The Supreme Court of the United States (SCOTUS) has ruled in favor of South Dakota in a case that establishes tax fairness between brick and mortar businesses and large, out-of-state online companies. The 5-4 ruling handed down today means South Dakota can require these large remote sellers to remit sales tax on purchases shipped into the state.
“To right one of the biggest wrongs that has happened to brick and mortar in retail history is probably the largest event that I have seen in my career,” stated Eric Sinclair of Montgomery’s Furniture of Sioux Falls, Madison and Watertown.
Before this ruling, remote sellers were not required to collect and remit sales tax on purchases unless they had a physical presence in the state.
“It’s almost a David and Goliath kind of a story, because South Dakota stood up for what was right for all the states and we prevailed,” said SDRA Board President Gary Cammack, owner of Cammack Ranch Supply in Union Center. “It will improve the revenue picture for all states across the US that depend on sales tax. It’s huge.”
The state of South Dakota had previously estimated an annual loss of approximately $50 million in revenue to the state and municipalities due to this loophole.
The South Dakota Retailers Association (SDRA) says this is a vital issue for Main Street retailers not only in South Dakota, but all across the nation. The Association’s leadership including former executive director, Shawn Lyons, played a pivotal role in the passage of the 2016 state law that led to the court case. The Association filed two briefs with SCOTUS in support of the State.
“This is absolutely a great day for brick and mortar retail,” said Dan Tribby of Prairie Edge in Rapid City. “It’ll forever be known as the day the field got leveled.”