2019 Conference Committees - HB 1265 Minutes

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94th Legislative Session _ 2019

Committee: 1265 A 3/12/2019 5:00:00 PM
Tuesday, March 12, 2019

                                            P - Present
                                            E - Excused
                                            A - Absent

Roll Call
P    Gosch, Chair
P    Beal
P    Ring
P    Wiik, Chair
P    Stalzer
P    Kennedy

OTHERS PRESENT: See Original Minutes

The meeting was called to order by Representative Spencer Gosch.

    HB 1265: revise provisions regarding certain tax rates.

MOTION:    DO PASS AND CONCUR WITH SENATE AMENDMENT.

Moved by:    Wiik
Second by:    Kennedy
Action:    Was not acted on.

MOTION:    SUBSTITUTE MOTION AMEND HB 1265

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    On the Senate State Affairs Committee engrossed bill, delete everything after the enacting clause and insert:

"    Section 1. That the code be amended by adding a NEW SECTION to read:

    (A) The rate of tax under §§ 10-45-2, 10-45-5, 10-45-5.3, 10-45-6, 10-45-6.1. 10-45-6.2,

10-45-8, 10-45-71, 10-46-2.1, 10-46-2.2, 10-46-58, 10-46-69, 10-46-69.1, 10-46.69.2, 10-46E-1, and 10-58-1 is four and one-half percent, except as follows:

            (1)    If the actual revenue certified under subsection (B) exceeds twenty million dollars, the rate of tax imposed by this section is four and four-tenths percent, effective on the first day of July in the next calendar year;
            (2)    If the rate of tax under this section is four and four-tenths percent, and a calculation of actual revenue certified under subsection (B) exceeds forty million dollars, the rate of tax imposed by this section is four and three-tenths percent, effective on the first day of July in the next calendar year;
            (3)    If the rate of tax under this section is four and three-tenths percent, and a calculation of actual revenue certified under subsection (B) exceeds sixty million dollars, the rate of tax imposed by this section is four and two-tenths percent, effective on the first day of July in the next calendar year;
            (4)    If the rate of tax under this section is four and two-tenths percent, and a calculation of actual revenue certified under subsection (B) exceeds eighty million dollars, the rate of tax imposed by this section is four and one-tenth percent, effective on the first day of July in the next calendar year; and
            (5)    If the rate of tax under this section is four and one-tenth percent, and a calculation of actual revenue certified under subsection (B) exceeds one hundred million dollars, the rate of tax imposed by this section is four percent, effective on the first day of July in the next calendar year.

    (B) The Department of Revenue shall certify to the Joint Committee on Appropriations, no later than the fifteenth day of February, a calculation of actual revenue generated during the immediately preceding calendar year under §§ 10-64-2 and 10-65-5. The calculation under this subsection may not include any revenue generated prior to November 1, 2018. For any seller that is subject to §§ 10-64-2 and 10-65-5, revenue generated from that seller shall continue to be included in the calculation under this subsection even if the seller subsequently establishes a physical presence in this state.

    (C) The Joint Committee on Appropriations may introduce legislation to delay the effective date of any reduction under subsection (A).

    Section 2. 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 this state to consumers or users. The rate of tax under this section is the same as provided under section 1 of this Act.


    Section 3. 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 Specific enumeration of businesses and professions made in any business or profession under this section does not, in any way, limit the scope and effect of the provisions of § 10-45-4. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 4. 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 5. 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 this state to consumers or users. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 6. 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 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 7. 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 8. 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 9. That § 10-45-71 be amended to read:

    10-45-71. There is imposed a tax of four and one-half percent on upon 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 10. That § 10-46-2.1 be amended to read:

    10-46-2.1. For the privilege of using services in South Dakota this state, except those types of any 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 on the value of the services at the time they are rendered. However, this The tax under this section 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 11. 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 rate of tax under this section is the same as provided under section 1 of this Act as applied to the rental payments upon the property.

    Section 12. 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 13. 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. The rate of tax under this section is the same as provided under section 1 of this Act.



    Section 14. 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 15. 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 16. 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 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. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 17. 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 on the gross receipts from the operation of any mechanical or electronic

amusement device. The rate of tax under this section is the same as provided under section 1 of this Act.

    Section 18. That § 10-64-9 be repealed.

    10-64-9. If the state is able to enforce the obligation to collect and remit sales tax on remote sellers who deliver tangible personal property, products transferred electronically, or services directly to the citizens of South Dakota, the additional net revenue from such obligation shall be used to reduce the rate of certain taxes. The rate of tax imposed by §§ 10-45-2, 10-45-5, 10-45-5.3, 10-45-6, 10-45-6.1, 10-45-6.2, 10-45-8, 10-45-71, 10-46-2.1, 10-46-2.2, 10-46-58, 10-46-69, 10-46-69.1, 10-46-69.2, 10-46E-1, and 10-58-1 shall be reduced by one-tenth percent on July first following the calendar year for which each additional twenty million dollar increment of net revenue is collected and remitted by such remote sellers. However, the rate of tax imposed by §§ 10-45-2, 10-45-5, 10-45-5.3, 10-45-6, 10-45-6.1, 10-45-6.2, 10-45-8, 10-45-71, 10-46-2.1, 10-46-2.2, 10-46-58, 10-46-69, 10-46-69.1, 10-46-69.2, 10-46E-1, and 10-58-1 may not be reduced below four percent pursuant to the provisions of this section. "



Moved by:    Beal
Second by:    Gosch
Action:    Failed by roll call vote. (2-4-0-0)

Voting Yes:    Wiik, Kennedy

Voting No:    Gosch, Beal, Ring, Stalzer

MOTION:    SUBSTITUTE MOTION DO PASS HB 1265 AS AMENDED

Moved by:    Beal
Second by:    Gosch
Action:    Failed by roll call vote. (2-4-0-0)

Voting Yes:    Wiik, Kennedy

Voting No:    Gosch, Beal, Ring, Stalzer

MOTION: DO PASS AND CONCUR WITH SENATE AMENDMENT.

Moved by:    Wiik
Second by:    Kennedy
Action:    Failed by roll call vote. (3-3-0-0)


Voting Yes:    Gosch, Beal, Stalzer

Voting No:    Ring, Wiik, Kennedy

MOTION:    THE SENATE AND HOUSE DO NOT CONCUR WITH THE SENATE AMENDMENTS TO HB1265 AND DO NOT APPOINT A NEW COMMITTEE.

Action:    Prevailed by roll call vote. (6-0-0-0)

Voting Yes:    Gosch, Beal, Ring, Wiik, Stalzer, Kennedy

MOTION:    ADJOURN

Moved by:    Beal
Second by:    Wiik
Action:    Prevailed by voice vote.

Sharon

____________________________

Committee Secretary
Spencer Gosch, Chair


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