A South Dakota circuit court recently ruled against a law seeking to extend the reach of the state's sales tax. The law required out-of-state sellers meeting certain requirements to collect and remit sales tax.
As written, the law required out-of-state sellers to collect and remit sales tax if the sellers (1) made sales of $100,000 or more in South Dakota or (2) made 200 or more separate transactions in South Dakota.
The ruling against this law relies on a United States Supreme Court case known as Quill. According to Quill, a state may only require a seller to collect and remit sales tax if the seller has a physical presence in the state.
According to ruling, the requirements set forth in the law violate the physical presence requirement of Quill. The court therefore struck down the law. The state plans to appeal this ruling to the South Dakota Supreme Court.