Supreme Court sides with S.D. in online sales tax collection

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Supreme Court sides with S.D. in online sales tax collection

South Dakota earned victory in the argument over online sales tax collection.


In a 5-4 decision, members of the U.S. Supreme Court sided with South Dakota in its challenge that states can collect sales tax from online retailers. The high court’s decision comes two months after Attorney General Marty Jackley presented the state’s case that the inability to collect sales tax from online sales resulted in massive revenue loss and put local, in-state retailers at a disadvantage.


The trek to this point began in 2016 when the state legislature passed and Gov. Dennis Daugaard signed into law Senate Bill 106, which permitted the collection of sales tax from certain remote sellers, and continued in 2017 when the state began pursuing and signing agreements with online retailers to have sales tax remitted.


The voluntary agreements were a positive for the state’s revenue, but the federal ruling could have major ramifications, specifically related to the half-cent added to the state’s sales tax in 2016.


An amendment attached to House Bill 1182, which increased the state’s sales tax by a half-cent in order to raise additional revenue to increase teacher pay, among other things, calls for the reduction of the half-cent if revenue generated from online sales equals what is raised by the half-cent added.


Time will obviously tell if the revenue generated reaches the point of triggering the reduction clause, but the ramification on the state’s sales tax and revenue collection will be worth watching closely.


“The Supreme Court’s decision is beneficial to South Dakota and we commend the hard work of Sen. Deb Peters, Attorney General Jackley and all those involved in seeing the case through,” ASBSD Executive Director Wade Pogany said.


“We’ll need to monitor closely how this affects revenue collection as those figures play a major role in what schools receive in funding increases.”


For updates on revenue collection figures and other news affecting K-12 education, check the ASBSD Blog, Facebook page and Twitter feed.

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