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S.D. Attorney General announces wide support for 'tax fairness' fight against online retailers

S.D. Attorney General Marty Jackley meets with President Donald Trump. Courtesy of the South Dakota Attorney General's Office

MITCHELL, S.D.—South Dakota will have a lot of support in its fight for "tax fairness" next month.

State Attorney General Marty Jackley announced Wednesday, March 7, that the majority of states and the executive branch back South Dakota's case against retailers Wayfair Inc., Overstock.com Inc., and Newegg Inc.

"We are pleased that President Trump and the 41 State Attorneys General have joined us in seeking tax fairness," Jackley said in a press release. "On April 17, 2018, I will appear before the United States Supreme Court and provide a strong and long-awaited voice for our main street businesses."

The case would help states like South Dakota collect sales tax from internet-based sellers that don't have a physical presence in the state. It also refers to the case of Quill Corp. v. North Dakota in 1992, which determined a taxable retailer must have a physical retail location in a state.

Jackley has argued the case "only sheltered the mail-order industry" at the time, but needs to be revisited due to the substantial growth of the internet retail market.

Last week, the South Dakota Retailers Association supported Jackley's effort via a court filing, noting that online retailers that have sales fewer than $100,000 annually or don't have 200 transactions with state customers per year do not have to collect and remit sales tax. And while state law says the consumer is required to submit and pay sales tax for items purchased online, most don't.

"Most consumers, frankly, do not know use taxes may be owed with online purchases," the association's court filing states.

The S.D. Retailers Association also argues the state is already at a competitive disadvantage in the industry and the slow growth in sales tax revenues has forced the state to increase its audit activities.

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