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by Sarah Craig November 22, 2024
The state of South Dakota requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Etsy and eBay.
This means that if you sell on a platform like Etsy, then Etsy will collect sales tax from your South Dakota buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrinkles here when it comes to e-commerce sales tax.
This post will explain what online sellers need to know about the South Dakota marketplace facilitator law, and answer your frequently asked questions.
South Dakota’s marketplace facilitator law state s that marketplace providers must register for a sales tax license and collect and remit sales tax on all sales into South Dakota if the threshold of at least 200 or more transactions or $100,000 in sales into the state is met.
South Dakota law uses the term marketplace provider and defines this as: a marketplace provider is any person that facilitates a sale for a marketplace seller through a marketplace by:
Online sales platforms like Amazon and eBay are considered marketplace facilitators under South Dakota law.
It depends. If you have nexus in the state (physical or economic) and you make sales to customers in South Dakota on platforms outside of the marketplace that are now automatically collecting and remitting, you will also need to collect tax on your end on the South Dakota orders that are processed on the other platforms.
No, marketplace-only sellers should not cancel their sales tax permits.
If you are registered to collect sales tax in South Dakota (i.e. you have an active South Dakota sales tax permit) then the state still requires that you file sales tax returns. Once you register for a license, you will be required to file a return based on the frequency the state has assigned you.
If you have already collected South Dakota sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
TaxJar AutoFile handles South Dakota sales tax automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of South Dakota wants it filed. For example, many states, South Dakota included, want sellers to break down their sales tax collected interstate (sales originating in South Dakota sent to another state) and intrastate (sales made from South Dakota to South Dakota.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your South Dakota sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar reports give you all the info you need to file manually
If you prefer to file manually, your TaxJar Reports also reflect what the South Dakota Department of Revenue wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
It's time to solve your tax complexity
Talk to a TaxJar expert about automating your sales tax compliance.