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Governor submits bills for online sales tax special session

August 30, 2018

PIERRE, S.D. (AP) — Gov. Dennis Daugaard on Thursday submitted two bills for consideration during the upcoming special legislative session that would help implement a recent U.S. Supreme Court ruling allowing states to force online shoppers to pay sales tax.

The Republican governor said in a statement that the bills would let the state benefit from the “national tax fairness victory that we led.” The special session starts Sept. 12.

It was a South Dakota case that led to the U.S. Supreme Court’s decision in June to overturn two decades-old high court decisions that have made it tougher for states to collect sales taxes for certain purchases online. South Dakota estimated that it loses about $50 million per year to e-commerce.

One special session measure would allow the state to start collecting sales taxes from many out-of-state internet retailers on Nov. 1. South Dakota currently can’t collect such taxes because of an injunction in place under state law that would be lifted under the proposal, with the companies involved in the state’s case exempted as court proceedings continue.

The sales tax obligation applies to sellers outside the state who do more than $100,000 of business in South Dakota or more than 200 transactions annually with state residents under a law passed in 2016. A second bill would require marketplaces such as eBay to collect sales taxes for sellers on their platforms if the marketplace handles payments.

House Majority Leader Lee Qualm said he anticipates the proposals will pass, though changes could be made.

“I think it’ll be received pretty good,” Qualm said. “It gives us the ability to start collecting the tax.”

Lawmakers are also set to debate an unrelated third bill on the timing of the new governor’s inauguration in January. The state’s last special legislative session was held in 2017 to create rules governing the use of lakes on private land for recreation.

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