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Effective July 1, 2004 used and new manufactured homes built to Housing and Urban Development (HUD) standards, and placed on a temporary foundation, must be titled and are subject to a 3% initial registration fee if the homes are to be moved to a temporary foundation. If a home was previously on a permanent foundation and moved to a temporary foundation, it must be titled and is subject to the 3% fee. Dealers may purchase HUD homes and materials and services used to construct manufactured homes exempt from tax because they are for resale. Dealers who sell and install manufactured homes to be installed on a permanent foundation in a different city are responsible for the 4% state use tax and any applicable contractors’ excise tax and municipal taxes. In addition, dealers who sell manufactured homes to be installed outside the state are responsible for the 4% state sales tax and applicable local use taxes, but not contractors’ excise taxes, unless the dealer does not have the contract to install the home on its permanent foundation, in which case the dealer is not considered the prime contractor. For homes sold to be on a permanent foundation where installation is not included the taxable base would be the cost of the raw materials and the state and municipal sales tax would apply. Delivery charges are included in the sale price of the home. Display models are considered to be still in inventory and are not subject to sales or use tax or the 3% initial registration fee if the manufactured home is only being used for display purposes. For more information, taxpayers can call the Business Tax Division at 800-829-9188. (Tax Facts #221, July 2004)


Items or services purchased by South Dakota residents over the Internet may have use tax due. This use tax is typically due if the purchaser (1) didn’t pay sales tax when purchasing the items or (2) the sales tax paid to another state was less then what should have been paid in South Dakota. Almost all services and merchandise sold in South Dakota are subject to the state sales and use tax. The state is working harder to let taxpayers know about the use tax simply because it loses out on large amounts of tax dollars when buyers go out of state via the Internet or through catalogs to make their purchases. (South Dakota Department of Revenue and Regulation, SD Tax Facts #316, Sales and Use Tax, January 1, 2004)


There is a law in South Dakota preventing public corporations from buying goods or services from retailers who meet the definition of a retailer or a retailer maintaining a place of business in the state if the retailer or any of the retailer's affiliates refuse to collect and remit sales and use tax on sales delivered to a location within the state. Certain exceptions apply to this law including the purchase of a contract to construct a new building, or remodel or add to an existing building. Contracts for public improvement worth twenty-five thousand dollars or more may also be allowed without meeting the above criteria. (Sec. 5-18-[45], July 1, 2003)


The Governor of South Dakota signed into law H.B. 1042 allowing the state to use private collection agencies and attorneys to collect on delinquent accounts. This new practice will be effective July 1, 2004. The secretary of revenue will oversee the process and he or she will make the determination as to when collection efforts by the state have failed. The new law indicates that those employed by the state will work on a contingent fee basis in their collection efforts. (House Bill 1042, Laws 2004.)


The outline reads, "...Every person, partnership, corporation or other organization that sells, rents, or leases taxable items or performs taxable services in South Dakota must apply for a sales tax license. You must be licensed before making sales in South Dakota..." The outline replaces any previous documentation on the matter at hand prior to January 1, 2004. Included in the outline are answers to questions a taxpayer may have about getting licensed, collecting and remitting sales and use taxes, and potential penalties for not abiding by established laws. (Tax Facts #130, January 1, 2004.)



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