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Learn the fundamentals of sales tax
Do you need to collect sales tax in South Dakota?
You’ll need to collect sales tax in South Dakota if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in South Dakota?
Any “retailer maintaining a place of business in the state” has physical nexus in South Dakota. See their definition on p. 5 here.
Do you have economic nexus in South Dakota?
Effective November 1, 2018, South Dakota considers vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read South Dakota’s economic nexus guidance for sellers here.
South Dakota also pioneered economic nexus laws, and you can read more about South Dakota’s economic nexus law here.
Is what you’re selling even taxable?
Most services in South Dakota are subject to sales tax with some exceptions in the construction industry. The state sales tax rate for South Dakota is 4.5%. For more information on excise taxes related to construction projects, consult the South Dakota Department of Revenue’s site (as of this writing, excise taxes stand at 2% on gross receipts).
Tangible products are generally taxable in South Dakota, with a few exceptions like prescription medication and gasoline.
Is SaaS taxable in South Dakota?
SaaS is considered a taxable service in South Dakota, as are other charges to access software. (Source)
What is use tax?
If sales tax has not been paid on products and services – including electronically-delivered products – that are used or consumed in South Dakota, a business must still pay use tax. South Dakota requires businesses to determine if a vendor charged the correct sales tax (or no tax at all) to report use tax on their tax return. Consult this PDF from the South Dakota Department of Revenue for more information on use tax.
How to get a sales tax permit in South Dakota
You can apply online at the South Dakota Tax Application website or call 1-800-829-9188 for more information on applying in person.
You need this information to register for a sales tax permit in South Dakota:
- Personal identification info (SSN, address, etc.)
- Business identification info (EIN, address, etc.)
- Business entity type
- Business description
- Date started doing business in South Dakota
It’s free to apply for a sales tax permit, but other South Dakota business registration fees may apply.
Collecting Sales Tax
South Dakota is a destination-based sales tax state. So if you live in South Dakota, collect sales tax at the rate at your buyer’s location. The South Dakota sales tax rate is 4.5%.
You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator.
Should you collect sales tax on shipping charges in South Dakota?
Delivery charges (i.e. shipping charges) on taxable items are taxable. If what you are selling is tax-exempt, then you don’t need to charge sales tax on the shipping charges. If some items in the shipment are taxable and some are not, just calculate what percentage of the shipping charges apply to the taxable item(s) and charge sales tax on that.
For examples on shipping taxability, check out South Dakota’s June 2016 publication on delivery charges and taxability in the state.
When are Returns Due?
When you file and pay South Dakota sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in South Dakota?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In South Dakota, you will be required to file and remit sales tax either at the state’s discretion, and this can be monthly, bimonthly, quarterly, or semi-annually.
Important to Note: South Dakota sales tax returns are generally always due the 20th day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day. However the payment is generally due by the 30th day of the month following the due date. See South Dakota’s posted sales tax filing due dates for specific info on filing and paying your South Dakota sales tax returns.
Filing Sales Tax
When it comes time to file sales tax in South Dakota you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in South Dakota
Calculating how much sales tax you should remit to the state of South Dakota is easy with TaxJar’s South Dakota sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your South Dakota sales tax return will be waiting for you in TaxJar. All you have to do is login.
How to File and Pay Sales Tax in South Dakota
You have two options for filing and paying your South Dakota sales tax:
- File online File online at the South Dakota Department of Revenue. You can remit your payment through their online system.
- AutoFile – Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.