What does the South Dakota Marketplace Facilitator law do?
Effective March 1, 2019, this law requires marketplace providers to register for a sales tax license and collect and remit sales tax on all sales into South Dakota if the threshold of at least 200 or more transactions or $100,000 in sales into the state is met.
How the law affects marketplaces
Under the new South Dakota law, a marketplace is considered to be a fulfillment service (Amazon FBA), a facilitator (eBay and Etsy), or a virtual classified ad (Craigslist). The marketplace will now remit sales tax if any of the above-mentioned thresholds are met. And, if a marketplace is remitting the sales tax, South Dakota sellers will not be responsible for remitting sales tax on sales made through that marketplace.
How the law affects remote sellers
Under the law, a remote seller is someone who:
- is a non-physical nexus seller
- sellers licensed through the Streamlined Sales Tax Project
Note: It’s important to highlight that this law applies only to online sellers who do not have physical nexus in the state of South Dakota. The purpose of economic nexus laws like this one are to require out-of-state sellers who were not previously liable to collect sales tax to be required to collect and add money to the state’s coffers.
Remote sellers who make at least $100,000 in aggregate sales to buyers in South Dakota, or 200 or more transactions in the previous 12 calendar months, are required to:
- Register for a South Dakota sales tax license and collect South Dakota sales tax.
- Once you register for a license, you’ll be required to file a return based on the frequency the state assigns you.
- If you’ve previously registered, you should remain registered and continue to file returns (even if you are filing a $0 return).
For more information about this law and how it affects your TaxJar reports, here’s our updated guide.
Will other marketplaces collect South Dakota sales tax on behalf of third-party sellers?
Each marketplace will determine their own course of action. Currently, Amazon, Walmart and Etsy have to-date agreed to collect sales tax on behalf of third-party sellers in South Dakota.
It remains to be seen if other marketplaces will announce that they are collecting South Dakota sales tax on behalf of third-party sellers on the platform. We’ll be following this story, so click the yellow “Subscribe” button at the bottom of this post for email updates.
Do you have questions or something to say about South Dakota’s new law? Start the conversation in the comments or over on our Sales Tax for eCommerce Sellers Facebook Group.