Governor might call special session over sales tax ruling

Wednesday, July 25, 2018

PIERRE, S.D. (AP) — South Dakota Gov. Dennis Daugaard might call a special legislative session after a recent U.S. Supreme Court ruling in the state’s favor that could yield millions of dollars in online sales taxes.

The governor’s chief of staff, Tony Venhuizen, said in an email this week that Daugaard has informed legislative leaders a special session might be needed later in the summer or in early fall to expedite the ruling’s implementation. Venhuizen was to discuss the financial implications of the high court ruling Wednesday with the Legislature’s budget-writing committee. The Republican governor doesn’t currently have proposals he’d like lawmakers to consider, but wanted to notify officials that new legislation could be required, Venhuizen said. House Majority Leader Lee Qualm, a Republican, said he needs more information about the changes that would be made and whether the issue can wait.

State lawmakers and a new governor will gather for the 2019 legislative session in January. Republican Kristi Noem and Democrat Billie Sutton are campaigning to succeed Daugaard, who cannot run again because of term limits.

South Dakota currently can’t enforce its requirement that out-of-state retailers collect sales taxes as state-level legal proceedings continue. The obligation applies to sellers outside the state who do more than $100,000 of business in South Dakota or more than 200 transactions annually with state residents.

It was a South Dakota case that led to the U.S. Supreme Court’s decision in June to overturn two decades-old high court decisions that have made it tougher for states to collect sales taxes for certain purchases online, a situation they said costs them revenues each year. South Dakota has estimated it loses about $50 million annually to e-commerce.

State law requires a 2016 sales tax hike for teacher pay be scaled back if the state is able to collect tax on the online purchases. Under the law, the state’s 4.5 percent rate is to be rolled back by one-tenth of a percent for every additional $20 million the state reaps, with a floor of 4 percent.