On October 2 South Dakota Attorney General Marty Jackley announced he filed a petition asking the U.S. Supreme Court to review the South Dakota Supreme Court decision regarding the online sales tax case, State of South Dakota v. Wayfair, Overstock and Newegg.
South Dakota is asking U.S. Supreme Court to overrule its 1992 decision (Quill Corp. v. North Dakota), which placed a physical-presence requirement as a precedent for collecting sales tax.
“The retail landscape significantly changed with the inception of the internet and access to online shopping. Federal law currently shields out-of-state businesses from remitting the same taxes as South Dakota businesses. Today the State asks the U.S. Supreme Court level to the playing field,” said Jackley in a statement issued by his office.
The South Dakota case is a result of the statute passed in the state in 2016 designed to create this legal challenge to Quill. The law requires out-of-state retailers to collect and remit sales tax if they transact more than $100,000 of business in the state or more than 200 sales. The law was advanced one year after U.S. Supreme Court Justice Anthony Kennedy recognized that, “[t]he Internet has caused far-reaching systemic and structural changes in the economy” so that “a business may be present in a State in a meaningful way without that presence being physical in the traditional sense of the word.”
Stakeholders watching this case are hopeful that the U.S. Supreme Court will grant cert for the spring 2018 session, which could give us a ruling by June of next year. ICSC is encouraged by comments from Justice Kennedy, who noted the significant economic harm that the sales tax base erosion has caused for state budgets and local retailers, writing that “it is unwise [for the U.S. Supreme Court] to delay any longer a reconsideration of the Court’s holding in Quill” and asked the “legal system [to] find an appropriate case for this Court to reexamine Quill.”