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HB 1182 increase the state sales tax, the state use tax, the excise ta...

State of South Dakota  
NINETY-FIRST SESSION
LEGISLATIVE ASSEMBLY, 2016  

400X0607   HOUSE BILL   NO.  1182  

Introduced by:    The Committee on Appropriations at the request of the Office of the Governor
 

        FOR AN ACT ENTITLED, An Act to increase the state sales tax, the state use tax, the excise tax on farm machinery, and amusement device tax for the purpose of increasing education funding and reducing property taxes, and to declare an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
    Section 1. That § 10-45-2 be amended to read:
    10-45-2. There is hereby imposed a tax upon the privilege of engaging in business as a retailer, a tax of four and one-half percent upon the gross receipts of all sales of tangible personal property consisting of goods, wares, or merchandise, except as otherwise provided in this chapter, sold at retail in the State of South Dakota to consumers or users.
    Section 2. That § 10-45-5 be amended to read:
    10-45-5. There is imposed a tax at the rate of four and one-half percent upon the gross receipts of any person from engaging or continuing in any of the following businesses or services in this state: abstracters; accountants; ancillary services; architects; barbers; beauty shops; bill collection services; blacksmith shops; car washing; dry cleaning; dyeing; exterminators; garage and service stations; garment alteration; cleaning and pressing; janitorial

services and supplies; specialty cleaners; laundry; linen and towel supply; membership or entrance fees for the use of a facility or for the right to purchase tangible personal property, any product transferred electronically, or services; photography; photo developing and enlarging; tire recapping; welding and all repair services, except repair services for farm machinery, attachment units, and irrigation equipment used exclusively for agricultural purposes; cable television; and rentals of tangible personal property except leases of tangible personal property between one telephone company and another telephone company, motor vehicles as defined pursuant to § 32-5-1 leased under a single contract for more than twenty-eight days and mobile homes. However, the specific enumeration of businesses and professions made in this section does not, in any way, limit the scope and effect of the provisions of § 10-45-4.
    Section 3. That § 10-45-5.3 be amended to read:
    10-45-5.3. There is imposed, at the rate of four and one-half percent, an excise tax on the gross receipts of any person engaging in oil and gas field services (group no. 138) as enumerated in the Standard Industrial Classification Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President.
    Section 4. That § 10-45-6 be amended to read:
    10-45-6. There is hereby imposed a tax of four and one-half percent upon the gross receipts from sales, furnishing, or service of gas, electricity, and water, including the gross receipts from such sales by any municipal corporation furnishing gas, and electricity, to the public in its proprietary capacity, except as otherwise provided in this chapter, when sold at retail in the State of South Dakota to consumers or users.
    Section 5. That § 10-45-6.1 be amended to read:
    10-45-6.1. Except as provided in § 10-45-6.2, there is hereby imposed a tax of four and one-half percent upon the gross receipts from providing any intrastate, interstate, or international

telecommunications service that originates or terminates in this state and that is billed or charged to a service address in this state, or that both originates and terminates in this state. However, the tax imposed by this section does not apply to:

            (1)    Any eight hundred or eight hundred type service unless the service both originates and terminates in this state;
            (2)    Any sale of a telecommunication service to a provider of telecommunication services, including access service, for use in providing any telecommunication service; or
            (3)    Any sale of interstate telecommunication service provided to a call center that has been certified by the secretary of revenue to meet the criterion established in § 10-45-6.3 and the call center has provided to the telecommunications service provider an exemption certificate issued by the secretary indicating that it meets the criterion.
    If a call center uses an exemption certificate to purchase services not meeting the criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty, and interest.
    Section 6. That § 10-45-6.2 be amended to read:
    10-45-6.2. There is hereby imposed a tax of four and one-half percent upon the gross receipts of mobile telecommunications services, as defined in 4 U.S.C. § 124(7) as of January 1, 2002, that originate and terminate in the same state and are billed to a customer with a place of primary use in this state or are deemed to have originated or been received in this state and to be billed or charged to a service address in this state if the customer's place of primary use is located in this state regardless of where the service actually originates or terminates. Notwithstanding any other provision of this chapter and for purposes of the tax imposed by this section, the tax imposed upon mobile telecommunication services shall be administered in accordance with 4 U.S.C. §§ 116-126 as in effect on July 28, 2000.
    Section 7. That § 10-45-8 be amended to read:
    10-45-8. There is imposed a tax of four and one-half percent upon the gross receipts from all sales of tickets or admissions to places of amusement and athletic contests or events, except as otherwise provided in this chapter.
    Section 8. That § 10-45-71 be amended to read:
    10-45-71. There is imposed a tax of four and one-half percent on the gross receipts from the transportation of passengers. The tax imposed by this section shall apply to any transportation of passengers if the passenger boards and exits the mode of transportation within this state.
    Section 9. That § 10-46-2.1 be amended to read:
    10-46-2.1. For the privilege of using services in South Dakota, except those types of services exempted by § 10-46-17.3, there is imposed on the person using the service an excise tax equal to four and one-half percent of the value of the services at the time they are rendered. However, this tax may not be imposed on any service rendered by a related corporation as defined in subdivision 10-43-1(11) for use by a financial institution as defined in subdivision 10-43-1(4) or on any service rendered by a financial institution as defined in subdivision 10-43-1(4) for use by a related corporation as defined in subdivision 10-43-1(11). For the purposes of this section, the term related corporation includes a corporation which together with the financial institution is part of a controlled group of corporations as defined in 26 U.S.C. § 1563 as in effect on January 1, 1989, except that the eighty percent ownership requirements set forth in 26 U.S.C. § 563(a)(2)(A) for a brother-sister controlled group are reduced to fifty-one percent. For the purpose of this chapter, services rendered by an employee for the use of his employer are not taxable.
    Section 10. That § 10-46-2.2 be amended to read:
    10-46-2.2. An excise tax is imposed upon the privilege of the use of rented tangible personal

property and any product transferred electronically in this state at the rate of four and one-half percent of the rental payments upon the property.
    Section 11. That § 10-46-58 be amended to read:
    10-46-58. There is imposed a tax of four and one-half percent on the privilege of the use of any transportation of passengers. The tax imposed by this section shall apply to any transportation of passengers if the passenger boards and exits the mode of transportation within this state.
    Section 12. That § 10-46-69 be amended to read:
    10-46-69. There is hereby imposed a tax of four and one-half percent upon the privilege of the use of mobile telecommunications services, as defined in 4 U.S.C. § 124(7) as of January 1, 2002, that originate and terminate in the same state and are billed to a customer with a place of primary use in this state. Notwithstanding any other provision of this chapter and for purposes of the tax imposed by this section, the tax imposed upon mobile telecommunication services shall be administered in accordance with 4 U.S.C. §§ 116-126 as in effect on July 28, 2000.
    Section 13. That § 10-46-69.1 be amended to read:
    10-46-69.1. Except as provided in § 10-46-69, there is hereby imposed a tax of four and one-half percent upon the privilege of the use of any intrastate, interstate, or international telecommunications service that originates or terminates in this state and that is billed or charged to a service address in this state, or that both originates and terminates in this state. However, the tax imposed by this section does not apply to:

            (1)    Any eight hundred or eight hundred type service unless the service both originates and terminates in this state;
            (2)    Any sale of a telecommunication service to a provider of telecommunication services, including access service, for use in providing any telecommunication

service; or

            (3)    Any sale of interstate telecommunication service provided to a call center that has been certified by the secretary of revenue to meet the criterion established in § 10-45-6.3 and the call center has provided to the telecommunications service provider an exemption certificate issued by the secretary indicating that it meets the criterion.
    If a call center uses an exemption certificate to purchase services not meeting the criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty, and interest.
    Section 14. That § 10-46-69.2 be amended to read:
    10-46-69.2. There is hereby imposed a tax of four and one-half percent upon the privilege of the use of any ancillary services.
    Section 15. That § 10-46E-1 be amended to read:
    10-46E-1. There is hereby imposed an excise tax of four and one-half percent on the gross receipts from the sale, resale, or lease of farm machinery, attachment units, and irrigation equipment used exclusively for agricultural purposes. However, if any trade-in or exchange of used farm machinery, attachment units, and irrigation equipment is involved in the transaction, the excise tax is only due and may only be collected on the cash difference.
    Section 16. That § 10-58-1 be amended to read:
    10-58-1. There is imposed upon owners and operators a special amusement excise tax of four and one-half percent of the gross receipts from the operation of any mechanical or electronic amusement device.
    Section 17. It is the intent of the Legislature that from the proceeds of this Act, forty million dollars shall be dedicated to reducing the property tax levies for general education for all classes of property.
    Section 18. Whereas, this Act is necessary for the support of the state government and its

existing public institutions, an emergency is hereby declared to exist, and this Act shall be in full force and effect on June 1, 2016.

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