” the sale).

The dissent, by contrast, treated Alltel Commc'ns, Inc. v. S.C. Dep't of Rev., Cooper River Bridge, Inc. v. S.C. Tax Comm'n, and S.C. Nat. Bank v. S.C. Tax Comm'n as controlling once it found both sides’ interpretations “reasonable.”

“[A]ny 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
“In the enforcement of tax statutes, the taxpayer should receive the benefit in cases of doubt.” — S.C. Nat. Bank v. S.C. Tax Comm'n

5. Travelscape and the interpretive “broadly” debate

The Court addressed Amazon’s criticism of the court of appeals’ treatment of Travelscape, LLC v. S.C. Dep't of Revenue. The Supreme Court agreed that Travelscape does not instruct courts to read § 12-36-910(A) “broadly,” and stated that to the extent the court of appeals read it that way, it “erred.” The Supreme Court reinforced interpretive neutrality by citing Multi-Cinema, Ltd. v. S.C. Tax Comm'n (“usual rules of statutory construction apply”).

Notably, the majority then declined to engage Travelscape further, adding a parenthetical reference to a dissent in Books-A-Million, Inc. v. S.C. Dep't of Revenue characterizing Travelscape as “narrow and tailored to the facts.”

“The usual rules of statutory construction apply to the interpretation of tax statutes.” — Multi-Cinema, Ltd. v. S.C. Tax Comm'n
“Our holding in Travelscape was narrow and tailored to the facts of that case . . . .” — Books-A-Million, Inc. v. S.C. Dep't of Revenue (James, J., dissenting)

6. Due process / fair notice

On “fair notice,” the Court cited F.C.C. v. Fox Television Stations, Inc. for the general due process proposition that regulated parties must have fair notice of required or forbidden conduct. The Court held there was no retroactivity problem because the Department issued its determination before Act 21 existed and applied the 2016 statute as written.

“laws which regulate persons or entities must give fair notice…” — F.C.C. v. Fox Television Stations, Inc.

B. Legal Reasoning

1. The Court’s statutory hook: “engaged . . . in the business of selling”

The Court treated § 12-36-910(A) as the operative charging provision and framed the question narrowly: sales tax was indisputably due on the retail sales; the dispute was who had the obligation to collect/remit. It then parsed the key phrase “engaged . . . in the business of selling,” using:

  • Ordinary meaning of “engaged” (involved in activity; employ or involve oneself);
  • Statutory definition of “business” (activities for gain/profit/benefit, direct or indirect); and
  • Statutory definition of “sale” (transfer/exchange/barter for consideration).

The Court’s synthesis produced a functional test: a person is “engaged . . . in the business of selling” when it is integrally involved in taxable retail sales to obtain benefit (even indirect), not only when it holds title or is labeled the “seller.”

2. Application to Amazon’s marketplace structure: “integral involvement” as the differentiator

The Court emphasized the “comprehensive detail” and “tight control” imposed by Amazon’s Business Solutions Agreement and the operational reality that “a third-party transaction could not occur on Amazon.com without actions taken by Amazon Services.” The listed controls—price constraints, listing rules, notifications, payment initiation through Amazon Payments, shipping communications, returns, and fund disbursement—were treated not as ancillary services but as constitutive steps in the sale’s execution.

This factual framing matters: the Court did not announce that “platforms” in the abstract must collect tax; it anchored liability to a business model that embeds the platform as a necessary transactional actor.

3. Rejection of the “seller” detour

Amazon argued that because it was not a “seller” of third-party goods, it could not be subject to § 12-36-910(A). The Court’s response was textual: “seller” does not appear in § 12-36-910(A), so it cannot control the subsection’s reach. The Court thus separated:

  • Who is a “seller” (a defined term elsewhere), from
  • Who is “engaged . . . in the business of selling” (the charging phrase in § 12-36-910(A)).

4. The “stopping point” problem and the Court’s limiting principle

Amazon’s parade of horribles—payment processors, banks, delivery companies, advertisers—forced the Court to articulate a boundary. The Court located the boundary in the statute’s phrase itself: entities are covered when their involvement is integral (transaction cannot occur without them in that setting), and not covered when their role is incidental (helpful but substitutable and not required for the sale).

While the Court framed this as “plain language,” its practical contribution is a functional line-drawing standard likely to shape future disputes: the more the intermediary controls essential sale mechanics, the more it looks like it is “engaged . . . in the business of selling.”

5. Ambiguity, “reasonableness,” and the taxpayer-favor canon

The critical jurisprudential move is the Court’s conclusion that § 12-36-910(A) is unambiguous, which prevents the taxpayer-favor canon from doing work. The Court further held Amazon’s interpretation was not “reasonable” under Alltel Commc'ns, Inc. v. S.C. Dep't of Revenue because it imported requirements not present in the text—specifically, that the taxpayer must receive consideration “for” the sale at issue and that liability depends on “seller” status.

The dissent disagreed at precisely this hinge point: it found both readings reasonable (including Amazon’s contention that it acted as a conduit, paid via service fees not tied to particular sales) and therefore believed South Carolina precedent compelled judgment for the taxpayer.

6. Travelscape: correction without incorporation

The majority corrected the court of appeals’ suggestion that Travelscape, LLC v. S.C. Dep't of Revenue required “broad” interpretation of the Act, emphasizing interpretive orthodoxy (Multi-Cinema, Ltd. v. S.C. Tax Comm'n). Yet it declined to reassess the merits through a Travelscape lens. The dissent viewed that as insufficient, warning that the court of appeals’ interpretive error was “inextricably linked” to its unambiguity conclusion.

7. Due process/fair notice and Act 21 (2019)

Amazon argued Act 21 (2019)—which expressly addressed “Marketplace facilitators”—showed the earlier statute did not clearly impose facilitator collection duties and that applying such duties for 2016 was retroactive in effect. The Court rejected the framing: the Department issued its determination before Act 21 existed and applied the 2016 statute “as written.” Therefore, the Court found no due process “fair notice” violation under F.C.C. v. Fox Television Stations, Inc..

C. Impact

1. Substantive tax administration impact: pre-2019 facilitator liability

The immediate impact is that South Carolina can impose collection/remittance obligations on marketplace operators for pre-Act 21 periods under § 12-36-910(A), at least where the operator’s contractual and operational control makes it integral to each sale. This expands the Department’s ability to pursue assessments in historical periods (subject to limitations periods and other defenses not addressed in the Opinion).

2. Litigation impact: “integral vs incidental” becomes the central factual battleground

Future disputes are likely to focus less on labels (“seller,” “platform,” “facilitator”) and more on granular operational facts:

  • Who controls price parity or listing eligibility?
  • Who triggers payment capture and sets payment timing?
  • Who owns customer communications and dispute/returns processes?
  • Is the intermediary substitutable, or is it structurally necessary for the sale to occur as conducted?

The Opinion’s “stopping point” analysis invites a functional evidentiary record—contracts, platform rules, workflow proofs—rather than formalistic entity-status arguments.

3. Interpretive impact: limits on “broad reading” rhetoric

The Court’s explicit clarification that Travelscape, LLC v. S.C. Dep't of Revenue does not command “broad” construction may curb argumentative shortcuts in tax cases. Even so, the case also highlights an enduring tension in South Carolina tax jurisprudence: (i) strict textualism when clarity is found, versus (ii) robust application of the taxpayer-favor doubt canon when reasonableness is conceded on both sides.

4. Policy/legislative impact: Act 21 as “clarifying,” not necessarily “creating,” duties

Although Act 21 is not applied here, the Court’s holding reduces the force of arguments that Act 21 necessarily created new obligations. Instead, Act 21 may be treated (in some contexts) as “further inform[ing]” facilitators of requirements that could already exist under earlier text—especially where platform control resembles Amazon’s 2016 model.

IV. Complex Concepts Simplified

1. “Engaged . . . in the business of selling” (what the Court made it mean in practice)

Think of this as a “how central are you to the sale?” test. The Court treated Amazon Services not as a passive billboard for third-party sellers, but as a necessary operator whose rules and systems execute the sale end-to-end. That level of involvement was enough to make Amazon “engaged” in selling, even if another party owned the inventory.

2. “Seller” vs. “engaged in selling”

A statute can impose duties using different concepts. Here, § 12-36-910(A) imposes the tax on “every person” engaged in the selling business. The Court said that does not depend on fitting the separate defined label “seller” found elsewhere.

3. The “taxpayer-favor canon” (resolving doubt for the taxpayer)

South Carolina recognizes a rule that if a tax statute is genuinely ambiguous—reasonably read both ways—courts should not extend tax liability by doubtful implication. The majority avoided the canon by finding no ambiguity (and deeming Amazon’s reading not “reasonable” because it added requirements not in the text). The dissent would have applied the canon because it found both interpretations reasonable.

4. “Fair notice” due process

Due process requires that regulated parties have reasonable notice of what the law requires. Amazon argued a 2019 law showed 2016 obligations were unclear. The Court responded: regardless of later legislation, the Department applied the 2016 statute as written, and did so before the 2019 law existed—so there was no retroactive application.

V. Conclusion

The Supreme Court of South Carolina affirmed a substantial assessment against Amazon Services by holding that, in 2016, Amazon Services’ marketplace design and contractual control made it “engaged . . . in the business of selling” under § 12-36-910(A), obligating it to collect and remit sales tax on third-party merchant sales to South Carolina customers. The Court supplied a practical limiting principle—the divide between integral transactional control and incidental services—while also clarifying that Travelscape, LLC v. S.C. Dep't of Revenue does not license “broad” interpretation of the Sales and Use Tax Act. The dissent underscores that future cases may turn on whether courts perceive genuine ambiguity and thus apply (or bypass) South Carolina’s longstanding taxpayer-favor doubt canon.