Sales Tax in the Pandemic

Sales tax in the pandemic has become a critical topic of discussion and concern, particularly in the context of events like the Sturgis motorcycle rally. As the world grapples with the ongoing challenges posed by COVID-19, the decision to proceed with large-scale gatherings raises questions about the implications for sales tax collections and compliance. Sturgis, South Dakota, known for its annual motorcycle rally, has chosen to move forward with the event despite the pandemic, prompting a closer examination of the unique circumstances surrounding sales tax amidst these uncertain times.

Annual Motorcycle in Sturgis

Sturgis, South Dakota, is getting ready for their annual motorcycle rally, in spite of the COVID-19 pandemic. Where Fayetteville, Arkansas, canceled their Bikes, Blues & Barbecue festival, which usually brings 400,000 visitors to the town of 86,000, Sturgis is going ahead. They usually see 500,00 or more visitors in their town of 7,000.

Eight years ago, the city of Sturgis decided to insist that vendors at the rally comply with sales tax requirements. Undercover Revenue officers checked up on vendors and made sure everyone was using a point-of-sale system that calculated sales tax. They insisted that vendors file sales tax returns and collected more than a million dollars last year. The sales tax revenue from the rally made up 11% of their total income last year.

It may be no surprise that the city determined to take a chance on the rally this year, in spite of fears that Sturgis could be a coronavirus “super spreader.

Safety Measures

60% of residents wanted to cancel the rally. It will be the largest gathering in the United States since the beginning of the pandemic in March if the expected number of participants roll into town. Businesses in the area told the city, which officially hosts the event, that they would hold the event no matter what the city decided. Rally-goers spend some $800

The city is going to hold the rally as usual but will make some changes in hopes of keeping infections down. Public events have been canceled, official information booths will not open, and advertising has been cut in hopes of lowering the total number of visitors. The annual pancake breakfast will not take place, hand sanitation stations are available, and masks are being encouraged — though so far not many are actually being worn.

There also will be no Department of Revenue office open at the Buffalo Chip, the venue that houses most of the visitors, and the regular office will only see individuals by appointment. Instead, Sturgis is asking vendors to take care of their sales tax filings online. Vendors have to get a temporary South Dakota Sales Tax License if they haven’t already registered to collect sales tax in South Dakota. First-time vendors had to post a bond, as well.

Number so Far

As of Monday night, the official total of Sturgis participants was 217,778, compared with 228,348 at the same point in the rally last year. 250,000 are expected, but it looks as though the total will be larger.

Visitors from hot spots are not being required to quarantine, but some states, including New York, will require quarantine for Sturgis participants when they get back to their home states.

We’ll be interested to see whether the sales tax revenue meets expectations.

If sales tax compliance is on your mind, you owe it to yourself to check out Sales Tax DataLINK. Call 479-715-4275 and let us impress you.


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