The Supreme Court is considering a case that has ties in the Dakotas and which could greatly affect internet commerce.
Here is the issue: In 1992, the court - in Quill Corporation v. North Dakota - declared a state cannot expect to collect sales taxes from companies that do not have actual buildings in or physical connections to that state.
The timing proved unfortunate. In 1992, few would have predicted the coming wave of internet commerce and the effect it would have on brick-and-mortar businesses. Amazon used that loophole to gain a competitive edge and dominate the digital sales landscape. Downtown businesses - which pay property taxes, employ workers and spur local economies - were at an obvious disadvantage.
It's important to mention that since 2012, Amazon has opted to collect state taxes on sales of its own products. However, Amazon still does not collect sales taxes for third-party products, and most other internet companies do not collect any sales taxes.
Now, the issue rests with the Supreme Court, which earlier this week was undecided in this new case, titled "South Dakota v. Wayfair."
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Four points:
First, the court should side with South Dakota, which intentionally has chosen to be the bell cow for what could be a case with nationwide consequences. Our neighbors to the south enacted a law - requiring merchants to collect a 4.5 percent sales tax if the merchant does more than $100,000 in annual sales - that they fully knew would prompt a legal fight. This week, the Supreme Court is split and considering options. We hope the court sides with South Dakota, although we acknowledge that would overturn a court precedent - not an easy thing to do.
Second, the argument that new rules will doom internet businesses - as some claim - doesn't hold water. Opponents say it will be burdensome to try to collect sales taxes from thousands of local and state taxing jurisdictions. We believe South Dakota Attorney General Marty Jackley, who says modern software can solve such a problem.
Third, the Supreme Court must be the deciding branch, and not elected bodies such as Congress or legislatures. Justice Sonia Sotomayor this week wondered if instead Congress should decide, asking if there is "anything we can do to give Congress a signal that it should act more affirmatively in this area." Justice John Roberts replied that "it would be very strange for us to tell Congress it ought to do something in any particular area." We agree with Roberts.
Fourth, 40 states and President Trump side with South Dakota on this issue.
If people choose to purchase, say, a garden hose over the internet instead of at Terry's True Value in Cavalier, N.D., that's their prerogative. But they need to know their decision means they are not supporting a local business that employs community residents and pays taxes that help the school and community survive.
At the same time, the online seller certainly shouldn't be rewarded with an advantageous tax break that puts Main Street in peril.
