South Dakota Enacts Bills for Affiliate Nexus and Remote-Seller Reporting Requirements

South Dakota Governor Dennis Daugaard signed an “affiliate nexus” bill into legislation as well as legislation regarding remote-seller reporting requirements. Under the new “affiliate nexus” law, a retailer is considered to be selling tangible personal property, services, and products transferred electronically for use in South Dakota if they hold a substantial interest in, or are owned by, a South Dakota retailer and the retailer sells the same or a substantially similar line of products under the same or a similar business name, or the in-state facility/employee is used to advertise, promote, or facilitate sales to a South Dakota consumer. The same goes if the retailer holds a substantial ownership interest in or is owned by a business maintaining a distribution house, sales house, warehouse, or similar place of business in South Dakota that delivers items sold by the retailer to consumers. The legislation also states that the electronic processing of orders does not relieve a retailer doing business in South Dakota of its responsibility to collect tax from the purchaser. The legislation also creates a rebuttable presumption that any retailer that is part of a group with a component member that is a retailer in South Dakota is also considered to be a retailer in South Dakota. In addition, any retailer making sales to South Dakota customers by mail, telephone, internet, or other media that has a contract with an entity to perform installation, maintenance or repair services for the retailer’s purchasers in South Dakota is included in the definition of “retailer.” The other bill that the Governor signed into legislation requires that out-of-state retailers that sell tangible personal property, services, or products transferred electronically for use but aren’t registered to collect and remit sales and use tax must notify customers that they must pay and report South Dakota use tax on their purchases. The notice must be readily visible. The following information must be included on the notice: the retailer is not required to and does not collect South Dakota sales and use tax, the purchase is subject to South Dakota use tax unless specifically exempt, the purchase is not exempt because it’s purchased on the internet, by catalog or by other remote means, the state requires the purchaser to report any non-taxed purchase and to pay use tax on the purchase, and the tax may be reported and paid on the South Dakota use tax form, which is available on the South Dakota Department of Revenue and Regulation website. The notice must appear on a page necessary to facilitate the applicable transaction. De minimis retailers and online auction websites are exempt from the reporting requirements. To qualify as de minimis, retailers and online auction websites must have total gross sales in South Dakota in the prior calendar year of less than $100,000 and reasonably expect that South Dakota sales in the current calendar year will be less than $100,000. (S.B. 146, Laws 2011, effective July 1, 2011; S.B. 147, Laws 2011, July 1, 2011)

Click here for additional information from the South Dakota Department of Revenue. 

Posted on June 24, 2011