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Policies & IssuesOct 05, 2017
S.D. Asks Supreme Court to Take Up Online Sales Tax Issue
South Dakota’s attorney general wants the nation’s highest court to revisit the now 25-year-old ruling that impacts internet sales today.
Washington--South Dakota’s attorney general has filed a petition asking the U.S. Supreme Court to reconsider the ruling that stands in the way of allowing states to effectively collect sales tax from online sellers.
Quill Corp. v. North Dakota was handed down in 1992, prohibiting states from imposing sales tax requirements on vendors with no “physical presence” in the state.
In the petition, state Attorney General Marty J. Jackley states that the original ruling in Quill was made to ensure that undue burden wasn’t placed on national mail-order retailers that put them at a competitive disadvantage when compared with their brick-and-mortar competitors.
In the 25 years since the ruling, however, a lot has changed, and it is now states and brick-and-mortar retailers that are at a disadvantage, the petition argues.
It points out that today, billions of dollars’ worth of products are sold online each year, but state and local governments are missing out on tax revenues because they cannot require out-of-state sellers to collect tax.
The petition puts the annual revenue lost by South Dakota at somewhere between $21 million and $50 million-plus, a “huge sum in a small state.”
The Marketplace Fairness Coalition, which recently released a state-by-state accounting of lost revenue, calculates the losses nationwide at $211 billion through 2022.
In addition, brick-and-mortar retailers are losing business and being forced to cut margins to compete with online sellers that aren’t charging sales tax.
“Quill clearly needs to go,” the petition states. “After 25 years of technological progress and economic changes, it has proven entirely out of date.”
It asks the Supreme Court to revisit Quill and eliminate the physical presence requirement.
Jackley filed the petition Tuesday, one day after the Supreme Court’s current term began.
It originated from a law passed by the South Dakota state legislature that was ultimately shot down by the state Supreme Court but was, observers say, a deliberate attempt by state legislators to get the issue of internet sales tax in front of the Supreme Court.
The U.S. Supreme Court’s current term runs through June 2018, and oral arguments are scheduled to be heard until April 25, 2018.
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