South Dakota – Retailers Sued Over Sales Tax Collections

SALT Report 3843 – The state of South Dakota has filed a lawsuit against four big online retailers seeking to force them to comply with a new state law that requires them to collect and remit sales tax even if they have no physical presence in South Dakota.

The state on Thursday sued Newegg Inc., No. 17 in the Internet Retailer 2016 Top 500 Guide; Inc. (No. 29); Systemax Inc. (No. 32); and Wayfair LLC. (No. 24) in a circuit court in Hughes County, where the state capital of Pierre is located. The suit seeks the court to affirm that South Dakota may require the four web-only retailers to collect and remit sales tax.

The lawsuit is explicitly aimed at forcing the U.S. Supreme Court to reverse its 1992 ruling in a case known as Quill Corp. v. North Dakota in which the high court rules that only a company with a physical presence in a state—such as a store, office or warehouse—could be required to collect sales tax from state residents. The lawsuit says in the first paragraph of the summary, “The State acknowledges that a declaration in its favor will require abrogation of the United States Supreme Court’s decision in Quill Corp. v. North Dakota.”

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