South Dakota: Sales Tax Handbook
What constitutes sales tax nexus in South Dakota?
One of the more complicated aspects of South Dakota sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of South Dakota, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in South Dakota, the vendor must register for a South Dakota sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in South Dakota.
Sales Tax Nexus in South Dakota
According to the law of South Dakota, all retailers who have tax nexus can be defined as "engaged in business". A seller is "engaged in business" if they have any of the following within the state's boundaries:
An office or place of business(directly or through any subsidiary), any employee or other representative, storing goods in a warehouse, determinant or temporary.
For additional details on sales tax nexus law in South Dakota, see the nexus information page from the Department of Revenue at http://www.salestaxsupport.com/sales-tax-information/sales-tax-by-state/overview-and-nexus/south-dakota/
Taxation of Internet-Based Sales in South Dakota
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Generally, South Dakota does not charge sales tax on Internet-based transactions determined to have nexus within the state. This means that purchases from Amazon.com and other Internet-based retailers may be sales-tax-free.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within South Dakota, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in South Dakota?
The folks at the sales tax compliance company Avalara are an approved South Dakota sales tax partner, and you can use their free South Dakota nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay South Dakota sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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