Online Shoppers Still Pay Use Taxes

Posted on Monday, December 3, 2007

National Cyber Monday statistics released earlier this week show more consumers than ever are making purchases online, either for convenience or savings. As South Dakotans head to their computers to do their holiday shopping, the South Dakota Department of Revenue & Regulation reminds them that state and municipal use tax may be due on their purchases.

Business Tax Division Director Jan Talley says many consumers don’t realize that most Internet retailers are not collecting sales tax on online sales. And when sales tax isn’t charged on those purchases, use tax is owed by the purchaser.

Talley says many people assume they are being charged sales tax by Internet retailers because they are used to paying sales tax on items they buy in a storefront business, but in many cases, the Internet retailer isn’t charging the tax. If an individual buys something online and isn’t charged sales tax on the item, she says it’s up to the purchaser to pay use tax to the state.

South Dakota’s use tax rate is 4%, the same as the state’s sales tax rate. Municipal tax may also be due based on where the purchaser receives the goods. People having questions on use tax can also call the Department’s toll-free helpline at 1-800-829-9188 or contact Revenue & Regulation’s field offices in Aberdeen, Mitchell, Pierre, Rapid City, Sioux Falls, Watertown and Yankton.