South Dakota Supreme Court Overturns Sales Tax Law

South Dakota Supreme Court Ruling

Recently, a South Dakota Supreme Court ruling made headlines regarding state sales tax and online merchants.

On September 13, the South Dakota Supreme Court unanimously ruled that a 2016 state law requiring out-of-state merchants to pay state sales tax on goods and services purchased by state residents is unconstitutional.

The South Dakota state Attorney General, Marty Jackley, believes that internet sales tax is an outdated interpretation of the Commerce Clause, which states that the United States Congress shall have power to regulate commerce among the states. He hopes that the United States Supreme Court will pick up the case.

Interstate Commerce in the Digital Age

This is particularly important for South Dakota which does not have an income tax and relies heavily on sales tax collections.  The state Attorney General is confident that other states will join with South Dakota in its push for a new reading of interstate commerce in the digital age, especially as they continue to watch sagging sales tax collections hurt their local businesses.

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