Rounds Statement on Supreme Court’s Decision on South Dakota v. Wayfair

WASHINGTON—U.S. Sen. Mike Rounds (R-S.D.) today issued the following statement on the Supreme Court’s ruling on South Dakota v. Wayfair. The Supreme Court ruled in favor of South Dakota, paving the way for states to collect sales taxes from most online retailers.

“Today’s ruling is a victory for brick-and-mortar stores across South Dakota, who now have an opportunity to be on a level playing field with online businesses,” said Rounds. “With online sales growing at four times the rate of retail sales in recent years, the state and local governments in South Dakota are losing between $48 and $58 million annually. By opening the door for states to collect online sales taxes, local governments will be able to receive additional resources to help pay for the education of our kids, maintain safety nets for individuals who can’t care for themselves and reinvest in our communities.

“We congratulate South Dakota Attorney General Marty Jackley for his successful presentation before the United States Supreme Court.”

Rounds has been a longtime advocate for granting states the right to require that out-of-state businesses collect state sales taxes on purchases sold in South Dakota. He is an original cosponsor of the Marketplace Fairness Act of 2017.

Background: South Dakota v. Wayfair

• Today, The Supreme Court ruled 5-4 in favor of South Dakota, overturning a 1992 decision (Quill v. North Dakota) and paving the way for states to collect sales tax on goods sold within their borders from out-of-state online vendors.
• Quill v. North Dakota said that states could not collect sales taxes from retailers who do not have a physical presence in that state.
  • Individuals who made purchases in the state, through out-of-state retailers, were still separately responsible to pay a use tax, but it would not be collected at the point of sale.
  • The tax is often not paid, creating a tax loophole that treats out-of-state retailers different than local brick-and-mortar businesses, creating a price disadvantage.
  • Some have argued that the complicated tax structures of state and local governments make it difficult for online vendors to comply, however there are web-based programs available to make this a smooth and simple transaction when paying for the online goods.

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