South Dakota’s law exempted out-of-state businesses with less than $100,000 in sales or 200 transactions in the state. In the majority opinion, Justice Anthony Kennedy said these small business exemptions would prevent an undue burden on interstate commerce.
But states have since enacted disparate rules, which as we warned are straining small business. As a case in point, the Kansas Department of Revenue will now require all out-of-state retailers to collect sales tax no matter how much business they do in the state. This includes college students selling used textbooks on eBay and retirees hawking a few hand-made greeting cards on Etsy .
Democratic Gov. Laura Kelly earlier this year vetoed an internet sales tax with a small-business exception that the GOP-controlled Legislature had included in a broader tax reform. The state agency then imposed the internet sales tax by fiat while claiming it lacked legal authority to exempt out-of-state small businesses, which are now hostages in a partisan brawl.