WASHINGTON — A closely divided Supreme Court struggled on Tuesday to decide whether internet retailers should have to collect sales taxes in states where they have no physical presence.
Brick-and-mortar businesses have long complained that they are disadvantaged by having to charge sales taxes while many of their online competitors do not. States have said that they are missing out on tens of billions of dollars in annual revenue under a 1992 Supreme Court ruling that helped spur the rise of internet shopping.
By the end of arguments on Tuesday, it was not clear whether there were five votes to overrule the 1992 decision, Quill Corporation v. North Dakota, which said the Constitution bars states from collecting sales taxes from companies that do not have a substantial connection to the state.
Several justices expressed concerns about imposing crushing burdens on small businesses that sell goods on the internet and about making them liable for back taxes. Justice Sonia Sotomayor said the case before the court, South Dakota v. Wayfair, No. 17-494, raised “a host of questions” and “a whole new set of difficulties.”
Sounding almost plaintive, she added that Congress, rather than the Supreme Court, was the right forum in which to settle the matter.
“Is there anything we can do to give Congress a signal that it should act more affirmatively in this area?” Justice Sotomayor asked.
But Chief Justice John G. Roberts Jr. said that “it would be very strange for us to tell Congress it ought to do something in any particular area.”
Both he and Justice Elena Kagan said the fact that Congress has so far chosen not to act was itself a telling indication that it was satisfied with the current system.
The chief justice added that the marketplace may already be addressing the problem.
“The bigger e-commerce companies find themselves with a physical presence in all 50 states,” he said, “so they’re already covered.”
The tenor of the argument was a surprise, as three members of the Supreme Court had indicated that they may be ready to reconsider the Quill decision. Justices Clarence Thomas and Neil M. Gorsuch have written about their uneasiness with the ruling and the constitutional justifications for it.
Justice Gorsuch seemed prepared on Tuesday to reconsider the Quill decision. “Why should this court favor a particular business model?” he asked.
In a 2015 concurring opinion, Justice Anthony M. Kennedy seemed to call for a fresh challenge to the decision.
“It is unwise to delay any longer a reconsideration of the court’s holding in Quill,” he wrote. “A case questionable even when decided, Quill now harms states to a degree far greater than could have been anticipated earlier.”
South Dakota responded to Justice Kennedy’s invitation by enacting a law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state. State officials sued three large online retailers — Wayfair, Overstock.com and Newegg — for violating the law.
“The South Dakota law is obviously a test case,” Justice Samuel A. Alito Jr. said on Tuesday. “It was devised to present the most reasonable incarnation of this scheme.”
“But do you have any doubt,” Justice Alito asked a lawyer for the federal government, “that states that are tottering on the edge of insolvency and municipalities, which may be in even worse position, have a strong incentive to grab everything they possibly can?”
The lawyer, Malcolm L. Stewart, who argued in support of South Dakota, did not disagree.
“Many states would adopt regimes that are less hospitable to retailers” if the court allowed them to require the collection of taxes, he said, “unless they were stopped from doing that by Congress.”
Justice Alito suggested that a decision from the Supreme Court could short-circuit a more nuanced legislative consideration of the issue. “As things stand now,” he said, “it seems that both the states and internet retailers have an incentive to ask for a congressional solution to this problem.”
Lower courts ruled for the online retailers in the South Dakota case, citing the Quill decision.
In recent weeks, President Trump has criticized Amazon for its tax and shipping practices. Amazon, which is not involved in the case before the Supreme Court, collects sales taxes for goods that it sells directly but not for merchandise sold by third parties. Critics said Mr. Trump’s critique was motivated by his displeasure with reporting from The Washington Post, which is owned by Amazon’s founder, Jeff Bezos.
At Tuesday’s argument, Marty J. Jackley, South Dakota’s attorney general, argued that the Quill decision did not make sense in the digital era. He said that the major practical problem it had identified — that it would be burdensome for out-of-state retailers to calculate and collect taxes for thousands of state and local jurisdictions — had been solved by modern software.
But that assertion was hotly disputed by George S. Isaacson, a lawyer for the three internet retailers, who said a ruling against his clients would impose burdens on small online merchants. A national solution, he said, should come from Congress rather than the Supreme Court.
Some justices complained that they lacked fundamental information about how hard it is to collect the taxes and how much money is at stake. The two sides, Justice Stephen G. Breyer said, were of little help. Estimates of how much it would cost internet businesses to comply with the tax laws of what were said to be 12,000 state and local jurisdictions varied from $12 to $250,000.
Justice Ruth Bader Ginsburg said there could be a market solution, too. “If we did overrule Quill,” she said, “entrepreneurs would produce software that would meet the market need.”