South Dakota Marketplace Provider Sales Tax to begin March 1, 2019

South Dakota’s marketplace provider sales tax bill will go into effect on March 1, 2019.

If you’re a remote seller without a physical presence in South Dakota, then the sales tax rule went into effect on November 1, 2018.

From the South Dakota Department of Revenue’s website, remote sellers who exceed these thresholds are required to register, collect, and remit sales tax:

  • Your business’s gross revenue from sales into South Dakota exceeded $100,000; or
  • Your business made sales for delivery into South Dakota in 200 or more separate transactions

If you’re selling through Amazon FBA, then Amazon will likely collect and remit on your behalf. Speak to a tax professional if you believe you exceed the exemption for South Dakota or any other state.

While most states have $200,000 or 200 transactions, some states such as South Dakota have lower limits of $100,000 or 200 or more separate transactions. Some states may even have $100,000 or 100 transactions. See our link below for a collection of the small seller exemptions listed by state.

Most states have some kind of remote seller sales tax legislation based on an economic, rather than physical, nexus. That means nexus is defined through economic activity (gross sales), rather than physical presence.

South Dakota joins a growing list of states that are requiring marketplace facilitators to collect sales tax on sales. Many more states are considering legislation or have pending legislation regarding sales tax, so expect more changes in 2019.

Using SellerZen to automatically import orders from Amazon into QuickBooks Online? Simply add South Dakota as a sales tax agency in QuickBooks Online. We’ll create the proper documents so you can track sales tax collected for those tax agencies.

Read our article on 50-state list of remote seller and marketplace provider tax to get a compiled list of the states and their exemptions. You’ll also find direct links to the tax agency’s website so you can learn more.

Alabama and Iowa marketplace facilitator sales tax rule to begin on January 1, 2019

Both Alabama and Iowa will begin to require marketplace facilitators to collect sales tax on orders or report sales starting on January 1, 2019.

As with previous states, Amazon is likely to collect and remit your behalf if you sell through FBA.

Other marketplaces like eBay and Etsy have also followed suit by collecting sales tax on behalf of their sellers.

Don’t forget about Amazon’s Sales Tax Collection Fee, which is 2.9% of the sales tax collected. For example, if the order has a sales tax of $10, then you’d pay an additional sales tax collection fee of 29¢ on top of other fees for the order.

Alabama’s rule for remote sellers started on October 1, 2018. Alabama’s Department of Revenue (ADOR) states the following:

Remote sellers with annual Alabama sales in excess of the rule’s $250,000 small seller exception should register for the Alabama Simplified Sellers Use Tax Program (SSUT) and begin collecting no later than October 1, 2018.

The rule for marketplace facilitators is below.

In addition to the collection requirements for remote sellers, Ala. Act 2018-539 requires marketplace facilitators with Alabama marketplace sales in excess of $250,000 to collect tax on sales made by or on behalf of its third-party sellers or to comply with reporting and customer notification requirements. The Act mandates compliance with reporting or remitting requirements on or before January 1, 2019.

Read more from ADOR’s Sales and Use Tax Guidelines for Online Sellers.

Iowa’s Department of Revenue requires both remote sellers and marketplace facilitators to collect sales tax starting on January 1, 2019.

From the Iowa Department of Revenue’s website:

Effective January 1, 2019 marketplace facilitators and remote sellers that exceed a certain amount of revenue or transactions must charge Iowa sales tax, including local option sales tax, the same as retailers with a physical presence in Iowa.

The small seller exception for Iowa is a bit lower than Alabama’s exception:

has $100,000 or more in gross revenue from Iowa sales or makes 200 or more separate sales transactions into Iowa.

Alabama and Iowa join these states in requiring marketplace facilitators to collect sales tax or report sales:

  • Connecticut
  • Minnesota
  • New Jersey
  • Oklahoma
  • Pennsylvania
  • Washington

Other states are sure to follow in 2019, with South Dakota requiring marketplace facilitators to begin collecting or reporting on March 1, 2019.

Many sellers have a mix of FBA and FBM sales, and combined sales may meet or exceed the small seller exemptions for the states. Be sure to speak to a tax professional about your business.

Interested in a comprehensive list of remote seller and marketplace facilitator tax rules? Take a look at our 50-state list of remote seller and marketplace facilitator taxes.