When South Dakota first adopted its thresholds for determining what remote sellers would become obligated to collect and remit their sales tax, the state specified that it would apply to companies that had, on an annual basis, $100,000 in gross sales or engaged in 200 or more separate transactions into the state. Once the Wayfair case was decided in South Dakota’s favor, many states, viewing those thresholds as a sort of “safe harbor,” adopted similar requirements in a rolling succession.
However, in the intervening years, states have reconsidered these rules and adjusted their thresholds in ways that better suit their local economies. Similarly, South Dakota enacted Senate Bill 30, which removes the 200-transaction count threshold, effective July 1, 2023. While South Dakota did not specifically perform a revenue impact analysis, it seems likely that both the governor and the legislature were confident that excusing the smallest sellers from sales tax compliance would not significantly impact their tax coffers. In fact, an argument could be made that excluding small sellers increases department of revenue efficiency. After all, small sellers with little tax resources are likely to have more questions and make more mistakes.
It remains to be seen as to whether this recent change to threshold requirements will again lead to a trend for ease of administration for small sellers in other jurisdictions across the country.
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