And now for today's News You Can Use:
Ever wondered who pays the sales tax on interstate online sales? I've been wondering because I'm going to sell some paintings online. Here's what I learned from SDDRR, information that loyal readers can apply to their own interstate commerce endeavors:
- If I sell a painting to someone in Pipestone and ship it from Lake Herman, I pay no tax to South Dakota and have no obligation to Minnesota.
- If I sell a painting to someone in Pipestone and drive over there to deliver it myself, I establish a "nexus" (ooo, Star Trek!) in Minnesota. At the point, I pay the sales tax on that delivery and on every future sale I make to anyone in Minnesota, whether I deliver it in person or ship it. (Minnesota buyers, don't expect any personal deliveries.)
Of course, I got to wondering (I'm always wondering): when I ship a painting to Minnesota, does Minnesota just forfeit any tax on that sale? Won't they send a revenue hit squad across the border to shake me down? Are they so rich from income tax they don't need to quibble over interstate sales?
Oh no, my friend at DRR informed me. The Minnesotan who buys my painting has a use-tax obligation to her home state.
But wait a minute, I asked. Does that apply on our side of the border as well?
Yes, DRR told me. When a South Dakotan orders something on Amazon.com, Pierre doesn't expect Amazon to pay. The tax obligation rests on the buyer here in South Dakota.
In other words: when you log on to Amazon.com and order your copy of Jon Lauck's epic campaign tome, you will owe the state of South Dakota 73 cents (4% of today's sale price of $18.21), plus your local sales tax.
Now DRR lacks the resources to send out sales tax cops to everyone's homes to audit your receipts from Amazon.com and other online retailers. No need, since surely you've all been itemizing your online purchases and remitting your sales tax obligations out of the goodness of your South Dakota hearts.
However, for those of you who just moved to the state, send your checks to the Department of Revenue & Regulation, 445 East Capitol Avenue, Pierre, SD 57501.