Remote Sellers

The United States Supreme Court issued a decision June 21, 2018, which permits South Dakota to collect sales tax from remote sellers. The South Dakota Department of Revenue is committed to keeping an open dialogue with the business community as we implement this historic decision.

While the U.S. Supreme Court ruled in South Dakota's favor, the South Dakota Department of Revenue is currently unable to enforce 2016's remote seller taxation law due to the State Circuit Court's injunction that is still in place. The U.S. Supreme Court’s decision set aside the South Dakota Supreme Court's decision and the case will return to the South Dakota court system for further legal proceedings.

It is expected the injunction will soon be lifted, requiring sellers meeting certain thresholds of sales or transactions into South Dakota to get a sales tax license. The South Dakota Department of Revenue is partnering with other states and the business community to ensure the transition is as smooth as possible once the law takes effect.

If you wish to voluntarily apply for your South Dakota sales tax license, click here.

Please watch this webpage for updates as they are available.

More Information

If you would like further updates on this topic, subscribe for our email updates.

You can also register for tax collection through the Streamlined Sales Tax Project.

To view a legal timeline of South Dakota v. Wayfair, click here.

To access the U.S. Supreme Court's opinion, click here.

 

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Frequently Asked Questions

Who is a remote seller?

A remote seller is a business without a physical presence in South Dakota. 



Do I need a South Dakota sales tax license?

Any business with a physical presence in South Dakota is currently and will continue to be required to be licensed for sales tax collection.

*South Dakota law also requires any business without a physical presence in South Dakota to obtain a South Dakota sales tax license and pay applicable sales tax if the business meets one or both of the following criteria in the previous or current calendar year:

  1. The business has gross sales into South Dakota exceeding $100,000; or
  2. The business has 200 or more separate transactions into South Dakota.

Gross sales or transactions include the sale of tangible personal property, any products transferred electronically, or services.

Note: These minimum thresholds do not apply to any business with a physical presence in South Dakota.

*While the U.S. Supreme Court ruled in South Dakota's favor, the South Dakota Department of Revenue is currently unable to enforce 2016's remote seller taxation law due to the State Circuit Court's injunction that is still in place. The U.S. Supreme Court’s decision set aside the South Dakota Supreme Court's decision and the case will return to the South Dakota court system for further legal proceedings.

For more information on these thresholds, click here.



Will the State of South Dakota go back and try to recover taxes that weren’t collected and paid on purchases made prior to the ruling?

No, the state cannot go back and retroactively collect sales tax from a remote seller. The state is legally precluded from enforcing retroactive tax collection on remote sellers per SDCL 10-64-6.



Once a business reaches the thresholds, will the state tax all of that company’s in-state transactions from the previous year?

Once a business meets either of the thresholds of SDCL 10-64-2 in the previous calendar year, the business is required to become licensed and remit South Dakota sales tax for the following year.
When a business meets either the thresholds of SDCL 10-64-2 during the current calendar year, the business is required to become licensed and remit South Dakota sales tax from that point forward.
However, the Department is legally precluded from enforcing retroactive tax collection on remote sellers per SDCL 10-64-6.



How does South Dakota’s remote seller law apply to third-party marketplaces and sellers on the marketplace?

Most third-party marketplaces are the not the seller of the products or services offered through the marketplace. Sellers making sales into South Dakota through a third-party marketplace are responsible for the South Dakota sales taxes that may be due. The marketplace is not responsible to collect sales taxes on behalf of the sellers on the marketplace.

If the third-party marketplace is the seller of the products or services, the third-party marketplace is responsible to become licensed and pay applicable sales taxes if the third-party marketplace meets either of the minimum thresholds.

For more information on marketplaces and sellers on the marketplace, click here.



What is the Streamlined Sales Tax Project?

The Streamlined Sales Tax Project provides businesses of all sizes the ability to simultaneously obtain a license, file and pay sales tax with the program’s 24-member states.

To learn more about the Streamlined Sales Tax Project, click here.


Still have questions?

You can connect with one of our business tax agents by clicking on the live chat button on the lower, right corner of this webpage.

You can also contact the South Dakota Department of Revenue toll free at (800) 829.9188(800) 829.9188 or by email at bustax@state.sd.us.

 



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