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PIERRE, S.D. (AP) — South Dakota officials are optimistic that a 1992 Supreme Court ruling saying sales taxes can't be collected from companies not physically present in the state can be overturned.
The Argus Leader (http://argusne.ws/2jZO0wS ) reports District Court Judge Roberto Lange ordered on Tuesday that a state-filed lawsuit requiring four out-of-state internet companies remit sales taxes to the South Dakota Department of Revenue be heard in state court. The order follows a legislative passage of a bill last year requiring some out-of-state internet companies to remit sales taxes on purchases in South Dakota.
The lawsuit was filed in state court against Wayfair, Inc. of Boston; Systemax, Inc. of Port Washington, New York; Overstock.com, Inc. of Salt Lake City; and Newegg, Inc. of City of Industry, California. But the companies asked Lange to move the proceedings to federal court, arguing that it belonged there because the issue dealt with a Supreme Court ruling and the Commerce Clause.
The state argued state court was the proper jurisdiction for a state tax issue, and Lange agreed.
Gov. Dennis Daugaard's chief of staff, Tony Venhuizen, said that the administration was pleased with the ruling but that it didn't have any further comment on pending litigation.
Earlier this month, Daugaard announced that online retail giant Amazon agreed to begin collecting state and local sales taxes on purchases in South Dakota.
Lange's ruling could move the case more quickly to the U.S. Supreme Court, which would give the state an opportunity to overturn the 1992 ruling. Still, the U.S. Supreme Court only takes a small number of cases each year, and an even fewer percentage are heard from state courts, said Jonathan Van Patten, a law professor at the University of South Dakota School of Law.
The state has at least one thing in its favor. Justice Anthony Kennedy wrote in a recent Supreme Court opinion about his desire to re-evaluate the 1992 decision, noting the evolution of consumer buying habits in the age of the internet.
"It's got a chance, particularly if one of the justices has signaled his interest in revisiting the issue," Van Patten said.
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Information from: Argus Leader, http://www.argusleader.com
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