The 10 Untold Limitations of a South Dakota PMB Address
You’ve made the strategic decision to change your state of residency, and South Dakota is at the top of your list. As you explore different virtual mail services, you come across enticing promises like “Save on auto insurance” and “No state income tax.” Some websites even feature savings calculators, painting a picture of South Dakota residency as a near-magical solution—a domestic offshore haven that’s almost too good to be true.
As someone who has also chosen South Dakota as my state of residency and headquarters for WorldPost, I understand the appeal. However, guided by the principles of the Four-Way Test [LINK], it’s crucial to be transparent about the challenges. While South Dakota offers significant benefits, the process is not as simple as some services may suggest. It’s important to approach this decision with a strong plan and a realistic understanding of potential limitations.
Understanding the Challenges
The limitations outlined below are not roadblocks but challenges that require careful consideration and planning. Many of these are federal restrictions that will impact your domicile, regardless of the state you choose. We offer guidance on how to navigate each of these challenges, but it’s important to be prepared for additional costs and complexities.
1. Voting
As of 2023, new voting registrations using a PMB address in South Dakota are restricted. If voting is important to you, there are options, but you must weigh the consequences if your goal is to escape a high-tax state. I’m hopeful that these restrictions will be lifted by 2025, allowing PMB holders to vote again. For more details, refer to my blog post on voting.
2. Automobile Insurance
Many assume that South Dakota residency will automatically result in lower auto insurance premiums. However, listing a PMB address on your insurance application is likely to be flagged by the underwriter. While your application may initially be accepted, audits or automated systems may later detect the discrepancy, potentially leading to cancellation of your policy. Your automobile insurance generally needs to list the address where the vehicle is garaged, not a PMB. We’ll cover this topic in more detail in an upcoming post.
3. W2 Employment
Before COVID-19, it was more common to list a PMB address as your W2 employment address of record. However, post-pandemic, there has been a crackdown, especially after it was discovered that many individuals receiving unemployment insurance did not even reside in the U.S., let alone South Dakota. This realization contributed to the 2023 House Bill 139, which redefined residency, making it more difficult to use a PMB for W2 employment. This change also affects those using an LLC strategy to pay themselves W2 wages. If you want to claim South Dakota as your tax state, you’ll need a residential address.
4. Personal Banking Home Address
This constraint is a federal limitation rather than a South Dakota-specific issue, stemming from the 9/11 attacks and the Patriot Act. All personal bank accounts require a physical residential address. When you open a bank account, the application process typically checks the address against the USPS database, which can reveal whether it’s residential or commercial, and if it’s a CMRA (Commercial Mail Receiving Agency). For more details, see our blog post.
5. eCommerce Address
Running an eCommerce business, such as Fulfillment by Amazon (FBA), from a PMB address can present challenges. FBA, for example, requires a physical address and may also ask for an office lease and utility bill. The USPS database will identify the type of address you’ve provided, and attempts to disguise a PMB as a “Suite” are easily detected.
6. Investment Accounts
Some clients have reported that their investment accounts were locked or closed after listing a PMB as their home address. Whether this is tied to federal banking requirements or specific company policies is unclear. Since the banking crisis, many investment banks have converted to commercial banks, which are subject to stricter regulations. Logging in from an IP address outside the country could also be a factor. It’s best to consult your investment bank and escalate your query if necessary.
7. Credit Card Processing
Credit card processors like Stripe require a physical address, and P.O. boxes or PMBs are strictly prohibited. Some processors may also demand an office lease and utility bill. While you might find a processor that accepts a PMB address, be aware that policies can change without warning, potentially cutting off your revenue source and freezing funds until the address requirements are met.
8. Firearm Purchase
Purchasing a firearm through a licensed dealer requires a federal background check, and the address on your driver’s license or state ID will be scrutinized. If it’s a PMB, the purchase will likely be declined. To buy a firearm from a dealer, you’ll need a physical address.
9. Enhanced Carry Permit
South Dakota is a constitutional carry state, and anyone meeting basic requirements can carry arms openly or concealed. However, if you want reciprocity with other states, you’ll need an enhanced carry license, which requires a background check and approval from the Sheriff’s office. Many Sheriffs will not accept a PMB on the application or as the address on your driver’s license. We cover this topic in more detail in a soon to be posted blog post.
10. Library Card
This limitation might seem minor, but it’s worth noting for those who value access to digital media. To apply for a Sioux Falls library card, you need to provide proof of a residential address, such as a driver’s license, utility bill, or housing lease. A library card allows you to check out digital media from anywhere in the world, which can be a great budget-friendly resource for avid readers.
In Conclusion
It’s essential to conduct thorough research and plan accordingly. While these limitations may seem daunting, our goal is not to discourage your choice of South Dakota but to prepare you for the challenges you might face. Many of these restrictions are federal and will need to be addressed regardless of your chosen domicile state. If you have any questions or need guidance on a plan, please feel free to contact WorldPost.