• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar

Alston & Bird Tax Blog

  • Home
  • Services
  • Contacts

South Dakota Takes NCSL Challenge, Enacts Sales Tax Nexus Law

March 24, 2016 By Andrew Yates

In February, we discussed how the National Conference of State Legislatures (NCSL) circulated a letter to all the states encouraging them to enact laws to challenge the physical-presence standard for sales tax nexus articulated in Quill v. North Dakota. On March 22, South Dakota heeded the NCLS’s call when Gov. Dennis Daugaard signed SB 106.

SB 106 imposes a sales tax collection obligation on out-of-state sellers “as if the seller had physical presence in the state,” provided that the seller meets one of two conditions: (1) the seller’s gross revenue from taxable products or services delivered into South Dakota exceeds $100,000; or (2) the seller sells taxable products or services for delivery into South Dakota in 200 or more separate transactions. The collection obligation attaches if a seller exceeds either of the thresholds in the current calendar year or the prior calendar year.

SB 106 makes clear that South Dakota intends to challenge Quill. Section 8 of the bill enacts a number of legislative findings, including the following: “As Justice Kennedy recently recognized in his concurrence to Direct Marketing Association v. Brohl, the Supreme Court of the United States should reconsider its doctrine that prevents states from requiring remote sellers to collect sales tax. . . .”

In addition, SB 106 creates procedures designed to expedite a legal challenge to its provisions. The state may bring a declaratory judgment action against any seller the state believes is subject to the bill’s provisions. Such an action creates an automatic injunction against enforcing the collection obligation while the case is resolved, and the case must be heard “as expeditiously as possible” by a court. Appeals go directly to the South Dakota Supreme Court, which must also hear the case expeditiously.

We will be watching to see how swiftly SB 106 creates a challenge to Quill. Though South Dakota is sure to act quickly, a viable legal challenge will require taxpayer who refuses to concede to South Dakota’s jurisdiction. We think one will come along sooner rather than later.

Maybe it’s you.

Filed Under: Sales and Use Tax, State & Local Tax, State Tax Litigation, Uncategorized

About Andrew Yates

Andrew Yates is an associate in the firm’s State & Local Tax Group. He focuses his practice on advising clients on state and local tax and regulation matters, as well as unclaimed property issues.

[Read Bio]

Primary Sidebar

As a service of Alston & Bird’s Tax groups, this blog focuses on current issues and events in international, federal, state and local tax and wealth planning of interest to business.

Subscribe

Receive email notifications when new posts are added.

Check your inbox or spam folder to confirm your subscription.

Tags

401(k) ACA Affordable Care Act audit BEAT CARES Act CFC Corporate Tax Planning covid-19 Delaware ERISA Escheat FATCA FDII Gift cards GILTI international tax IRA IRAs IRS Kelmar New York nexus OECD qualified plans Quill RUUPA SCOTUS Section 351 Section 355 Section 367 Section 385 section 482 section 965 State legislation Subpart F Supreme Court Tax Court Tax Cuts and Jobs Act tax reform TCJA Treasury Unclaimed property UP Wayfair

Secondary Sidebar

Categories

Recent Posts

  • Litigate, Legislate and Repeat: The Delaware Escheat Law Spin Cycle
  • Looking Back at Georgia’s 2022 Legislative Session
  • Diving into IRS’s Annual Report on Advance Pricing Agreements: Can APMA Overcome Its Sisyphean Task?
  • California Dreaming of a Voluntary Compliance Program
  • Testing for COVID and Your Kits for Free: Expanded Coverage of OTC COVID-19 Test Kits and Developments in Preventive Care

Archives

Copyright © 2022 · Alston & Bird · All Rights Reserved. Privacy.