The South Dakota legislature today signed into law SB146, which includes certain notice requirements for retailers that do not have nexus in South Dakota. It’s aimed at increasing the collection of sales tax on remote (online and mail order) purchases and is similar to laws enacted by Oklahoma and Colorado.
Specifically, South Dakota’s law requires online and catalog retailers that do not collect South Dakota sales tax to display a notice to consumers informing them that sales tax is due on the purchase (unless the transaction is tax-exempt). The notice has to be posted on the retailer’s website or catalog and on the customer invoice. Retailers and auction websites with less than $100,000 in annual sales to South Dakota are exempt from complying with the law.
Section 9 of the law leaves us puzzled, though—it states, “No criminal penalty or civil liability may be applied or assessed for failure to comply with the provisions of this Act.” Huh?
Even without penalties, the intent of the law is clear: South Dakota, like many other states, is willing to explore every means available to increase the collection of taxes that are already due.
We believe that retailers should be concerned about the growing (and frequently confusing) patchwork of state affiliate laws and notification requirements. Federal legislation will solve this problem once and for all, and we can’t help but wonder if all this state action is deliberately aimed at ensuring such legislation comes quickly.