South Dakota v. Wayfair: Setting New Precedents in Sales Taxation

South Dakota v. Wayfair: Setting New Precedents in Sales Taxation

If you’re an auctioneer or e-commerce shop owner, chances are you’ve heard about the recent South Dakota v. Wayfair court case that made its way to the Supreme Court back in early 2018. But you might be wondering: “How is this going to apply to me?”, and you don’t know where to start. Here’s a quick rundown on the ruling and who it applies to:

The Ruling:

Basically, it boils down to this: South Dakota should receive a sales tax on any taxable item purchased outside the state if the buyer takes possession of the item within the border of South Dakota (i.e., has the item shipped to them). This includes items purchased both in person and online at a store or won at live or online auctions.

This means that a South Dakota resident would be charged the South Dakota sales tax for any online purchase, if that purchase is shipped from outside the border of South Dakota (i.e. an auction company in Tennessee) to a location within the border of South Dakota (i.e. a bidder’s house in South Dakota) to finalize the transaction. It also means the burden is on the seller to make sure this sales tax is applied correctly.

Does this Ruling Apply to You?

The ruling impacts sales tax requirements only for out-of-state sellers that deliver goods or services into South Dakota with a value greater than $100,000 or engage in 200 or more separate transactions for the delivery of goods or services into South Dakota.

This law (at the moment) only applies to companies that do business in South Dakota. Long story short, if you are an auctioneer or online retailer who offers shipping and your business isn’t based in South Dakota, you’ll need to start preparing to charge South Dakota residents the correct sales tax should they win or buy an item. Check out a full list of sales taxes broken down by city and county at https://www.avalara.com/taxrates/en/state-rates/south-dakota.html.

Disclaimer:

We know this is by no means a comprehensive guide to the South Dakota v. Wayfair ruling, but we want you to have a way to stay ahead of the game, so to speak.

Auctioneer Mike Brandly (CAI, CAS, AARE) and fellow auctioneers have put together some great material to assist us all in staying informed. We’ve included some links to their blogs below:

https://mikebrandlyauctioneer.wordpress.com/2018/06/23/south-dakota-v-wayfair-inc-et-al/

http://www.auctioneers.org/auction-tax

https://www.auctiontax.com/

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