This month marks five years since South Dakota began collecting sales tax on online purchases following the Supreme Court's ruling in the South Dakota v. Wayfair Inc. case.
The court overturned previous rulings, including its 1992 holding in Quill Corporation v. North Dakota, that restricted the collection of sales tax on online purchases from physically out-of-state vendors.
The state's Department of Revenue says South Dakota reported roughly $6 to $12 million from remote sellers per month for the last five years. For example, from 2018-2022, South Dakota averaged $9,086,473.20 for the month of July.
In this time period, South Dakota reported the most sales tax revenue from remote sellers in January, with the exception of 2019 when the state received most of this tax in July.
South Dakota Attorney General Marty Jackley played a leading role in the state’s case in 2018.
"We knew it was an uphill battle, but we felt times had changed and we had the benefit of a strong argument dealing with protecting main street businesses," Jackley said. "And, I think what really turned the corner was 41 state attorneys general, Republican and Democrat, the chief litigators of their states, weighed in on this. And I felt that that was a significant impact to a couple of justices."
Jackley believes that in the five years since the Supreme Court ruling, the case has benefited small businesses in the state.
“South Dakotans were oftentimes turning to those out-of-state retailers that were selling things cheaper, because they didn't have to remit a tax. And this decision - when it evened that playing field - at least helps the small businesses be able to have the same taxing structure as those large companies out of state," he said. "And so, ultimately, I think we have seen in South Dakota a positive benefit."
Jackley also said sales tax revenue is important because South Dakota does not have a state income tax.
