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Earlier this year South Dakota passed a law requiring out-of-state sellers with in-state sales over $100,000 or 200 individual transactions per year to collect and remit sales taxes to the state. The law was part of an effort by multiple states - including Alabama, Colorado and North Dakota - to draw a legal challenge that ultimately leads to the overturning of the U.S. Supreme Court’s 1992 decision in Quill Corp. v. North Dakota, allowing states to collect sales and use tax only from businesses with a physical presence within their borders.
E-commerce trade association NetChoice and the American Catalog Mailers Association obliged, filing a lawsuit against South Dakota two days before its sales tax law took effect. With that law calling for an expedited process through the state’s courts, Max Behlke, director of the Budget and Tax State-Federal Relations Department at the National Conference of State Legislatures, said, “The Quill issue could be resolved or confirmed by June of next year.”
But Behlke said if the Supreme Court rules against the state - which he doesn’t think will happen - “expect gross receipts tax to come to a state near you.” Many economists oppose the tax, which is similar to a sales tax but levied on sellers of goods and services instead of buyers, but Behlke said it’s a tax states know they can collect from online retailers that don’t have a physical presence within their borders. (BLOOMBERG BNA)