City benefits from remote seller sales tax revenue

The City of New Rockford has collected more than $54,000 in local sales tax revenue from remote sellers in the past two years. That information was revealed in a new report released by North Dakota Tax Commissioner Ryan Rauschenberger last week.

The report, found at http://www.nd.gov/tax/data, shows a comparison of the tax collected by remote sellers in 2019 and 2020 for counties and cities with local sales tax. Counties and cities that impose local sales and use taxes received a combined total of $6,775,463 in 2019 and $17,416,327 in 2020.

A remote seller is defined as a business that sells its products to customers in the state using the internet, mail order, or telephone without having a physical presence in the state. The landmark U.S. Supreme Court case, South Dakota Department of Revenue versus Wayfair, Inc., in 2018 brought to light the collection of sales tax from remote sellers. In its decision, the Supreme Court overturned an existing law requiring a physical presence within the state before the burden of collecting sales taxes could be imposed on a seller. As of today, a total of $108.8 million has been collected for the state and the counties and cities that impose local sales and use taxes.

"Remote sales have drastically increased in the last two years," Rauschenberger said. "In response, we have seen consistent growth in taxes collected from remote sellers, espepecially with many North Dakotans now choosing to make purchases online during the coronavirus pandemic."

"This landmark decision really affected both remote sellers, who are now collecting sales tax, but also local sellers, who now no longer have a competitive disadvantage due to a sales tax requirement," added Rauschenberger.

The City of New Rockford collects 2.5% sales tax from all eligible purchases. The city has had a sales tax in place since October 1996. The 1% tax was increased to 2% in 2008, then another half-percent was added in 2019 to help cover the costs of the water infrastructure project. This new requirement allows the city to collect revenue from a wider range of purchases made by local residents, namely purchases made at large online-only retailers.