Special Session Bills Up: Online Tax Collection Postponed to November 1

The Legislative Research Council has posted the three bills Governor Dennis Daugaard wants passed at the September 12 Special Session. They aren’t in nice neat HTML/plain text format yet, but LRC does offer the PDF’s on the Legislature’s home page:

1. Lifting the remote seller sales tax injunction
2. Including marketplace providers in the Amazon/Wayfair tax
3. Making the traditional Saturday gubernatorial inauguration statutory

The first bill lifts the injunction on South Dakota’s enforcement of collection of sales tax by remote online vendors on November 1, 2018 (see Section 3). The bill also amends statute to make clear that the obligation to collect and remit sales tax does not begin until November 1, 2018 (see Section 4). South Dakotans may thus not see any difference in the cost of the online purchases until just a few days before they vote for the legislators who approve or resist this effort to increase South Dakota’s tax revenues.

The second bill distinguishes online marketplace sellers from marketplace providers. The bill makes makes clear that the small vendors who use Amazon or other online marketplaces to sell their wares instead of their own independent online stores aren’t responsible for collecting South Dakota sales tax. That responsibility falls on Amazon and other providers of the retailing service, but not until March 1, 2019. Interestingly, Section 6 of Bill #2 excuses marketplace providers from liability for failure to collect sales tax if their sellers provide them bogus information but excepts from that exception “affiliated” sellers—i.e., those who own more than 5% of the provider, are more than 5% owned by the provider, or are controlled by an entity that owns more than 5% of the seller and the provider. The provisions of Section 6 sunset on June 30, 2024.

The third bill deals with the fun calendrial glitch that would prevent Governor Sutton from taking his inaugural oath on Saturday, January 5, 2019. It adds to current statute this simple sentence: “However, a state officer may qualify and enter upon the duties of office on the Saturday immediately preceding the second Tuesday of January that  succeeds the state officer’s election.” Watch for Republican amendments to exclude state officers whose last names start with S.