South Dakota court rejects law aimed at online sales taxes

[Judi Lynn]

Source: Associated Press


Updated 2:27 pm, Thursday, September 14, 2017

PIERRE, S.D. (AP) — South Dakota's Supreme Court on Thursday struck down a law that would require out-of-state retailers to collect sales taxes on in-state purchases — a defeat the state expected and welcomed in a case that eventually could have national implications for e-commerce.

Attorney General Marty Jackley hopes to persuade the U.S. Supreme Court to reconsider rulings issued mostly before the online shopping boom that exempt retailers from having to collect sales taxes in states where they have no physical presence. He said they give out-of-state online retailers an unfair competitive advantage over local retailers.

"Today's decision paves the way to respectfully request the U.S. Supreme Court to provide that much needed fairness to save main streets and jobs across South Dakota," Jackley said in a statement.
 
South Dakota has no income tax and depends heavily on sales taxes, and the state estimates it loses about $50 million in tax revenue annually to e-commerce. Jackley said the U.S. Supreme Court should particularly reconsider its 1992 ruling in a North Dakota case "in light of the extraordinary growth of the internet and the exponential technological advances that have been made in the last quarter century."

Read more: http://www.chron.com/news/us/article/South-Dakota-s-high-court-rejects-law-aimed-at-12197627.php

[bucolic_frolic]

1. SD Law is a cumbersome way to do it

penalizing sellers all across the country. What will they do, issue arrest warrants to people in NY who don't comply?

Here in PA taxpayers must report their out of state online purchases on their tax returns, and pay the sales tax. Trouble is they also tax the shipping! We pay sales tax on USPS postage! And compliance is a problem from what the state has said. Never understand why they just don't go the credit card and paypal route - the info is there for state revenuers to find.

[NutmegYankee]

3. Credit card and paypal won't show if taxes got paid or not.

It's just the final payment to the retailer and doesn't explain what was bought and for how much. The bigger issue is privacy and a lack of probable cause to pull any of that info. The state has to have probable cause for a warrant to compel these companies to turn over data. If citizens knew that the state was keeping tabs on their purchases, it would raise all kinds of alarm bells - Democracies don't keep dossiers on their citizens.

[bucolic_frolic]

4. I don't disagree with you

but let me play Devil's advocate

In PA, the final payment to the retailer is all that matters, except if item(s) are non-taxable. They tax it all.

The probable cause would be tax evasion. The state would say, just like speeding, everyone does it.

The state says based on income they know about how much people buy online from out of state with no sales tax collected. So you're saying they're just blowing smoke. I dunno.

In a tax audit, they can screen bank accounts, or paypal, for amounts received, no? And can match paypal activity with items purchased or sold, no? That's where push comes to shove.

[ToxMarz]

2. The current law only exempts retailers from acting as a free collection agency for the states sales

tax, as there is no coercive remedy available to the state to force out of state businesses to do their work for them. Residents are legally obligated to pay those taxes. Go after your deadbeat citizens with some harsh penalties for failing to report and remit their taxes, see how popular that is.