BISMARCK — North Dakota’s sales tax revenue from online retailers ballooned by a staggering 500% in April, during the worst of the pandemic closures, according to the state tax commissioner's office.
Remote sellers, or online retailers, contributed $2.9 million in sales tax revenue in April 2020, compared to $475,000 in April 2019. This mass migration toward online shopping came as many brick-and-mortar stores closed their doors during the coronavirus pandemic.
The huge e-commerce tax haul was made possible by tax law changes stemming from the U.S. Supreme Court case South Dakota v. Wayfair Inc., a decision settled two years ago this month.
But as online retail surges in North Dakota, business owners are left to wonder whether the coronavirus will accelerate the decline of brick-and-mortar stores. Total sales tax revenue dipped considerably during the heights of pandemic closures, coming in at 35% below pre-pandemic forecasts for the month of April.
“That’s one of the biggest questions we have going forward. How much will people continue to shop online?” State Tax Commissioner Ryan Rauschenberger said. “I hope that we’re able to keep as many retail establishments as possible. But the natural trend of things is that we are seeing more and more closures because more of retail shopping is occurring online.”
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Rauschenberger praised the Wayfair decision, which allowed states to tax out-of-state sales and e-commerce at the same rates as physical retailers. “Because of the Wayfair decision, states and localities can continue to collect sales taxes on those purchases providing a bit of stability in these difficult times,” Rauschenberger said in a statement.
Rauschenberger told The Forum that he supported the Wayfair decision at the time because of a need to “level the playing field” between “Main Street retailers” and their online competitors, who were not required to remit any sales tax.
Forty-five states, including North Dakota and South Dakota, have amended their laws to reflect the Wayfair decision. North Dakota’s sales tax is 5%, with an additional sales tax added by counties, applied to both online and brick-and-mortar sales.
Compared to other states during the pandemic, the shift toward online retail seems to have been especially dramatic in North Dakota. The jump in e-commerce sales tax for nearby Wisconsin was just 133% in April.
Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.
