south dakota

Facing 652% Interest Rates, South Dakota Voters Regulate Payday Lending

They joined the growing number of states that regulate the industry that critics say traps poor people in a cycle of debt.
BY  | NOVEMBER 9, 2016

In South Dakota, where payday loan interest rates average a whopping 652 percent and are among the highest in the nation, voters have struck back by approving a 36 percent rate cap.

With more than half of precincts reporting Tuesday night, results showed voters approved the move to regulate the industry by a margin of three to one. More than a dozen other states have enacted a similar cap on loan interest rates.

Critics of the payday industry say lenders prey upon low-income borrowers who are unable to access financing from mainstream banks. These borrowers, they claim, easily get trapped in a cycle of debt. Payday lenders, however, argue that they fill a critical hole in the economy by allowing people with poor credit to get emergency loans.

The push for the rate cap was led by South Dakotans for Responsible Lending, which also fended off a rival measure placed on the ballot more recently and backed by the payday lending industry. That measure proposed an 18 percent cap -- unless the borrower agreed to a higher rate. Opponents said the measure was intentionally misleading and would have essentially legalized sky-high interest rates for payday borrowers in South Dakota.

Like the Industry, Payday Loan Ballot Measures Mislead Voters

In South Dakota, two seemingly identical initiatives in November would have vastly different outcomes for consumers' interest rates.
BY  | AUGUST 24, 2016

Annual interest rates on payday loans in South Dakota are among the highest in the nation -- a whopping 652 percent on average. Yet the business is booming there with nearly 100 stores across the sparsely populated state.

Critics of the industry say lenders prey upon low-income borrowers who are unable to access financing from mainstream banks. These borrowers, they claim, easily get trapped into a cycle of debt. Payday lenders, however, argue that they fill a critical hole in the economy by allowing people with poor credit to get emergency loans.

South Dakota voters have the chance to regulate the industry in November. But two seemingly identical proposals that would have vastly different outcomes are complicating the effort to rein in high interest rate

In South Dakota, a Test Case for Online Sales Taxes

Provoked by legislators, online retailers have filed a lawsuit against the state that could have taxing consequences nationwide.
BY  | MAY 3, 2016

In a lawsuit that could have taxing consequences nationwide, online retailers are suing South Dakota for trying to collect a sales tax from them. If the suit makes it to the U.S. Supreme Court -- as many believe it will -- governments would finally get an answer to their long-awaited question of whether they can collect a sales tax from online purchases.

South Dakota lawmakers essentially provoked the suit by passing a law they knew would be challenged by retailers. The law allows the state to collect a sales tax on Internet purchases from remote retailers who have a so-called “economic presence” in the state. Retailers had to start complying with the law by May 1. It challenges a 1992 Supreme Court case that ruled states can only tax retailers who have a physical presence there.

“[Lawmakers] were intent on getting this to the U.S. Supreme Court, and we are obliging that intent,” said Steve DelBianco, executive director of NetChoice, a trade association promoting e-commerce and one of the plaintiffs in the lawsuit against South Dakota.

In Online Sales Tax Fight, States Adopt New Tactics

States are passing laws that -- they hope -- will lead to lawsuits that land the issue before the U.S. Supreme Court.
BY  | MAY 2016

Tired of waiting for Congress to approve a tax on Internet sales, nearly two dozen states are moving to pass bills or change regulations in ways that deliberately invite lawsuits from Internet retailers. The goal? Landing the issue before the U.S. Supreme Court.

On May 1, South Dakota became the first state to implement new legislation allowing it to collect a sales tax from out-of-state retailers who sell products over the Internet to South Dakotans. Because the legislation calls for an expedited path for judicial challenges, experts believe the law will produce a crucial first test case that the nation’s top court could take up as soon as the end of this year.

Putting the issue of taxing online sales before the courts is part of a new coordinated effort by state legislators across the country. All told, 34 bills in 22 states have been introduced this year that would allow states to collect sales taxes from remote retailers, according to the National Conference of State Legislatures. About a half-dozen of those bills have moved forward in some fashion.

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Panama Papers Unlikely to Lead to Reforms in Corporation-Friendly States

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A recent document leak revealed that four states were targeted by a Panamanian law firm to hide assets.
BY  | APRIL 13, 2016

States like Delaware and Nevada have long been criticized by transparency advocates for allowing Americans to use them as tax havens. But a recent document leak revealed that such corporation-friendly states may be helping foreign nationals hide potentially illicit assets as well.

Earlier this month, 11.5 million confidential documents were leaked from a Panamanian law firm, exposing how some of the world's richest people hide assets in shell companies to avoid paying taxes. It’s the largest leak in history, and among the so-called Panama Papers' many revelations was that the seventh most popular place to set up shell corporations was in Nevada.

More than 1,000 companies have used Nevada to hide their money. Delaware, South Dakota and Wyoming also emerged as popular places to stash cash.

Some of these states actively market themselves as quick and easy places to set up corporations. Take Nevada. Its website points visitors to its WhyNevada.Com to find out “why NV ranks as a top state for commercial filings," highlighting its favorable tax structure. Meanwhile, Delaware’s most recent financial report touted another record year for the number of new entities registered in the state. Delaware’s 1.1 million registered corporations outnumber the people who actually live there.

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The Week in Public Finance: States Dare Online Retailers to Sue, a Local Government Shutdown Threat and More

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A roundup of money (and other) news governments can use.
BY  | FEBRUARY 26, 2016

Don't Like It? Sue Me

Tired of waiting for Congress to approve a tax on Internet sales, more than a dozen states -- including Alabama, South Dakota and Utah -- are moving to pass bills or change regulations in ways that deliberately invite lawsuits from Internet retailers. The goal? Landing the issue before the U.S. Supreme Court.

Alabama, for its part, will start enforcing an old law it says allows it to tax out-of-state sellers. The state will audit companies that don’t file returns.

“We’re confident that some remote sellers will not comply and therefore it will lead to litigation,” Alabama Deputy Revenue Commissioner Joe Garrett told The Wall Street Journal. “We have been very open about what we’re doing.”