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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.)


When a telecommunication transaction is a bundled together with taxable and nontaxable services, the nontaxable part will be subject to tax unless the provider can "reasonably identify the nontaxable portion from its books and records kept in the regular course of business." (S.B. 116, signed by the Governor on 3/24/2003, effective 7/1/2003)



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