Jackley Spins Sales-Tax Court Fight as Anti-Income Tax Crusade

A.G. Jackley chooses his words carefully in response to Dakota Free Press questions.
Marty Jackley, going to the Supreme Court to save you from a state income tax!

How does a candidate for Governor of South Dakota spin losing another court case? By telling South Dakotans he’s saving them from an income tax.

The South Dakota Supreme Court ruled Wednesday against the state and for online retailers who don’t want to collect tax on their sales to South Dakotans. Attorney General Marty Jackley asked the Court to rule against the state so the state could appeal to the U.S. Supreme Court as soon as possible. So in a way, at this intermediate stage, Marty won by losing.

But kicking the appeal to the federal level isn’t just about tax fairness, as the law in question has been branded. For candidate Jackley, it is about forestalling the advent of a state income tax:

Attorney General Marty Jackley announces the State of South Dakota is one step closer to bringing tax fairness to South Dakota retailers which would continue to sustain South Dakota’s status as an income tax-free state. The State Supreme Court agreed with Attorney General Jackley that, despite changing times, the Court was obligated to rule in favor of the defendants in State of South Dakota v. Wayfair, Overstock and Newegg [Office of the Attorney General, press release, 2017.09.14].

Our remote-seller sales tax is only partially about making far-flung Internet vendors pay sales tax just like our Main Street shops. That sounds too much like saying South Dakota government wants to raise taxes. For a guy running for governor, it sounds much more appealing to jump a couple of vital logical steps (does state government need more revenue? is sales tax from online vendors the only alternative to directly taxing incomes?) talk about crusading all the way to the Supreme Court to fight a state income tax.

14 Responses to Jackley Spins Sales-Tax Court Fight as Anti-Income Tax Crusade

  1. Nick Nemec

    Jackley wants to increase my taxes? One of the best parts of buying something online is sticking it to the man by legally avoiding sales tax. My little pleasures are getting fewer and farther between.

  2. Roger Elgersma

    To tax everyone the same is just plain fair. He should be for the tax without needing excuses.

  3. mike from iowa

    This is not an attempt to hijack the thread, but after London bombing Drumpf called for shutting down the internet-which includes Twitter. No internet, no internet sales tax. Marty loses again.

  4. bearcreekbat

    Nick, isn’t there some state law requirement to file a “use tax” return and pay the sales tax that the merchant did not charge? And doesn’t such a law make it a crime or administration offense to fail to file the “use tax” forms?

    If there is such a law, this seems to undermine the idea that we can “legally” avoid paying state sales tax on a purchase. Our current situation reminds me of the days when SD had an annual “personal property” tax and most of our citizens reported very little personal property. Indeed, that tax was generally referred to as our “liars tax” before it was repealed.

  5. mike from iowa


    Jackley and wingnuts missed the boat on this. In Wisconsin, if a lower court issues an injunction against a koproration, that korporation can appeal immediately to business friendly Wisconsin Supreme Court.

  6. Amazon and Walmart don’t own everything that they sell. They now have individual sellers and businesses who sell through them. If you buy from Amazon or Walmart, you pay the tax. If you buy from one of their sellers on their site, most if not all, do not charge tax. Each item shows who is selling the item, and sometimes there is even a list of these sellers on the right hand column. Lots of times they are selling the same product, like Levis, TVs or other name brand products.
    I don’t know how a tax on all those who sell on ebay would ever be collected, since there are thousands of sellers with some small individuals and some of them quite big showing sales of 5000 to 50,000 or more.
    A state income tax will collect from those buyers who have the money to spend and collect, “not so much” from those who don’t have that much money to spend. We could then get rid of the sales tax on food too.

  7. If the on-lone merchant (ie Watfair) has sold something to one person in the state, don’t they have a “presence?”
    … and therefore owe taxes?

  8. Bearcreekbat, you’re right about that use tax requirement. The vendor’s failure to collect the tax for us does not relieve the legal obligation to pay that tax. Of course, South Dakota doesn’t bother to send its tax cops after online buyers, so Nick’s little pleasure remains safe until and unless the Roberts/Gorsuch Court decides to overturn Quill.

    Besides, Marty can’t send out DCI to arrest a bunch of good upstanding citizens and more than he can admit he’s going all the way to the Supreme Court just to make us pay more taxes. He’s running for election. ;-)

  9. Buckobear, that argument about “presence” is what South Dakota is making with its law. More specifically, 2016 SB 106, the sales tax law in question, would do away with physical presence as the distinguishing criterion completely, declaring, “any seller selling tangible personal property, products transferred electronically, or services for delivery into South Dakota, who does not have a physical presence in the state, is subject to chapters 10-45 and 10-52, shall remit the sales tax and shall follow all applicable procedures and requirements of law as if the seller had a physical presence in the state….”

    Of course, 2016 SB 106 doesn’t trigger on one sale to one person… unless that sale exceeds $100,000. 2016 SB 106 requires remote sellers to collect sales tax if their gross revenue from sales to South Dakotans exceeds $100K or if they make 200 or more separate transactions with South Dakotans.

  10. MaryD mentions eBay… the state doesn’t impose sales tax on used items, does it?

  11. bearcreekbat

    Cory, indeed, it seems to be a Class 1 misdemeanor to fail to file a required “use tax” return.


    I wonder how many South Dakotans who fail to file the required “use tax” returns are among those people demanding that undocumented immigrants be punished or deported for their misdemeanor of unlawfully crossing the border or their administrative error for overstaying a visa. And I wonder how many of our non-filer South Dakota tax criminals project their criminality on immigrants by calling them “illegals.”

    It is strange how we South Dakotans (and folks from other states with similar tax laws) can be so hypocritical at times. It would be comical but for the harm and pain it causes to individuals and families when they are label “illegals” and their families broken up.

  12. As far as I know used merchandise is subject to a sales tax. There used to be a lady in my town that had a consignment shop/rummage in her home and she needed to have a sales tax license. The Salvation Army and Goodwill charge sales tax.
    I have not found anyone on ebay either in state or out of state that charges sales tax. Some sellers say if you are from such and such state, you are subject to tax. There are a few sellers from SD, but I have not bought from any of them. Usually, they are just small sellers here in South Dakota. I don’t know if small home bases SD seller should be subject to tax ID if they sold over $50.00?
    I was just wondering how it would be set up to have ebay sellers collect taxes. There are some really big sellers who do their whole storefront business set-up on ebay and a lot of it is new. Is refurbished considered new too? I don’t know. I’ve come across some with over 100,000 sales. That is not dollars, which would probably be more, but the 100,000 is actual sales. They sell computer parts, or returns from tv manufacturers, etc., or clothing returns from big companies. Possibly, that is why they don’t charge tax on Amazon.com either, because usually big sellers sell on ebay and Amazon. There would be a lot of taxes to be collected on ebay if internet sales are subject to tax even without a presence in South Dakota. Just do a search for a Samsung Tv or any other tv or computer or name brand clothes, shoes, etc. If not a SD presence this would all be taxable under a horrendous database or whatever to collect it.
    How in the world would the state be able to collect sales tax on every web based seller. There are millions of those and they have the status of “Google approved,” etc. State income tax …easy to collect.

  13. Ah! SD Administrative Rule 64:06:01:06 clarifies:

    Casual or occasional sales made by an individual who is not engaged in the business of selling at retail are not subject to the tax. Tax applies on sales made in the course of a regularly conducted retail business.

    Unless sales are of such a number, volume, or frequency as to indicate evasion of the tax, they are not taxable. A jobber or wholesaler who sells direct to a consumer is a retailer for that portion of the jobber’s or wholesaler’s business.

    Each case must stand upon its own facts, but good faith is required. Taxability is the rule rather than the exception, and the rule of reason applies.

    Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

    General Authority: SDCL 10-45-47.1.

    Law Implemented: SDCL 10-45-2.


    (1) A and her family are moving so she decides to sell some household items before leaving. She advertises that she is having a garage sale. She sells many of the things she advertised. She does not have to collect or remit sales tax on these items as she is a casual or occasional seller.

    (2) Every summer B grows vegetables which he sells at a roadside stand. He must collect and remit sales tax on these sales as he is not a casual or occasional seller, but rather holds himself out to the public as a retailer.

    If you sell junk from your garage this weekend, no tax. If you sell junk from your garage every weekend, tax.

    Likewise, I would assume, eBay. If you only put an item or two online to sell every now and then, probably no tax. But if you’re making a going operation of it and deriving regular income, tax.

  14. Bear, I appreciate the comparison to DACA. Who is more culpable, the child whose parents brought her here illegally and now must face the choice between remaining in the land she calls home or following the law strictly and exiling herself, or the individual who knows full well sales are taxable and chooses not to pay it?