SD businesses might get tax collection allowanceThe allowance could be worth up to $840 annually per business.
By: Bob Mercer, Republic Capitol Bureau
PIERRE — As the 2013 session of the Legislature opens today, Gov. Dennis Daugaard has some good news for businesses that collect sales taxes for the governments in South Dakota.
They can expect one year from now to start receiving a collection allowance for doing the work.
They’ve already been waiting seven years. The allowance could be worth up to $840 annually per business, depending upon how much they collect in taxes.
Daugaard told a pre-session gathering of South Dakota Retailers Association members Monday that the state Department of Revenue has submitted legislation to put the allowance into effect.
He said all businesses that submit sales taxes would be covered by the legislation.
The retailers group convinced the Legislature in 2006 to give businesses that filed monthly returns a collection allowance equal to 1.5 percent of the gross amount of tax due, up to $70 per month.
But then-Gov. Mike Rounds vetoed the legislation. Its main sponsors were then-Rep. Shantel Krebs, R-Renner; and then-Sen. Brock Greenfield, R-Clark. They summoned the two-thirds majorities in the House and the Senate necessary to override the governor’s objection and pass the legislation into law.
The law contained one catch. The allowance wouldn’t take effect until the state’s tax relief fund reached a balance of $10 million.
The money trickling into the fund comes from taxes voluntarily submitted by businesses in other states that made sales to South Dakota customers through the Internet and mail via what’s called the Streamlined Sales Tax compact among some states.
Daugaard said Monday that South Dakota fund’s balance stood at $8.9 million as of Dec. 31. He said the $10 million threshold should be reached later this year.
The existing law says the allowances would take effect the following July 1, but Daugaard said his legislation would have the allowances start Jan. 1, 2014.
In exchange for expanding the eligibility to all businesses remitting sales taxes and the immediate kick-in, Daugaard’s legislation also contains a different catch. Everybody gets the allowance the first year, but after Jan. 1, 2015, businesses would have to submit the taxes electronically to remain eligible for the allowance.
“It’s good for you and it’s good for efficiency,” he told the retailers members.
The allowance under the existing law is forecast to put nearly $4.9 million back into businesses’ bottom lines, according to the governor.
He said the expansion to cover all filers would raise that estimate to about $6.4 million.
The legislation, Senate Bill 51, was introduced by the Senate appropriations committee because it’s a spending measure.
Daugaard said he would use part of his State of the State address to the Legislature to emphasize the need to eliminate paper documents and “paper shuffling” as much as possible in government operations.