Battle over sales taxes on online purchases heads to Supreme Court

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WASHINGTON (CNN) — The debate about paying sales tax on online purchases is heading to the U.S. Supreme Court.

Big retailers like Amazon and Walmart collect sales tax on all online sales in the 45 states with a statewide sales tax. Many smaller retailers don't -- unless they have a physical presence in the state where the buyer lives.

But many of the sales these small retailers get are through bigger sites like Amazon and Walmart. That practice stems from a 1992 Supreme Court decision.

On Tuesday, the Supreme Court is scheduled to hear South Dakota vs. Wayfair to determine whether to overturn that 26-year-old ruling.

If it's reversed it could mean all online retailers have to collect taxes everywhere -- something brick-and-mortar have argued will level the playing field.

President Donald Trump has argued Amazon doesn't collect sales taxes -- even though the company does.

The Trump administration will join the oral argument in favor of online retailers being required to collect sales taxes everywhere.