Sales Tax Bills Pass in Arkansas and South Dakota

There have been two recent victories in sales tax parity – affiliate nexus legislation approved by the Arkansas legislature, and, in South Dakota, new legislation enacted into law.

On March 30, the Arkansas House of Representatives approved sales tax fairness legislation [1] by a vote of 62 - 28. The legislation had previously been approved by the state senate on March 10 by a vote of 26 - 7. The bill awaits the signature of Gov. Mike Beebe, and, if enacted into law, would would require remote retailers with nexus in the state through online affiliates acting as sales agents to collect and remit sales tax on orders made by the states’ residents if their sales in the state exceeded $10,000 during the previous year. 

On March 11, South Dakota enacted S.B. 146 [2], sales tax legislation that requires out-of-state retailers that sell to in-state residents to notify their customers of their personal use tax obligation. Under the law, online sellers are required to provide clear notice to consumers during the checkout process that a South Dakota use tax is due. Use tax is due from a consumer when a distance retailer, such as an online or catalog retailer, is not obligated to collect and remit sales tax because it does not have a physical presence, or nexus, in the state in which the consumer resides.

The law applies to retailers that have more than $100,000 in total gross yearly sales in South Dakota, and it encompasses sales of digital downloads. AccountingWeb.com [3] outlines the requirements of the new law, which goes into effect on July 1.

The legislation is similar to a Colorado law, which went into effect on February 24, requiring out-of-state retailers to either collect and remit sales tax for purchases made by Colorado residents or to inform their Colorado customers that they owe use tax on any purchase they have made.