South Dakota Tax Nexus
Businesses with nexus in South Dakota are required to register with the South Dakota Department of Revenue and to charge, collect and remit the appropriate tax.
Generally, a business has nexus in South Dakota when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives. However, out-of-state sellers can also establish nexus in the ways described below.
South Dakota nexus for out-of-state sellers
Having a certain amount of economic activity in South Dakota could trigger nexus under Senate Bill 106, which creates a tax obligation for out-of-state sellers meeting one of the following criteria in the previous calendar year:
- The remote seller’s gross revenue from sales of taxable goods or services delivered into South Dakota exceeds $100,000
- The remote seller has at least 200 sales of tangible personal property or services delivered or transferred electronically to South Dakota customers
The South Dakota Legislature finds this law to be necessary for numerous reasons, including the fact that the “inability to effectively collect sales or use tax from remote sellers… is seriously eroding the sales tax base of this state,” and the “harm from the loss of revenue is especially serious in South Dakota because the state has no income tax, and sales and use tax revenues are essential in funding state and local services.”
Use tax notification requirement
Since July 2011, South Dakota has required “all non-collecting retailers with annual gross sales into South Dakota of $100,000 or more to give notice to customers on the billing statement and receipt that South Dakota use tax is due to the South Dakota Department of Revenue on non-exempt purchases of tangible personal property, services, and products transferred electronically.”
See Senate Bill 106 and the Department of Revenue’s notices Remote Seller Compliance and South Dakota Sales Tax Public Notice for Non-Collecting Retailers.