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South Dakota Internet Sales Tax


 South Dakota sales tax could soon apply.

Update, 3.24.2016: SB 106, An Act to provide for the collection of sales taxes from certain remote sellers, has been signed into law. It takes effect May 1, 2016.

The South Dakota legislature has sent remote sales tax legislation to the governor’s desk for approval.

Senate Bill 106 provides for the collection of sales taxes from certain remote sellers. Any out-of-state seller who does not have a physical presence in South Dakota but who sells tangible personal property, products transferred electronically, or services for delivery into South Dakota is required to collect and remit sales tax provided one of the following criteria is met in the previous calendar year or the current calendar year:

  • The seller’s gross revenue from the sale of tangible personal property, any product transferred electronically, or services delivered into South Dakota exceeds one hundred thousand dollars ($100,000)
  • The seller sold tangible personal property, any property transferred electronically, or services for delivery into South Dakota in two hundred or more separate transactions

Why?

The bill includes a section outlining the motivation behind the bill. Eleven reasons are provided, including:

  • The inability to effectively collect sale or use tax from remote sellers who do business in South Dakota is “seriously eroding the sales tax base of this state, causing revenue losses and imminent harm to this state through the loss of critical funding for state and local services.”
  • 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.
  • In spite of the fact that use tax is owed on untaxed taxable transactions, “many remote sellers actively market sales as tax free or no sales tax transactions.”

Read more in SB 106.

Sales tax software (SaaS) like Avalara AvaTax helps businesses comply with sales and use tax laws in multiple states. Learn how it works.

photo credit: alles-schlumpf via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.