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Paying Your Taxes For Online Purchases

December 4, 2012, 9:50 PM by Angela Kennecke

Paying Your Taxes For Online Purchases

The state of South Dakota is losing out on an estimated $60 million a year from residents shopping online and not paying sales tax. 

When you go to a site such as to buy Christmas presents, you may notice that you're not charged any state sales tax, and you may appreciate saving the money. But you're supposed to be paying at least four percent.

Currently only retailers who have a brick and mortar store in the state are required to collect sales taxes online. 

"Certainly see the difference when I do shop online.  With companies that have a business in South Dakota, so you pay online sales tax.  It doesn't make a difference in the way I shop, but it does make a difference to South Dakota,” Judy Buseman said.

"It's basically a fairness issue; People who have businesses in the state are collecting sales tax. It's only fair for out-of-state businesses do the same,” South Dakota Business Tax Director Doug Schinkel said.

While the law doesn't require merchants to collect it, it does say you the consumer should be paying the sales tax voluntarily. 

"I had no idea you were supposed to do that.  How do we know to do that?"  Teresa Buell said.

"We really have no way of monitoring them, catching them, so we do rely on the taxpayer to do that," Schinkel said.

The state Department of Revenue wants you to fill out a Use Tax Form and pay your state and city sales tax on your online purchases. 

"We have a lot of people who do that. It's on the honor system," Schinkel said.

But clearly, not enough are filling it out since the state is losing out on millions of dollars.  Now the state hopes Congress will do something about it and create a standardized sales tax for online sales. 

Now that you know about the law, you can easily fill out the South Dakota Use Tax Form online on the South Dakota Department of Revenue's website. has agreed to collect sales tax for California and within the first two weeks that amounted to more than $11 million.

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