Stay up to date with sales tax: Join our mailing list!

Citing the significant increase in new home building in a recent edition of South Dakota Taxation News, the South Dakota Department of Revenue and Regulation discussed the addition of a bid calculator for contractors. The Department stated that since they have limited time to work with contractors, they found it necessary to create the bid calculator. The calculator is a form that can be viewed with Adobe Acrobat Reader; this form will provide the proper tax amount based on the figures entered into the form by the user. The publication further discussed the responsibilities of specialty builders. Specialty builders in the State of South Dakota are required to have a contractor’s excise tax license, are responsible for paying sales or use tax on all construction materials, and are responsible for remitting the 2% contractor’s excise tax at the time of closing, if sold within four years of completion. The publication also discussed other sales and use tax issues including recent legislative updates by the state in regards to the SSTP. (South Dakota Taxation News, South Dakota Department of Revenue and Regulation, January 2005)


Effective July 1, 2005, the State of South Dakota has amended Section 10-45-30 of its tax law to read that a bad debt means the same as the term is defined in the Internal Revenue Code. According to the bill, for sales tax purposes, when computing the amount of tax due, a seller may deduct bad debts from the total amount upon which the tax is calculated for any return. Furthermore, a taxpayer who is not required to file Federal income tax returns may also take a bad debt deduction. The bill states that a seller may allocate its bad debts among states if the books and records of the seller claiming the bad debt can support such allocation. (State of South Dakota, H.B. 1037, effective July 1, 2005)


The South Dakota House of Representatives has recently passed House Bills 1033 and 1044 for review by the South Dakota Senate. House Bill 1033 would enact an amnesty that would relieve a seller of liabilities associated with uncollected or unpaid sales or use tax, penalty, or interest if the seller registers in accordance with the Streamlined Sales and Use Tax Agreement. House Bill 1044 discusses the refund procedures for over-collected sales or use taxes. If enacted, Chapter 10-59 would read as follows: No purchaser has a cause of action against a seller for over-collected sales or use taxes until the purchaser has provided written notice to a seller requesting a refund of over-collected sales or use taxes and the seller has had sixty days to respond. The notice to the seller shall contain the information necessary to determine the validity of the request. (H.B. 1033 and H.B. 1044, South Dakota House of Representatives, passed by House, January 20, 2005)


In South Dakota, a store that sells gasoline, grocery items, and cigarettes received promotional allowances from manufacturers, distributors, and wholesalers. These allowances were not subject to tax as long as they were received in conjunction with a contract that required the store to display the product or signage of the manufacturer, distributor, or wholesaler is a certain place and specified manner. (Declaratory Ruling Rev 04-04, Department of Revenue and Regulation, February 4, 2004)


The South Dakota Department of Revenue and Regulation stated that moving services are exempt from sales tax as of July 1, 2004, and that packing, unpacking, loading, unloading, and storage are also exempt if performed as part of the transportation service. However, packing, unpacking loading, unloading, and storage are taxable if performed separately from the transportation service. In addition, state and municipal sales taxes apply to containers purchased by moving companies in South Dakota, and use taxes apply to containers and services consumed or used in South Dakota by moving businesses if no sales tax was paid at the time of purchase. (Tax Facts #240, July 2004)



Scroll to Top