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South Dakota Circuit Court holds law challenging Quill’s physical presence requirement is unconstitutional

On March 6, 2017, the South Dakota Circuit Court for the Sixth Judicial Circuit granted a motion for summary judgment and held 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. The circuit court held 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 court has considered the constitutionality of legislation that disregards the physical presence requirement.