428 Signatures Were All That Stood Between Clay County and a New Sales Tax. Here's What Happened
Residents of Clay County, South Dakota have until 5 p.m. this afternoon to file a referendum petition with the Clay County Auditor's Office in Vermillion. If they submit 428 valid signatures from registered Clay County voters by that deadline, Ordinance No. 2026-05 — a new half-cent county sales tax — gets referred to a public vote. If they don't, the ordinance takes effect today and the tax begins collecting January 1, 2027.
As NewsBreak reported this week, the referendum petition forms must be filed by 5 p.m. Thursday, September 24, with the Clay County Auditor's Office in Vermillion.
That's now.
What's at Stake
The Clay County Commission voted 3-2 on August 25 in favor of Ordinance No. 2026-05 — a new 0.5% county gross receipts tax that follows the same rules as South Dakota's state retail sales tax. The revenue would flow through the state and back to Clay County as a property tax credit for owner-occupied homes.
Opponents have been vocal and organized since the first reading. Caitlin Collier — a Vermillion attorney and former South Dakota state legislator who helped lead the petition campaign — has argued the ordinance is a bad deal for most Clay County residents. In a letter to the editor published by Yankton.net, Collier wrote that the gross receipts tax covers more transactions than a standard sales tax and is especially hard on agribusinesses and general businesses — and that it would intentionally give property tax credits to wealthy people with expensive homes first, then might trickle down.
The community has been fighting this since August. Today is the last moment they have to force a public vote.
Do you already owe tax in Florida?
Two questions. No email required to see your answer.
Have your sales into Florida grown over the last four quarters?
The Statewide Context — Clay County Isn't Fighting Alone
Here's the bigger South Dakota story that makes Clay County's local fight even more significant.
Clay County's ordinance is a local version of Senate Bill 245 — a state law passed during the 2026 legislative session that would raise South Dakota's state sales tax rate from 4.2% to 4.5% in 2027 and direct the revenue to a relief fund for homeowner property taxes.
SB 245 has its own statewide referendum campaign — led by South Dakotans for Fair Taxes, a coalition including Bread for the World SD, the South Dakota AFL-CIO, and Dakota Rural Action. That campaign needs 17,508 signatures from registered South Dakota voters to put SB 245 on the November ballot and stop the state-level sales tax increase.
As Dakota Free Press reported, the coalition called SB 245 a permanent wealth transfer from the state's working families to the most affluent homeowners — arguing that high-end homes get the lion's share of the benefit while renters and lower-income residents bear the cost of the higher sales tax rate without proportional property tax relief.
Two simultaneous fights — one local, one statewide — over the same fundamental question: should South Dakota shift tax burden from property owners to sales tax payers?
What Happens If the Petition Succeeds
If Clay County's petition campaign has gathered its 428 signatures and files them by 5 p.m. today, the process moves to a special election.
As Plaintalk.net's coverage of the campaign confirmed, if Clay County's sales tax ordinance is referred to a public vote, a special election would be held within 60 days after the filing of the referendum petition. The Clay County Auditor's Office has been ordering ballots for the November 3 general election — meaning there's no way the sales tax question appears on that ballot even if the petition is filed today. The special election would likely happen in late November or early December — perhaps a week or two after the general election.
A simple majority of Clay County voters would determine the outcome. A yes vote on the referendum question means the ordinance is approved and the tax takes effect. A no vote means it fails and the county commission would need to start the process again.
What Happens If the Petition Fails
If the petition doesn't reach 428 signatures by 5 p.m. today — or isn't filed in time — Ordinance No. 2026-05 takes effect today.
The tax itself doesn't begin collecting immediately. The ordinance takes effect September 24, but the actual sales tax collection begins January 1, 2027 — giving businesses in Clay County approximately three months to update their systems.
For businesses operating in Vermillion and Clay County, a January 1, 2027 effective date means the compliance clock starts now regardless of today's petition outcome. If the petition fails, you have three months to add 0.5% to your Clay County rate. If the petition succeeds and the referendum fails, you have whatever time passes before the special election result and its effective date.
South Dakota's Sales Tax Rate — What's At Stake Statewide
The Clay County fight and the statewide SB 245 referendum together tell a larger story about South Dakota's sales tax trajectory.
South Dakota cut its state sales tax from 4.5% to 4.2% in 2023 — a temporary reduction set to expire in June 2027. SB 245 would effectively reverse that cut by redirecting the revenue from the returning 4.5% rate into property tax relief rather than letting the rate simply revert.
The statewide petition campaign to stop SB 245 is fighting the same argument Clay County residents are making locally: that using a regressive sales tax to fund property tax relief benefits homeowners disproportionately and shifts burden onto renters, low-income residents, and businesses.
Whether either petition campaign succeeds — and whether South Dakota's voters ultimately agree — will shape the state's combined sales tax rate heading into 2027 in ways that affect every business selling into the state.
Not sure how Clay County's potential January 1, 2027 rate change — or South Dakota's statewide SB 245 referendum — affects your compliance obligations? Book a free consultation with our team at sales.tax. We'll track today's outcome and help you prepare for whatever South Dakota's voters and commissioners decide.
What this means for your business
If your sales into Florida have grown with prices, you may have crossed the economic nexus threshold without changing anything about how you sell. We’ll tell you where you stand in 30 minutes — and if there’s nothing to fix, we’ll say so.