Can South Dakota Tax Online Buys? State Presses To Find Out

South Dakota is pressing for out-of-state companies to collect state sales tax on online purchases with a lawsuit against several remote retailers based on a law passed during the 2016 legislative session.

Two trade associations filed a lawsuit in state court Friday challenging the law’s constitutionality. It requires out-of-state sellers who exceed business thresholds to comply with state sales tax laws.

A 1992 Supreme Court decision bans states from forcing out-of-state retailers to collect taxes if they don’t have a physical presence there.

In a Thursday filing, the state said it ultimately wants the U.S. Supreme Court to overturn that decision.

The eCommerce trade group NetChoice says the state law could set the course for huge tax and administrative burdens on companies.

A state retailers association praised South Dakota’s lawsuit.

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