South Dakota – State Vows To ‘Educate, Then Enforce’ On Remote Seller Sales Tax

PIERRE — The South Dakota Department of Revenue recently asked the state’s citizens to report online retailers who aren’t collecting sales taxes, and to make sure that citizens themselves are paying the tax on goods they buy if the seller doesn’t collect it for them.

By state law, if a business does not collect the sales tax when a purchase is made online, South Dakotans still owe use tax to the state. The same is true if a South Dakotan buys something, a car for instance, out of state. In both cases it is up to the citizens themselves to pay the use tax on the item.

Until November, South Dakota could not collect on remote seller sales tax. In 2016, the state legislature passed a law aimed at challenging a longstanding Supreme Court precedent that banned states from collecting sales taxes from remote sellers. That 2016 law sparked a lawsuit that eventually caused the court to overturn its decades-old decision. In September, the Legislature met in special session to update the 2016 law.

Officials with the Department of Revenue faced the state Legislature’s Interim Joint Committee on Appropriations Dec. 3 with an update and to answer questions concerning Online Sales Tax enrollees.

Andy Gerlach is the secretary of the S.D. Dept. of Revenue. Doug Schinkel, director of business tax, gave the presentation. Information was supplemented by Wade LaRoche, public affairs manager, and Morgan Gruebele, policy analyst.

On Nov.1, the state began requiring remote sellers who meet certain criteria to be licensed and remit applicable taxes. South Dakota’s remote seller law applies to businesses without a physical presence in South Dakota that in the previous or current calendar year either earned a gross revenue from sales into South Dakota that exceeds $100,000 or the business made sales for delivery into South Dakota in 200 or more separate transactions.

Schinkel said, as of Dec. 3, there were 1,060 active licenses issued to online companies.

“These are companies that have come forward. But we know there are others out there, not forthcoming, and we need to find them,” Schinkel said. To do that, he said he is anticipating the need for more staff.

“Yeah, there is going to be a need,” Schinkel told the Appropriations Committee.

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Yankton Daily Press & Dakotan
by Del Bartels
Capitol Bureau
December 7, 2018