Noem Statement on Supreme Court Reviewing Online Sales Tax Collection

Noem Statement on Supreme Court Reviewing Online Sales Tax Collection

WASHINGTON, D.C. – Rep. Kristi Noem today issued the following statement, after the Supreme Court’s announcement that it will review South Dakota’s case regarding online sales tax collection:

“In the wake of today’s announcement, the need for legislative action on e-fairness is more urgent than ever before. If the Supreme Court rules in South Dakota’s favor, it could become a marketplace free-for-all. A South Dakota small business, for instance, could be forced to comply with 1,000 different tax structures nationwide without the tools necessary to do so. My legislation provides a necessary fix.

“The reality is that brick-and-mortar retailers, which provide thousands of jobs in our hometowns, have been closing at an alarming rate. State and local governments are similarly imperiled. Facing budget crises due to out-of-state retailers avoiding sales tax collection, states and localities are forced to raise taxes or consider levying new taxes, even after dramatically reducing spending. My legislation would remove the out-of-state retailer’s competitive advantage and level the playing field for our Main Street businesses. Moreover, it would protect small businesses and citizens alike from aggressive audits by out-of-state governments. The time for action is now.”

In 1992, the Supreme Court ruled inQuill v. North Dakota that states were prohibited from collecting sales taxes from out-of-state online retailers. Individuals were still liable to pay the tax, but it would not be collected at the point of sale. If South Dakota’s case is successful in the U.S. Supreme Court, Quill v. North Dakota will be overturned. As a result, businesses could be immediately responsible for collecting sales taxes from buyers and then remitting it to states. To add to the confusion, this requirement would be determined state-by-state. There would be no infrastructure in place to facilitate these transactions, however, potentially causing a free-for-all.

To put it in perspective, there are more than 1,000 different tax structures nationwide. A small business in South Dakota would need to be able to comply with each of them to sell nationwide – and they’d be subject to audits in each of these jurisdictions. There is software that can help figure these tax rates out, but the business is still liable if mistakes are made and that software could be cost prohibitive for smaller businesses.

Avoiding this free-for-all has been a focus of Rep. Noem’s since she was first elected, and she’s introduced legislation to manage the transition while protecting South Dakota small businesses. More specifically, H.R.2193, the Remote Transactions Parity Act, would:

  • Allow states to require remote sellers to collect sales tax from the buyer, according to the taxes owed in the buyer’s location. (essentially legislatively reversing Quill v. North Dakota)
  • Require states to provide software (free of charge) to businesses located within their borders. This software would be capable of figuring the buyer’s tax rate.
  • The businesses using this software would be largely protected from audit. Instead, it is the software provider that is subject to audits.
  • The legislation includes a phase-in period to ensure businesses have time to comply.

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20 Replies to “Noem Statement on Supreme Court Reviewing Online Sales Tax Collection”

  1. Small businessman

    Didn’t Noem sign on to the amicus brief supporting this appeal? Now it looks like she is saying it is a bad deal. We’ve been waiting for Congress to do something about this issue for over 25 years. Meanwhile, small businesses and states have suffered.

    1. Ike

      My biggest competitor is an online giant that operates at a 4.5%-6.5% advantage because they don’t charge sales tax like I have to for my local customers. Makes it tough some days. I wonder if Ms. Noem knows that there are simple, inexpensive software solutions that easily calculate sales tax across multiple jurisdictions. Judging by her comments, I’m thinking she’s clueless. You want to be governor? Stand up for local South Dakota businesses!

  2. Anonymous

    Noem understands the complexity of this issue. She is looking out for the best interests of South Dakota’s small businesses. I applaud her for her efforts.

  3. Anonymous

    It’s been an issue since 1992. Sure is getting some urgent Congressional attention now that it’s 2018…
    #sarcasm

  4. Truly sad

    It’s amazing how much work Noem us trying to get done now that she’s applying for a different job. Just imagine what she could have done if she thought she had to impress people for the last 7 years.

        1. KM

          What are the requirements for impressing you? If I research and list bills passed by Noem would that really get you excited? I bet not, because she’s not voting on bills or writing legislation the way you want her to. She votes pro-life and you’re not impressed because you’re pro-abortion, maybe it would go something like that?

          I’ve said it before, Kristi can vote more Liberal than my liking, but she has worked hard for SDakotans and all Americans. Everything she does up until the Governor’s race is called, is very crucial to her campaign. I’m pretty sure she and her staff know that.

          Thanks for your questions and comments;)

          1. Anony

            The research assignment is short. Prior to the last 12 months she has authored and passed one bill. That’s not impressive. She is fine as a follower, bit making her the last voice before an important decision is a bad call.

            1. KM

              I’m not interested in doing research for you, I was more interested in what it takes to impress you. Come to SDWC often and you’ll get to read about work she is doing in WH for all Americans. You could sign-up for her newsletter to be emailed to you. She’s also had some great, interactive tele-townhalls. See her picture posted, click on it for further info.

              No matter what I say, you won’t vote for her or consider changing your mind, I can read you’ve dug your heels in deep. I could probably pay you to vote Noem, but I bet Soros has already made an offer you can’t resist.

  5. The Sage

    The bottom line is that Rep. Noem has now been in congress for 7 years and has accomplished nothing on this tax fairness issue for brick and mortar businesses. Nothing. At. All.

    In the absence of any leadership from congress, Sen. Deb Peters got a South Dakota law passed that will now have its day before the Supreme Court. Rep. Noem has not earned the right to criticize anybody on this issue. She’s acting like a pundit here. She should be doing her job.

  6. The Sage

    To say it another way, Sen. Peters stepped in to fill the vacuum created by the absence of leadership from congress. She actually moved the ball forward because congress wouldn’t do it. A state legislator from South Dakota accomplished more on the national stage on this issue than Rep. Noem, who has accomplished nothing on this issue.

  7. Nonymouse

    I am pleased to live in a state with no income tax, but I really struggle with Republicans suggesting that we need to prop up uncompetitive businesses just because they employ people. The blacksmith may have been a nice guy, but I would rather drive a ford than ride a horse.

    1. duggersd

      It is one of those rare occasions where I actually agree with Ike. Being an “uncompetitive” business has little to do with the normal law of competition. It has more to do with your competitor being able to sell something for 5% to 6% less on the total than you do because that person does not have to charge a tax. If the main competitor is the company I believe it is, it also sounds like they are able to take advantage of the USPS in getting a discount rate. An even playing field is not unreasonable.
      When I worked for a company that was required to collect sales tax in the 1990’s there was software available that made it possible. If it was possible 20 years ago, it should be even easier today.

      1. KM

        Common ground is a productive place to land. Getting there without using insults or making false allegations is a way to keep the conversation moving forward. Thanks, duggersd.

  8. Rassilon

    Her press release smatters of “me too, I’m relevant” and has about as much substance as complaining about the drapery at the Ft. Meade VA Hospital. Precisely what is a “marketplace free-for-all,” and how is that a bad thing? Does that mean businesses on main streets in South Dakota would be making more sales, and that’s somehow bad? Does she know that 24 of the states are members of Streamlined Sales Tax Compact, and that it would be the protocol used in collections, absent her legislation? Does she realize that tax collectors have budgets too, and they will only go after those businesses which have the largest sales?

    Her internet sales tax bill was assigned to the Judiciary Committee and referred to a subcommittee that Trey Gowdy from South Carolina who, I believe, chaired last year. It’s curious that she could get Mr. Gowdy to appear at a fundraiser, but she can’t even get a hearing on her own bill. Politics before policy, I suppose.

  9. "Very Stable Genius"

    Since when is supporting, authoring, enacting, and signing into law a law that is knowingly at odds with current court precedence not itself a violation of ones oath of office, when a political leader swears to uphold the law?

    If you don’t like current law or a court precedence, there is an ethical and legal way to handle this, it is called a constitutional amendment. Or else you can wait for a third party incident to provoke, in a far more ethical and legal way, a constitutional question of a given legal concern or reality.

  10. Anonymous

    The simple fact is that if the challenge currently before SCOTUS is decided in favor of the states Noem’s legislation is critical. The mechanics of collecting and remitting sale and use taxes in multiple jurisdictions are daunting, despite the technological tools available.There really was little Congress could do prior to the determination by SOTUS as to the legality of state imposed sales tax on internet based businesses. This issue has been around for a long time. I remember when the state legislature looked at collecting sales tax from out of state catalogue companies in the late 70’s. The Austad family of Sioux Falls was the main opponent and were successful in their efforts to quash the concept.

  11. "Very Stable Genius"

    Thank goodness for a strong form of federalism, huh? It looks like states’ rights can’t cut the mustard alone on this one, huh?

  12. Anonymous

    I like that BOTH AG Jackley and Rep. Noem are approaching this difficult subject but from different directions…Neither route is easy…just because the case will be heard does not mean Jackley’s position will win esp as was pointed out 2 members voted against his position already (Kennedy–a key swing vote & Thomas a staunch conservative) & Noem has to pass it through Congress…never an easy task for any bill.

    We should be routing for BOTH of them, not just the one you favor for governor. Let them do the jobs we already elected them to do.