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South Dakota Supreme Court holds law challenging Quill's physical presence requirement is unconstitutional

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On Sept. 13, 2017, the South Dakota Supreme Court unanimously affirmed a circuit court’s decision that a law requiring certain remote sellers that do not have a physical presence in South Dakota to collect sales tax on sales made in the state is unconstitutional. The collection and remittance duties are triggered if certain gross revenue or transaction thresholds are met. In affirming the circuit court, the Supreme Court agreed that the law violates the physical presence requirement for sales and use taxes under Quill v. North Dakota and its application of the Commerce Clause. This is the first time that a state’s highest court has considered the constitutionality of legislation that disregards the physical presence requirement.