As states scramble to begin collecting sales taxes after the Supreme Court’s decision in the case of South Dakota v. Wayfair, one state that has not yet been able to begin collecting the tax is, of all things, the state of South Dakota itself. Those who have read the Supreme Court’s decision will remember that the decision did not actually formally approve South Dakota’s law and order the defendants to pay the taxes. Rather, the case was sent back down to South Dakota state courts to consider other potential objections.
In order to get around this problem, the Governor of the State of South Dakota has called a special session of the state legislature for September 12 and issued two draft pieces of legislation to allow the state to begin collecting taxes from remote sellers beginning on November 1, 2018.
Proposed Revenue Bill #1 would require collection of the sales tax by remote sellers except for the three defendants in the Supreme Court case. It will also revise the law so that the requirement to collect the tax cannot be required by the state before November 1, 2018, but would otherwise keep the provisions found in the bill that was the focus of the Supreme Court decision.
Proposed Revenue Bill #2 would add to South Dakota’s law a rule applying the collection requirement to marketplace sellers, a provision that other states have added to their remote seller collection rules. Under this bill a marketplace seller is defined as:
For the purposes of this Act, a marketplace provider is any person that facilitates a sale for a marketplace seller through a marketplace by:
(1) Offering for sale by the marketplace seller, by any means, tangible personal property, products transferred electronically, or services for delivery into this state; and
(2) Directly, or indirectly through any agreement or arrangement with third parties, collecting payment from a purchaser and transmitting the payment to the marketplace seller, regardless of whether the person receives compensation or other consideration in exchange for facilitating the sale or providing any other service.
Marketplace sellers are required to collect and remit sales taxes under the remote seller law.
Presumably the Governor hopes that this bill will be enacted by the Legislature in the September special session and thus those selling over $100,000 of product into South Dakota or with more than 200 transactions should plan to begin collecting tax in November.