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Can I sell products or services online without violating e-commerce laws in South Dakota? What are the requirements?

To sell products or services online in South Dakota, you must comply with the state’s e-commerce laws. The requirements depend on the type of retailer you are and the amount of sales you make in South Dakota.

De minimis online auction website and de minimis retailer

If you are a de minimis online auction website or a de minimis retailer, you are not required to collect and remit South Dakota sales and use tax if you made total gross sales in South Dakota in the prior calendar year of less than one hundred thousand dollars and reasonably expect South Dakota sales in the current calendar year will be less than one hundred thousand dollars [SDCL 10-63-1(1) and (2)][1.1][1.5].

Noncollecting retailer

If you are a noncollecting retailer, you are not currently registered to collect and remit South Dakota sales and use tax, and you make sales of tangible personal property, services, and products transferred electronically from a place of business outside of South Dakota to be shipped to South Dakota for use, storage, or consumption, you may be required to collect and remit South Dakota sales or use taxes [SDCL 10-63-1(3)][1.1].

Unsolicited commercial e-mail advertisements

South Dakota prohibits the initiation or advertisement in an unsolicited commercial e-mail advertisement from South Dakota or to a South Dakota electronic mail address, or advertising in an unsolicited commercial e-mail advertisement sent from South Dakota or sent to a South Dakota electronic mail address [SDCL 37-24-42][2.1]. Additionally, no person may collect electronic mail addresses posted on the internet if the purpose of the collection is for the electronic mail addresses to be used to initiate or advertise in an unsolicited commercial e-mail advertisement from South Dakota or to a South Dakota electronic mail address, or advertise in an unsolicited commercial e-mail advertisement sent from South Dakota or sent to a South Dakota electronic mail address [SDCL 37-24-44][2.2]. Furthermore, no person may advertise in a commercial e-mail advertisement either sent from South Dakota or sent to a South Dakota electronic mail address under certain circumstances [SDCL 37-24-47][2.3]. Finally, no person may use scripts or other automated means to register for multiple electronic mail accounts from which to initiate or advertise in an unsolicited commercial e-mail advertisement from South Dakota or to a South Dakota electronic mail address, or advertise in an unsolicited commercial e-mail advertisement sent from South Dakota or sent to a South Dakota electronic mail address [SDCL 37-24-46][2.5].

Notice requirements

For any internet purchase made in South Dakota, the invoice notice shall occur on the electronic order confirmation. The notice shall be sufficient if the noncollecting retailer provides a prominent linking notice that reads as follows: “See important South Dakota sales and use tax information regarding the tax you may owe directly to the State of South Dakota.” The invoice notice link shall direct the purchaser to the principal notice required by § 10-63-2 [SDCL 10-63-4][1.3]. Pursuant to this chapter, each noncollecting retailer shall give notice that South Dakota use tax is due on nonexempt purchases of tangible personal property, services, or products transferred electronically and shall be paid by the South Dakota purchaser [SDCL 10-63-2][1.4]. A de minimis retailer and a de minimis online auction website are exempt from the notice requirements provided by this chapter [SDCL 10-63-8][1.5].

Conclusion

To summarize, if you are a de minimis online auction website or a de minimis retailer, you are not required to collect and remit South Dakota sales and use tax if you made total gross sales in South Dakota in the prior calendar year of less than one hundred thousand dollars and reasonably expect South Dakota sales in the current calendar year will be less than one hundred thousand dollars. If you are a noncollecting retailer, you may be required to collect and remit South Dakota sales or use taxes. South Dakota prohibits the initiation or advertisement in an unsolicited commercial e-mail advertisement from South Dakota or to a South Dakota electronic mail address, or advertising in an unsolicited commercial e-mail advertisement sent from South Dakota or sent to a South Dakota electronic mail address. Finally, notice requirements apply to internet purchases made in South Dakota, but de minimis retailers and de minimis online auction websites are exempt from these requirements.

Source(s):
Jurisdiction

South Dakota