SIOUX FALLS, S.D. (KELO) — It’s Cyber Monday and states like South Dakota are collecting sales taxes that were once out of reach.
The state had a remote sales tax on certain items in 2016. After a 2018 U.S. Supreme Court landmark court case, South Dakota vs. Wayfair, the remote sales tax was in full effect. As of Nov. 1, 2018, Remote sellers must license their business and remit applicable sales tax if the business meets one or both of the following criteria in the previous or current calendar year: Gross sales into South Dakota exceeding $100,000; or 200 or more separate transactions into South Dakota, according to the South Dakota Department of Revenue.
Before the state law, collecting sales tax on online sales was non-existent or nearly impossible. South Dakota’s win in court triggered similar laws in other states.
When people buy holiday gifts online, the state benefits.
“The sales tax collected from remote sellers accounts for about 8.2% of sales tax collections, Rachel Soulek, a marketing and communications specialist for the DOR, said in an email. “Any dollar collected is important to both the state and municipalities in funding the services provided.”
Sales and use tax, including the tax paid through remote sales, account for 63.6% of the state’s general fund revenue.
The Adobe Analytics report predicted $11.2 billion in Cyber Monday sales this year. Consumers spent $10.7 billion in 2021.
Based on how sales tax is reported by a remote seller, December tax amounts would likely show up in January in South Dakota.
“If a business reports on a monthly basis and has sales in December, those sales are reported on the December return which is filed Jan. 20,” Soulek said in the email.
In January of Fiscal Year 2021, remote sellers reported $12.1 million in state sales tax, according to the South Dakota DOR.
The DOR said another $4.2 million in municipal sales tax was reported by remote sellers.
In FY 2020, remote sellers reported $10.1 million in sales tax. The municipal reported portion was $3.7 million.
In December of FY2021, remote sellers reported $7 million in state sales tax, according to the South Dakota DOR.
Remote sellers reported $6.3 million in sales tax in December of FY2019, the first month the state processed returns.
FY2019, FY2020 and FY2021 data show high filed amounts in July as well.
In FY2021 remote sellers reported $9.2 million in sales tax in July. In FY2020, $8.5 million was reported.
While the remote sales tax contributes to state revenue, Soulek said it has another important function.
“More importantly than the tax collected, the requirement for remote sellers and marketplace providers to become licensed to collect and remit sales tax creates a more level playing field for all businesses selling products and services to consumers in South Dakota,” Soulek said in the email.