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South Dakota Sales Tax Guide

By Cristina Garza

🦖🏔 South Dakota, so-called “Land of Infinite Variety,” is a state known for its expansive natural bounty. Home to nine national parks, its most famous is probably Mt. Rushmore. With over 2.3 million visitors a year, it’s easily South Dakota’s biggest draw for tourists. Another prized area in the state, the Badlands National Park, is where a major archeological treasure was uncovered in 1990. Sue the T-Rex, the best preserved and most complete T-Rex fossil ever found, was unearthed in the Badlands. Beyond agriculture and tourism, South Dakota has a thriving spirit of entrepreneurship. If you’re one of the lucky small business owners who calls South Dakota home, you’re going to want to be sure your business stays in line with South Dakota's sales tax laws. No problem! That’s why we have assembled this all-in-one guide; so that you can readily meet the sales tax compliance requirements for a small business in South Dakota. 

After reading this guide, you will have learned:

  • How to be prepared for your call with the South Dakota Department of Revenue.
  • How to contact the South Dakota Department of Revenue.
  • When to charge sales tax in South Dakota.
  • What goods, products, and services are taxable in South Dakota.
  • When you establish a sales tax nexus with the state of South Dakota, and the nuances of various thresholds.
  • How to register for a sales tax license in South Dakota.
  • How to collect sales tax in South Dakota.
  • How to file and pay sales tax in South Dakota.

If, after reading, you still have any questions to help you determine your tax sales obligations in South Dakota and how to fulfill them, we are here for your small business bookkeeping needs! 

 

 


Sales Tax Contacts in South Dakota

South Dakota Sales Tax Contacts

 

âś…  Do you need to get in touch with the South Dakota Department of Revenue?

âś…  Are you uncertain about whether to visit, call them, or contact them through their website?  

âś… Do you wonder what information you should have ready before you contact them?

 

If you answered “Yes” to any of these questions, please read onward, as we have just the information you need! :)

The South Dakota Department of Revenue is reachable by phone at 800-829-9188. 

You can also visit their one of their seven local offices or send them an email. If you are hoping for the fastest response, we always suggest that you call rather than visit in person or emailing. 

When you do call the South Dakota Department of Revenue, you will want to have some information on hand. It will save time to have the following information easily accessible before you call: 

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

If you plan on having a third party contact them on your behalf, you’ll want to be sure to have completed a power of attorney form (E-1285, PDF). If you don’t have a completed form they won’t be able to assist someone else on your behalf.

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

 

 


Register for Sales Tax in South Dakota

South Dakota Sales Tax Registration

 

Are you a new business selling tangible property in South Dakota? If yes, you are going to want to register your business with the South Dakota Department of Revenue so that you can pay your sales tax on time. 

You need not fret as this is a relatively simple process and one for which you’re about to be fully prepared. We are going to outline the steps below so you are totally ready to register for your sales tax license.

Here we go! Remember...

Preparation is key. 

Let’s get started!

 

 

How do I register to collect sales tax in South Dakota?

You can apply or register for a South Dakota sales tax permit by visiting the South Dakota Tax Application site and following the instructions provided.

South Dakota doesn’t offer an old school paper based form you can print and mail in. All new businesses must register online.

 

 

What information do I need to register for a South Dakota sales tax permit?

Great question!

Before you sign up for South Dakota sales tax permit you’ll want the following information on hand:

  • Business name
  • Business entity type 
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • Associated business entities 
  • NAICS code that best matches the business
  • Federal Employer Identification Number (FEIN)
  • List of business officers, partners, managing members, and/or trustees

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your permit at the South Dakota Tax Application site. 

 

 

How much does it cost to register for a South Dakota sales tax permit?

Zilch! South Dakota charges precisely $0 to register a new business sales tax permit.

 

 

Do I need a Federal Tax ID Number or EIN to register for a South Dakota sales tax permit?

Quite right! You will most assuredly need one, but if you don’t already have one and need to get a new EIN, it’s a painless process. You can register for a Federal EIN right here :). 

 

 

Which agencies in South Dakota do I need to additionally register with?

You may need to check with some of the following agencies or resources: 

You’ll want to give this some thought and do a little research or investigating; since every business is unique, and there are such different rules, regulations, and laws that may apply. 

We suggest contacting the South Dakota Department of Revenue to verify which additional government agencies you may be required to register with. 

 

*****

 

Huzzah!!!

You are now prepared to register for your South Dakota sales tax permit in South Dakota. 

Let’s summarize what we have covered:  

  • Have all the required information easily accessible before registering online.
  • Acquire a tax ID or EIN before registering for a South Dakota sales tax permit.
  • Register online at the South Dakota Tax Application page.
  • Look into what other agencies you may have to additionally register with.

Registering for your South Dakota sales tax permit will be stress free as long as you are prepared. We recommend organizing all the essential information in a folder, preferably using a system like Box.com or Dropbox (something we’re happy to handle for our customers). 

 

 


South Dakota Sales Tax FAQ

South Dakota Sales Tax FAQ 

By now, you may have already contacted the South Dakota Department of Revenue and applied for a South Dakota sales tax permit. 

Once you have a license to collect and remit sales taxes in South Dakota, you will probably be asking yourself two questions: 

  • When do I charge a sales tax in South Dakota?
  • What goods and services are subject to sales taxes in South Dakota? 

We are going to go over some common questions that our clients have asked. We believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations. 

Let’s start with the first question…

 

 

What goods and services are considered taxable in South Dakota?

The following items are all taxable in the state of South Dakota: 

  • Sales of tangible goods at retail.
  • Repairs or alterations of tangible personal property.
  • Property rentals, leases, or licenses [e.g. commercial, mini-warehouse]
  • Selling service warranty contracts.
  • Short-term rentals for living accommodations (e.g. motel/hotel, beach houses, condos, timeshares, vacation homes, or RV homes).
  • Rental/lease of personal goods (e.g.: machinery, vehicles, equipment, or other property).
  • Charges for admission to any place of amusement, sport, or recreation.
  • Manufacturing or producing goods for retail sales.
  • Operating vending machines or amusement rides.
  • Some services are exempted

 

 

The bottom line is …

Your business must pay taxes on sales of any non-exempt goods, and some taxable services.

 

*****

 

 

Let’s now review some of our clients’ frequently asked questions:

  • Is South Dakota an Origin or Destination sales tax State?
  • What creates a sales tax nexus in South Dakota?
  • What is the economic threshold in South Dakota?
  • Does Amazon have fulfillment centers in South Dakota?
  • Does South Dakota have a Click-Through Nexus?

To best understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions. 

 Let’s discuss some questions that will help you understand the nature of your small business and the subsequent tax implications.   

 

 

Is South Dakota an origin or destination-based sales tax state?

South Dakota is a Destination-based sales tax state. This simply means you’ll want to have your Point-of-Sales system configured to track sales tax based on your buyer’s location vs your business location.

 

 

 Protip: Charge sales tax based on your buyer’s location rather than your location

 

 

What creates a tax nexus with the state of South Dakota?  

Having nexus, also known as "sufficient business presence,” with South Dakota means your business has established a taxing connection with a state. When this happens, you are required to collect and remit sales tax in South Dakota because you created a sales tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay sales tax to the South Dakota Department of Revenue even if you never step foot in South Dakota.   

So, how do you create sales tax nexus in South Dakota?

 

What creates sales tax nexus?

 

A business establishes a nexus in South Dakota by:

  • having a business location in South Dakota;
  • having property stored in South Dakota;
  • employing any person in South Dakota;
  • contracting with a salesperson or other agent in South Dakota;
  • leasing equipment used in South Dakota;
  • performing services in South Dakota;
  • licensing the use of intangible property in South Dakota, or transporting property in South Dakota using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored, such as in the instance of an Amazon warehouse. 

 

 

Does Amazon have fulfillment centers in South Dakota?

No, not at this time. 

This is relevant for our customers that sell on Amazon or through Amazon’s FBA program.

In such cases we can help guide a small business through this regulatory maze! We use tools like A2X and Wherestock to identify where our clients' inventory is currently being held and shipped from so that we can keep them in compliance. 

 

 

Does South Dakota have economic nexus?

Does it ever! Yes, South Dakota has the OG economic nexus law (Wayfair vs. South Dakota the landmark precedent-setting case). As of November 1st, 2018, remote sellers are liable to pay sales tax beyond a certain threshold. This means that even businesses without a physical presence or traditional nexus can be required to register for, collect, and pay sales taxes.

The threshold for registering is having a cumulative gross revenue of over $100,000 or more than 200 transactions in a year to South Dakota purchasers.

For  more information see the South Dakota DOR’s remote sellers page here.

 

 

Does South Dakota have click-through nexus?

Yes, it does, with the same thresholds as above: $100k in a year or 200 transactions in a year. This impacts affiliate marketers or those who gain income by referring rather than transacting sales.

 

 

Is South Dakota a streamlined sales tax state?

Yep! Since October, 2005 South Dakota has been a full member of Streamlined Sales Tax.

If you are planning on taking advantage of the Streamlined Sales Tax as a business, it is recommended that you use a Certified Service Provider though businesses may opt to register themselves without a CSP. Ultimately the aim of streamlined sales tax is to simplify payment to multiple different states of sales and use tax. It isn’t required that you utilize them, but it can significantly reduce complexity to do so, especially if your business sells in multiple states.

 

 

More effectively manage your tax needs by keeping this guide handy. 

You and your business can be better equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in South Dakota.

 

 


Collecting sales Tax in South Dakota

Collecting Sales Tax in South Dakota

 

By now you know if you are a business that has established a nexus with South Dakota. So you have an understanding about whether, or when, you are required to collect sales tax. Knowing this is just half the battle! Now, we are going to help you with the next half of the battle: how to navigate the process of collecting taxes.

Let’s review some common questions our clients have asked regarding their South Dakota Sales Tax obligations. 

  • How do I collect South Dakota Sales Tax?
  • Who is eligible for South Dakota Sales Tax exemptions?
  • What should I do if my customer is exempt from sales tax in South Dakota?
  • What happens if I lose a South Dakota nontaxable transaction certificate? 

After reading this, you will be better equipped to determine when --and when not-- to collect sales tax in South Dakota.

 

 

How do I collect South Dakota sales tax?

Because South Dakota is a destination-based sales tax state, your business should charge sales tax at the time of the transaction based on the buyer’s location rather than that of the business. 

 

 

What are the current South Dakota sales tax rates?   

South Dakota’s state-wide sales tax rate is 4.5% at the time of this article’s writing, with local surtaxes potentially adding on to that. Since sales tax rates may change, we advise you to check out the South Dakota Department of Revenue Tax Rate page which has the current rate. Any change will be reflected on that page.

It always helps to be accurate and up to date with this type of information! :) 

 

 

What is exempt from South Dakota Sales Tax?

What is exempt from sales tax in South Dakota?

 

Here is a sample list of exemptions: 

  • purchases for resale
  • Industrial Machinery
  • Medical supplies

And that’s it! Most items of tangible property are taxable in South Dakota. Controversially, this includes groceries. 

 

 

Who are eligible for South Dakota sales tax exemptions?

At this point, you should know what products are exempt from sales tax in South Dakota. You also want to know who may be exempt. 

Under South Dakota law, the type of buyer or the way the goods will be used can qualify can buyer for a sales tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

  • Government agencies
  • Non-profit organizations
  • Religious groups
  • Out-of-state buyers (should their business not have nexus in their home state).

Note that a non-profit status doesn’t instantly confer tax exemption.

 

 

What should I do if my customer is exempt from sales tax in South Dakota?

Purchasers who are tax exempt must have completed resale certificate (PDF) and must present their completed exemption certificate at the time of purchase. It is then incumbent upon the seller to hold on to this exemption certificate. Failure to do so may leave you unable to justify tax exempt sales.

Remember, you always want to collect and file a copy of the exempt certificate. Such certificates must be produced upon request in the event of an audit to justify tax-exempt sales.

 

 

What happens if I lose a South Dakota sales tax exemption certificate?

Obviously this issue is best to be avoided! Imagine finding out you’ll be audited and discovering you cannot produce an exemption certificate for a buyer... That nightmare scenario would mean you could be held liable to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking proper care of your paperwork... Which happens to be one of our specialties! :) 

 

 

Does South Dakota have a sales tax holiday?

Nope, no break from sales tax in South Dakota at this time. Boo!

 

***** 

 

We have now covered who you need to collect sales taxes from, how to determine whether goods for sale are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and, finally, the process of collecting sales tax in South Dakota state. 

Now that we’re this far down the rabbit hole there’s only one thing we need to learn about next… how to pay the piper! 

 

 


Filing and Paying Sales Tax in South Dakota

Filing and Paying Sales Tax in South Dakota

 

It is time to talk about filing and paying your sales taxes in South Dakota. In this section, We are going to cover the following frequently asked questions from our clients:

  • When is South Dakota Sales Tax due?
  • What are the South Dakota Sales Tax thresholds?
  • What if a South Dakota Sales Tax filing date falls on a weekend or holiday?
  • How do I file a South Dakota Sales Tax Return?
  • How do I correct a South Dakota Sales Tax return?
  • What happens if I don’t collect sales tax?
  • What happens if I file or pay my sales tax return late?
  • Do I need to file a return if I don’t collect any sales tax in South Dakota?
  • If I close my business, do I need to file a final sales tax return?
  • Does the South Dakota Department of Revenue offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your South Dakota Sales Tax.

 

 

When is South Dakota sales yax due?

South Dakota sales tax payments are due based on the filing interval and type. Filing intervals are based on the company’s tax liability [detailed ahead, be patient! :p] and the type refers to paper vs. online.

The state of South Dakota requires payment by no later than the 20th day of the month following the reporting period for paper and electronic filing. For electronic payment the due date is the 25th day following the reporting period. 

 

 

What are the South Dakota Sales Tax filing interval thresholds?

The thresholds for filing intervals are based on the expected or actual tax liability owed:

 

Average Tax Liability Owed Monthly*

Filing interval

Equal or less than $83.33

Annual / Quarterly

More than $83.33

Monthly

 

 

*anticipated if new business, actual if existing company

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point-of-Sale Software to see the volume of sales you have generated. 

Don't worry though! The state will let you know when your due dates change. :) 

Keep an eye out for notices in your mail from the State of South Dakota so that you don't miss any shift in deadlines.

 

 

What if a South Dakota sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. Where possible, we always suggest filing well before the holiday, of course ;). 

 

 

How do I file a South Dakota sales tax return?

Paper: Fill out SalesReturnBlank form and mail to the address on the form. 

Electronic: File online via ePATH site and submit payment via EFT.

 

  

How do I correct a South Dakota sales tax return?

Paper: Call 800-829-9188 to request a new form.

Electronic: Amend the return within the ePATH portal.

 

 

What happens if I don’t collect sales tax?

If you were required to collect sales taxes and failed to do so for whatever reason, that’s a big no-no! Ultimately the business will be held liable for the due tax. Always be sure to collect sales tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful.

 

 

Protip: You are still responsible for remitting sales taxes even if you failed to collect them. 

 

 

What happens if I file or pay my sales tax return late?

South Dakota's Department of Taxation charges separate penalties for late filing vs late payment:

 

Late filing results in a penalty of 10% per month with a minimum of $10 if a return isn’t filed within thirty days.

 

Late payment will also accrue interest at a rate of 1% per month.

 

 

Do I need to file a return if I don’t collect any sales tax in South Dakota?

Yep! South Dakota requires businesses file a “Zero-Tax” return even when they have no sales during a taxing period.

 

 

If I close my business, do I need to file a final sales tax return?

Absolutely, South Dakota requires businesses to file a “Final sales tax” return when closing their doors.

 

 

Does the South Dakota Department of Revenue offer a discount for filing on time?

Yes, they do! South Dakota offers 1.5% to a maximum of $70. Not a huge savings, but no reason to not capitalize on this potential saving, so be sure to file early!

 

*****

 

Now that we have covered all our bases for filing and paying sales taxes in the state of South Dakota, you should feel more at ease about the process.

 

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early.
  • There are three payment plans for filing and paying your sales taxes depending on how much you collect in sales tax on average in a month.
  • You can file and pay your taxes electronically or by mail
  • If you need to amend a return, you may do so electronically or by paper.
  • If you don’t collect sales tax and you were supposed to, you (not the buyer) is liable to pay the sales tax to the state of South Dakota.
  • You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
  • Even if you collect no sales tax, you still need to file a return.
  • You need to file a “Final sales tax report” when you close your business.

 

Now, you are ready to file and pay your sales tax in South Dakota. If you have any more questions, feel free to contact us.

 

 

  Click here if you think sales tax is boring. Book a meeting.

 

 


Please note: This blog is for informational purposes only and the information is accurate as of 10/14/2019. If you want legal advice on sales tax law for your business, please contact a Sales Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog possibly may be out of date by the time you review it.