SB 243

Current law requires the Department of Revenue to determine the amount of

additional revenue collected from the state sales and use tax from October 1, 2018,

to September 30, 2019, as a result of the U.S. Supreme Court decision that expands

the state's authority to collect such taxes from out-of-state retailers. See,

South

Dakota v. Wayfair, Inc

., 585 U.S. ___ (2018). After DOR makes that determination,

the Department of Administration, in consultation with DOR, must then determine

how much the individual income tax rates may be reduced for the 2019 taxable year

in order to decrease individual income tax revenue by the amount of additional sales

and use tax revenue. If a review by the Legislative Audit Bureau results in a

redetermination of the rates, the Joint Committee on Finance decides which rates

to apply. The reduction in rates only applies to 2019.

This bill makes the rate reductions determined for 2019 applicable to all

subsequent taxable years, except that the second individual income tax rate listed

in each tax bracket would change again in 2020. The bill requires DOR to determine

the amount of additional revenue collected from the sales and use tax from October

1, 2019, to September 30, 2020, as a result of the Supreme Court decision. DOA, in

consultation with DOR, would then use that determination to determine how much

the second individual income tax rate listed in each tax bracket may be reduced in

the 2020 taxable year. Those reduced rates would apply in 2020 and in each year

thereafter. The bill also requires DOR to make its determination of additional sales

and use tax revenue based on the sales and use taxes collected from out-of-state

retailers and marketplace providers.

The bill requires that marketplace providers collect and remit sales tax on sales

facilitated on behalf of marketplace sellers. For purposes of the bill, a “marketplace

provider” is a person who facilitates a retail sale by a seller by listing or advertising

for sale, in any manner, the seller's products or taxable services and through

agreements or arrangements with third parties, directly or indirectly, who are

collecting payment from the purchaser and transmitting that payment to the seller.

The bill defines “marketplace seller” to mean a seller who sells products through a

physical or electronic marketplace operated by a marketplace provider, regardless

of whether the seller is required to be registered with DOR.