Attorney General Jackley to Lead National Attorney General Consideration of State Authority over Internet Sales
PIERRE, S.D. – Attorney General Marty Jackley announces that on Wednesday, August 2, 2017, he will head the Online Commerce and Taxes Forum at the Conference of Western Attorneys General annual meeting. Attorney General Jackley will be joined by Deborah White, Senior Executive Vice President and General Counsel for the Retail Industry Leaders Association, and Todd Lard, a partner at the international law firm Eversheds Sutherland.
“As most South Dakotans, I believe if there has to be a tax, it should be applied fairly and equally to everyone. Our local retailers are presently paying a sales tax that many out-of-state companies are able to avoid because of federal law. This is an unfair advantage to out-of-state companies that is hurting our main street businesses across South Dakota,” said Attorney General Jackley.
In the spring of 2016, South Dakota took the lead to bring tax fairness to main street businesses when the Legislature passed SB 106 and it was signed into law by the Governor. SB 106 requires out-of-state retailers, who meet a specified sales threshold, to be taxed the same as in-state retailers for sales made and delivered into South Dakota. It is estimated that millions of dollars of tax due on sales made by out-of- state internet retailers has not been remitted to South Dakota.
In support of the South Dakota Legislature and Governor, the Attorney General filed a lawsuit seeking declaratory relief in Hughes County. The prevailing federal law, as set forth in Quill Corp v. North Dakota, 504 U.S. 298, 112 S. Ct. 1904 (1992), provides that a state cannot require retailers who do not have a “physical presence” in the state to collect and remit the state sales tax. The purpose of South Dakota’s current litigation is to invite the United States Supreme Court to overrule Quill so that retail sales tax may be applied fairly to both internet and main street businesses.
On March 6, 2017, the State Court recognized, as it must, that it was bound by the United States Supreme Court precedent set in Quill. The court noted, significantly, that this was required “even when changing times and events clearly suggest a different outcome.” In 2017, more than 77 bills were introduced into the legislative bodies of two-thirds of the states, resulting in nine states passing new laws and several other states taking regulatory action.
The South Dakota Supreme Court has scheduled oral argument on South Dakota’s case for August 29, 2017, at the Capitol Building in Pierre. The Attorney General is pursuing an aggressive schedule to place this issue before the highest court. The Attorney General plans to apply for certiorari to the United States Supreme Court in October for it to be considered in conference before the end of the year.
The Conference of Western Attorneys General’s agenda highlights the issue’s importance:
The consumer shift toward online commerce has impacted how states are taxing digital products and services. In addition, states are more focused than ever on requiring remote sellers to collect/remit their sales taxes, passing a variety of new laws following four years of inaction by Congress since the Senate passed the Marketplace Fairness Act in 2013. This panel will discuss the states’ various efforts to broaden the sales tax base to include digital products and services and expand their ability to collect sales tax from remote sellers. Examples include: South Dakota approach/lawsuit, use tax reporting, and taxing video.