State Court Case Moves Online Sales Tax Reform One Step Closer to Resolution

WASHINGTON— Earlier today, South Dakota’s state circuit court found a law that would have allowed the state to collect sales tax from online retailers unconstitutional.

Governors are not surprised by the decision found in South Dakota v. Wayfair, Inc. et al. For decades, the playing field has been stacked against Main Street and in favor of online merchants.

But today’s decision moves us one step closer to resolving this longstanding issue with broad bipartisan support.

The South Dakota law was designed to be challenged. In fact, the South Dakota court was “duty bound” to rule the law unconstitutional because of a decades-old U.S. Supreme Court precedent under Quill v. North Dakota. The court’s own words—“even when changing times and events clearly suggest a different outcome”—affirm that Quill hasn’t kept up with today’s modern economic and technological realities.

For years governors have fought to increase competition and level the playing field for online and Main Street merchants. We will continue to support federal efforts to modernize the marketplace by granting states the authority to collect what they are due and owed, but we are also tired of waiting.

The National Governors Association (NGA), the bipartisan association of the nation’s governors, looks forward to the eventual resolution of this case by the U.S. Supreme Court in favor of states and fair competition.