The president has made a commitment to U.S. Rep. Kristi Noem that her bill requiring online sellers to collect sales taxes will be passed into law this year, Noem said Wednesday in Rapid City.
Meanwhile, one of Noem’s opponents in this year’s gubernatorial race, fellow Republican and Attorney General Marty Jackley, is seeking a U.S. Supreme Court decision that would achieve the same goal.
Whichever candidate succeeds first could receive credit for helping to capture millions of dollars in lost revenue for the state and for city governments. But if either or both fail, they could suffer blame for failing to deliver.
Noem, R-S.D., said she received a commitment from President Donald Trump during a recent meeting at the White House. She said the meeting also included Vice President Mike Pence, Treasury Secretary Steven Mnuchin and White House staffers Rick Dearborn and Marc Short.
“They all committed to me that we were going to get my bill passed in ’18 here,” Noem said. “I told them that I would remind them of that daily.”
Noem’s comments came during a meeting with about a dozen community leaders at Black Hills Bagels, one of two gatherings she organized in Rapid City to talk about the tax-reform legislation that she recently helped pass into law.
The focus during the Black Hills Bagels meeting turned to sales taxes when newly appointed state Rep. Michael Diedrich, R-Rapid City, asked Noem what she is doing at the federal level to help collect sales taxes from online retailers.
South Dakota depends on sales taxes to fund much of its budget for state government. But as sales have migrated from local stores to the internet, some online sellers who are based outside of the state have refused to collect sales taxes. The exact amount of the revenue lost annually by the state and cities is unknown, but Gov. Dennis Daugaard mentioned one estimate of $50 million last month during his budget address to legislators.
Legislators passed and Daugaard signed a law in 2016 that would require online sellers to collect sales tax, and litigation ensued with online retailers Wayfair Inc., Overstock.com and Newegg Inc. The state of South Dakota has asked the U.S. Supreme Court to consider the case.
Noem said Wednesday that she hopes to pass her bill, H.R. 2193, the Remote Transactions Parity Act, before the Supreme Court decides whether to intervene.
“If that gets taken up by the Supreme Court, we could be in a situation where people will say, ‘Well, we shouldn’t act on this while the Supreme Court’s deciding,’ and that does put us months into delay,” Noem said.
Jackley is representing the state in the court case. Like Noem, he was in Rapid City on Wednesday, where he met with local law enforcement officials and the media at the Public Safety Building to talk about his package of bills for the 2018 legislative session.
In a Journal interview, Jackley said Congress could have resolved the sales-tax issue with legislation anytime since at least 1992, when a U.S. Supreme Court decision stymied North Dakota’s attempt to collect sales tax from an out-of-state retailer. Jackley said he welcomes Noem’s effort to solve the problem legislatively, even as he attempts to solve it in the courts.
“I am supportive of that,” Jackley said of the legislation, “but again, I recognize that they’ve been talking about this since 1992, and we would need something to actually pass.”
Jackley also noted that Noem signed a legal brief, along with one other U.S. representative and four U.S. senators, that was submitted in November in support of the state’s petition to the Supreme Court.
Gov. Dennis Daugaard, who is term-limited after this year, is supportive of any solution that would require out-of-state online sellers to collect sales taxes. That’s according to Tony Venhuizen, the governor’s chief of staff, who spoke to the Journal by phone Wednesday.
“The governor just wants to see this fixed,” Venhuizen said. “If Congress is able to fix this, that would be great, and if the Supreme Court takes action to fix this, that would be great.”
Jackley said he could know as soon as next week whether the Supreme Court will take up the sales-tax court case. If the court accepts the case, Jackley said, he would hope to argue the case in April and receive a decision before the court’s summer break.
Noem said her bill has been blocked so far by Rep. Bob Goodlatte, R-Va., who has not allowed the bill to pass out of the House Judiciary Committee that he chairs. Noem said she is considering “nuclear options,” such as a maneuver known as a discharge petition, to force the bill onto the House floor.
“I think with the president’s help and the vice president’s help, we won’t have to utilize that, but that’s always on the table,” Noem said, “and I’ve informed all of my leadership and the White House that those are all options I’m looking at.”