March 17th, 2017
The internet sales tax law that was recently enacted in South Dakota has been found to be unconstitutional by the South Dakota Sixth Judicial Circuit. The law, enacted in March of 2016, required retailers without a physical presence in the state to remit sales tax they had over $100,000 of sales or more than 200 transactions in the state.
This decision does not come as a surprise to many as it is in line with the 1992 Quill Corp v. North Dakota decision in which the U.S. Supreme Court decided a state cannot compel a business to remit sales tax across state boundaries. The fight is expected to continue to the U.S. Supreme Court in hope of overturning the Quill decision.
IREM supports the state’s ability to tax remote retailers. The Quill decision has created an uneven playing field that puts brick and mortar stores at a distinct disadvantage. Many consumers do not realize they are required to pay all applicable sales tax, even on remote sales. This has led to brick and mortar stores being reduced to showrooms while purchases are made online to avoid the tax.