SB243-SSA1,1,10 1An Act to repeal 77.51 (13b); to renumber and amend 73.03 (71) (a), 73.03 (71)
2(b), 73.03 (71) (c) and 73.03 (71) (d); to amend 66.0615 (1m) (f) 2., 77.51 (11d),
377.51 (13) (intro.), 77.51 (13) (a), 77.51 (13) (c), 77.982 (2), 77.991 (2) and
477.9951 (2); and to create 66.0615 (1m) (g), 73.03 (71) (a) 2., 73.03 (71) (b) 2.,
573.03 (71) (c) 2., 73.03 (71) (d) 2., 77.51 (7i), 77.51 (7j), 77.51 (13) (p) 7., 77.51
6(13) (q), 77.51 (14) (n) 7., 77.51 (17) (g), 77.52 (3m), 77.52 (14) (c), 77.523, 77.585
7(1g) and 77.585 (11) of the statutes; relating to: requiring marketplace
8providers to collect and remit sales tax from third parties and reducing
9individual income tax rates based on the collection of sales and use tax from
10out-of-state retailers and marketplace providers.

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 reduction determined for 2019 applicable only to the
second individual tax rate listed in each bracket. Those reduced rates would change
again in 2020. The bill requires DOR to estimate 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 estimation 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 estimation 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, generally, 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.