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Blue Nile Terminates South Dakota Business Over Tax Law

May 5, 2016 2:49 AM   By Rapaport News
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RAPAPORT... Blue Nile has stopped shipping to South Dakota in response to an “unconstitutional” new state law that requires online retailers to collect sales tax.

“South Dakota’s law is a direct contradiction to federal law,” a Blue Nile spokesperson said in a statement to Rapaport News. “Therefore, we made the difficult decision to temporarily suspend shipping to South Dakota until the contradiction can be resolved.”

The Remote Seller Compliance law, signed into force March 22, requires web retailers to collect the levy even if they do not have a physical presence in the state, according to a report by Internet Retailer. It applies to all retailers who exceed $100,000 in annual revenues or complete at least 200 electronic transactions in a calendar year. The tax rate is set to rise to 4.5 percent on June 1, from 4 percent.

The law aims to force the U.S. Supreme Court to reconsider a 1992 ruling that allowed online retailers to avoid collecting sales tax in most states, the report said. The case found that only a company with a physical presence in a state – such as a store, office or warehouse – could be required to collect sales tax from residents.

South Dakota, which sued four online retailers not including Blue Nile over the tax, admitted in the lawsuit that a declaration in its favor would require abrogation of the Supreme Court’s decision in the 1992 case, knows as Quill Corp. v. North Dakota, according to the report.

South Dakota’s Department of Revenue did not immediately respond to Rapaport News’ request for comment.
Tags: Blue Nile, financial, Rapaport News, South Dakto, tax
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