WILLIAMSVILLE, N.Y. - It's just your friendly, neighborhood sporting goods shop: JB Tennis on Main Street can fix your racket if the strings came loose, or the staff will sell you gear off the rack if you need to prepare for an upcoming match.
But this small business, which first opened in Western New York in 1994, has also adapted with changing technology.
A significant portion of its sales now come from out-of-state buyers over the Internet; these are people looking for a bargain because they don't have to pay sales tax on the purchase.
Based on judicial precedent set in 1992, current federal law doesn't require all businesses to collect sales tax from their customers' home states if they don't have a physical headquarters or warehouse there.
Phil Primerano, a manager at JB Tennis, said the store has attracted a large customer base in California because it offers a cheaper alternative than local businesses.
"Our second-most shipped state is California, because people try to avoid paying sales tax from this major competitor," Primerano said. "So they'll come to a store likes ours and order from us."
Twenty-five years after the current law was solidified, though, the state of South Dakota is now leading the opposition charge — all the way to the United States Supreme Court.
The nation's highest court will begin hearing arguments Tuesday in the South Dakota v. Wayfair case, in which South Dakota argues online retailers must be subject to state and local sales taxes in the buyers' states. The U.S. Accounting Office estimates that governments lost out on $13.4 billion in tax revenue last year as a result of the current law.
States like South Dakota say it's unfair for online retailers to skirt sales taxes, which may give them an unfair advantage over a small mom-and-pop store in the local community.
Amazon probably comes to mind immediately, but that company actually charges sales tax in almost every state now. In New York, state law requires large retailers like Amazon to collect sales tax, but third-party sellers through the Amazon Marketplace may not be subject to the tax.
Mark Bartholomew, a professor of law at the University at Buffalo, said New York's laws are stringent when it comes to online sellers and sales tax (They could have been more stringent: Gov. Cuomo proposed the Internet Fairness Conformity Tax in the 2019 state budget, but lawmakers didn't include it in the final document).
Still, the Supreme Court's decision could have major implications here.
"New York has taken an aggressive tone, saying, 'we don't care if you have a physical presence. If you advertise in New York, even if you don't have that brick-and-mortar store, we're going to charge sales tax,'" Bartholomew said. "What the Supreme Court decides could really determine whether New York can engage in that kind of practice, charging sales tax even when there isn't a physical presence in New York state."
Bartholomew said smaller online retailers could face serious challenges if the Supreme Court rules in favor of the states, simply because those companies would be subject to 12,000 new state, county and local tax laws across the United States.
At JB Tennis, Primerano said he's not necessarily enthused about the possibility of losing his sales tax advantage with out-of-state buyers, but he also doesn't think the court's decision will have a major impact either way.
He does, however, think it could help some other local stores.
"It's not something we're worried about or we're looking forward to. I don't think it's gonna change our business a ton," he said. "I think for some smaller stores, that aren't online, it might increase their business a little bit."
The Supreme Court is expected to issue a decision this summer.