Daugaard seeks to clear barrier to enforcing sales tax law
SIOUX FALLS, S.D. (AP) — Gov. Dennis Daugaard said Monday that he’s considering calling a special legislative session to remove a barrier to enforcing South Dakota’s requirement that many out-of-state internet retailers collect sales taxes.
The potential special session comes after a recent U.S. Supreme Court ruling in the state’s favor that opened the door for consumers to see sales tax on more online purchases from out-of-state companies. It sent the law back to South Dakota’s highest court to be revisited.
But the state currently can’t enforce the online sales tax requirement because of an injunction in place under state law until the case ends. The Republican governor said that if he calls a special session, he would seek in part to give the court flexibility to remove the injunction even if the case proceeds.
“If our opponents drag out the local court case in South Dakota, we could be in the paradoxical situation where we led the charge and all the other states are starting to collect, and we can’t,” Daugaard told the Rotary Club of Downtown Sioux Falls.
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, a situation they said costs them revenue each year. South Dakota has estimated it loses about $50 million annually to e-commerce.
South Dakota’s law 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.
Another topic of the potential special session could be creating a license for websites such as eBay that provide marketplaces for other merchants — but don’t sell products themselves — to collect sales taxes for the retailers that use the platforms.
Daugaard said the potential session could be in August or September.