Administrative Rule 64:06:02 | South Dakota Legislature

A nonprofit community playhouse which uses volunteer persons to perform in theatrical plays qualifies as an organization which is exempt under SDCL 10-45-13 from having to charge sales tax on its admissions. Secretary of Revenue and Regulation Declaratory Ruling No. 80-10.

Phonograph records purchased by a business which supplies background music to stores and offices are consumed by the business instead of being purchased for resale, and sales tax must be paid on them. Secretary of Revenue and Regulation Declaratory Ruling No. 81-3.

The entire gross receipts of a business which stores business records for banks, law firms, hospitals, and clinics, including the fees charged for pickup and delivery and for performing miscellaneous services on the records, are subject to the retail sales and service tax imposed by SDCL 10-45-4. Such services have not been specifically exempted from the tax by SDCL 10-45-12.1. Secretary of Revenue and Regulation Declaratory Ruling 91-2, May 14, 1991.

The engineering services provided by a technical services company to a company that builds and repairs building components are subject to tax pursuant to SDCL 10-45-4. They are not an integral, inseparable component of services involving the manufacture, fabrication, processing, or manipulation of tangible personal property. Secretary of Revenue and Regulation Declaratory Ruling 92-1, September 11, 1992.

Rule 64:06:02:01 Repealed.

64:06:02:01. Abstractors.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:02 Repealed.

64:06:02:02. Accountants and bookkeepers.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:03 Advertising.

64:06:02:03. Advertising. Advertising services are the business of preparing advertisements for publication in newspapers, magazines, placemats, billboards, or handbills or for broadcast and welcoming services which contact new residents and others to explain business services within the area and leave promotional literature.

Charges for advertising in newspapers or magazines are not taxable. Likewise, charges made by advertising agencies for preparing and placing advertising in advertising media are charges for services and therefore not taxable.

Services purchased by the agency to assist it in completing a project for a current customer are not subject to tax if the service is an integral and inseparable component of the ultimate service to its customer and the agency provides the service provider with an exemption certificate. Examples of services that may be considered for resale if they are an integral and inseparable part of the final product are art work, proofreading, copywriting, handlettering, photo finishing, modeling, photography, production studio rental, photo studio rental, video studio rental, audio studio rental, prop rental, music rights, sound effects, dubbing, typesetting, color separation, keylining, illustration, retouching, air brushing, silk screening, and editing.

Sales tax applies to gross receipts from sales of tangible personal property and any product transferred electronically to persons providing advertising services for use and consumption in preparing advertisements. Tax applies to the following: paper, ink, paint, tools, office supplies, type, and charges by printers for production of pamphlets, booklets, brochures, and other material printed by them.

Source: SL 1975, ch 16, § 1; 7 SDR 80, effective February 22, 1981; 12 SDR 111, effective January 12, 1986; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 18 SDR 3, effective July 14, 1991; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-45-12.1, 10-45-20.

Rule 64:06:02:03.01 Advertising payments.

64:06:02:03.01. Advertising payments. Gross receipts received by a retailer as a cost share or a reimbursement for purchases of exempt advertising services made by the retailer are not subject to sales tax if:

(1) The gross receipts are paid by a manufacturer or supplier to the retailer for including the manufacturer's or supplier's identity in the retailer's advertisement;

(2) The retailer denotes the gross receipts as a cost share or reimbursement for exempt advertising services; and

(3) The retailer has documentation verifying that the gross receipts were received as a cost share or reimbursement for a specific exempt advertising service purchased by the retailer.

Source: 24 SDR 97, effective January 25, 1998.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-2, 10-45-12.1, 10-45-20.

Rule 64:06:02:03.02 Advertising cooperatives.

64:06:02:03.02. Advertising cooperatives. Gross receipts received by a franchiser as a cost share or a reimbursement for purchases of exempt advertising services made by the franchiser are not subject to sales tax if:

(1) The gross receipts are paid by a franchisee to its franchiser for exempt advertising services purchased by the franchiser for the franchisee's business or the franchise;

(2) The franchiser denotes the gross receipts as a cost share or reimbursement for exempt advertising services; and

(3) The franchiser has documentation verifying that the gross receipts were received as a cost share or reimbursement for a specific exempt advertising service purchased by the franchiser.

Source: 24 SDR 97, effective January 25, 1998.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-2, 10-45-12.1, 10-45-20.

Rule 64:06:02:04 Repealed.

64:06:02:04. Architects.Repealed.

Source: SL 1975, ch 16, § 1; 5 SDR 60, effective January 25, 1979; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:05 Repealed.

64:06:02:05. Attorneys, physicists, meteorologists, geologists, chemists, engineers, and surveyors.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:06 Repealed.

64:06:02:06. Auctioneers and agents -- Pawnbrokers -- Disclosed and undisclosed principals.Repealed.

Source: SL 1975, ch 16, § 1; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; repealed by SL 1995, ch 68, §12A, effective July 1, 1995.

Rule 64:06:02:06.01 Repealed.

64:06:02:06.01. Community sales, auction houses, and public auctions.Repealed.

Source: 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; repealed by SL 1995, ch 68, § 12A, effective July 1, 1995.

Rule 64:06:02:06.02 Consignment sales are retail sales.

64:06:02:06.02. Consignment sales are retail sales. All consignment sales of tangible personal property and any product transferred electronically are sales at retail, and the consignee is a retailer who must collect and remit the tax on all such sales.

Source: 22 SDR 6, effective July 23, 1995; 28 SDR 178, effective July 1, 2002; 31 SDR 214, effective July 6, 2005; 35 SDR 48, effective September 8, 2008; 35 SDR 165, effective December 23, 2008.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-1(10), 10-45-2, 10-45-2.4.

Rule 64:06:02:06.03 Auctioneer sales not casual or occasional sales.

64:06:02:06.03. Auctioneer sales not casual or occasional sales. A sale directly by or a sale which is supervised or aided by an auctioneer or consignee or by an agent or employee of an auctioneer or consignee is not a casual or occasional sale.

Source: 22 SDR 6, effective July 23, 1995; 28 SDR 178, effective July 1, 2002; 33 SDR 226, effective June 27, 2007; 35 SDR 48, effective September 8, 2008; 37 SDR 48, effective September 21, 2010.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-1(10), 10-45-2, 10-45-2.4.

Cross-Reference: Casual or occasional sales, § 64:06:01:06.

Rule 64:06:02:07 Barber and beauty shops.

64:06:02:07. Barber and beauty shops. Taxable gross receipts of barber and beauty shops include items of merchandise sold to customers and the service performed for a customer.

Each shop must have one sales tax license, and each beautician or barber in a shop need not apply for a sales tax license, unless the beautician or barber is an independent contractor under the criteria set forth in § 64:06:02:07.01. At the end of each reporting period a sales tax return will be mailed by the department and only one sales tax return must be filed for each shop.

Barber and beauty shops are the consumers of supplies and equipment which are consumed or used by them in rendering their services. If the sales tax on such items is not paid to a South Dakota licensed supplier when purchased, then the cost of such items must be reported as a use tax item on the sales tax return. Such items include clippers, shampoos, rinses, and other items consumed on the premises by the barber or beauty shop. Items sold to customers for their use off the premises may be purchased from suppliers exempt from sales tax because they are purchases for resale.

Source: SL 1975, ch 16, § 1; 11 SDR 1, effective July 19, 1984; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-4.1, 10-45-5, 10-45-25, 10-46-2.

Rule 64:06:02:07.01 Independent contractors.

64:06:02:07.01. Independent contractors. The prime factor in distinguishing an employee from an independent contractor is the degree of control exercised by the employer. Other criteria which may be used to determine whether a person is an employee or an independent contractor are as follows:

(1) An employee is in the service of another, under an express or implied contract, and the employee's work is controlled by the employer, while an independent contractor is controlled by the person hiring the contractor only as to the results of the work;

(2) An independent contractor exercises rights or control over the worksite;

(3) An independent contractor may hire other workers over whom the contractor has control in matters such as hiring, firing, salary, and place and manner of work;

(4) An employee uses the equipment or material of the employer in a manner prescribed by the employer, while the independent contractor provides the labor, material, and means for accomplishing the work;

(5) An employee is generally paid an hourly rate or a monthly or annual salary, while the independent contractor is paid a specific amount for the work completed; and

(6) An independent contractor generally pays the contractor's own workers.

All of these factors are considered in determining whether a person is an independent contractor, but each case depends upon its own facts with the right to control being the most important criterion.

Source: 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-25, 10-46-2.1.

Rule 64:06:02:08 Blacksmiths and welders.

64:06:02:08. Blacksmiths and welders. Blacksmiths and welders are liable for tax on their receipts from the sales of tangible personal property and their services.

If a blacksmith makes or fabricates and sells a new article to a customer the blacksmith is liable for tax measured by the total gross receipts from the sale of this article, with no deduction for cost of production from the selling price.

Sales of tangible personal property to blacksmiths and welders, such as iron, steel, and metal for soldering for use either in manufacture of tangible personal property or in connection with repair work, are sales for the purpose of resale which are exempt from tax. Sales of oxygen, acetylene, blacksmith's coal or electrical energy are sales for consumption and taxable. Unless merchandise sold becomes an integral part in the manufacture or repair of personal property, the seller to the blacksmith must charge sales tax. If South Dakota sales tax has not been paid to a licensed vendor on supplies which do not become an integral part of the manufactured or repaired property, the cost of the supplies must be entered as a use tax item on the sales tax return.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-5.

Rule 64:06:02:09 Repealed.

64:06:02:09. Bootblacks.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 11 SDR 1, effective July 19, 1984.

Rule 64:06:02:10 Campgrounds or trailer parks.

64:06:02:10. Campgrounds or trailer parks. Sales tax, municipal gross receipts tax, and the gross receipts tax on certain visitor-related businesses is due on amounts paid or charges for parking facilities in campgrounds, tourist courts, trailer parks, or similar establishments provided for transient or permanent guests. Persons furnishing camping or parking services are considered the consumers of electricity, fuel, soap, towels, furniture, any other items of tangible personal property, or any product transferred electronically purchased for use in operating the establishment.

Source: SL 1975, ch 16, § 1; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3), 10-45D-13(3), 10-46-35.1(3), 10-52A-7(3).

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-45-5.2, 10-45-7, 10-45D-2, 10-46-2, 10-46-2.2, 10-52A-2.

Rule 64:06:02:11 Concessions at carnivals, circuses, and show troupes.

64:06:02:11. Concessions at carnivals, circuses, and show troupes. All concessionaires operating under the auspices of carnivals, circuses, show troupes, and similar organizations are, for the purpose of reporting and payment of sales and use tax, municipal gross receipts tax, and the gross receipts tax on certain visitor-related businesses, be considered as agents of the operator, and shall, at the close of each place of operation, report their gross receipts and the tax on the gross receipts to the operator. The operator shall maintain a record of the gross receipts and tax of each concessionaire, which record shall be available to taxation agents, and shall remit the tax to the department or its agents at the same time and place as the operator's own payments are made.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002; 30 SDR 58, effective November 5, 2003.

General Authority:SDCL 10-45-47.1(3), 10-45D-13(2), 10-52A-7(2).

Law Implemented:SDCL 10-45-2, 10-45D-12, 10-52A-6.

Rule 64:06:02:12 Repealed.

64:06:02:12. Carpenters.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:13 Repealed.

64:06:02:13. Carpenters -- Repair services taxable.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:14 Repealed.

64:06:02:14. Carpet installation.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:15 Car washing.

64:06:02:15. Car washing. Gross receipts from the business of car washing or providing car washing service are subject to sales tax. A car wash is the consumer of the supplies and must pay sales tax or use tax on the cost of the supplies in addition to reporting sales tax on gross receipts from washing cars. If only a car washing service is provided and the customer washes the car, the receipts for the use of the facility are subject to sales tax in addition to the receipts from supplies dispensed to a customer by a vending machine. Supplies which are sold to a customer through a vending machine may be purchased exempt from sales tax by the car wash as a resale item.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-5, 10-46-2.

Rule 64:06:02:16 Cleaners, dryers, and laundries.

64:06:02:16. Cleaners, dryers, and laundries. Gross receipts from cleaning and pressing, dry cleaning, and laundry services are subject to sales tax. No deduction may be taken for items expended by an operator in providing the service.

Cleaning and pressing establishments must pay South Dakota sales tax to suppliers or use tax to the state on their solvents, cleaning fluids, equipment, and other supplies which are consumed by them in rendering their service. Bags and hangers which ultimately pass to the customer as part of the taxable charge may be purchased exempt from tax when purchased by the cleaning establishment.

Laundries are the consumers of electricity, any product transferred electronically, and other tangible supplies or equipment which they purchase for providing their service and must pay South Dakota sales tax to their suppliers on such items or use tax to the state. Soap which is dispensed to a customer and a charge made to a customer may be purchased exempt from tax as an item for resale, however the gross receipts from items of tangible property or any product transferred electronically dispensed by a laundry are subject to sales tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-5, 10-45-2.4, 10-46-2, 10-46-2.2.

Rule 64:06:02:17 Repealed.

64:06:02:17. Coin operated laundries -- Fees.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:18 Coin operated laundries -- Consumers.

64:06:02:18. Coin operated laundries -- Consumers. Coin operated laundries are consumers of electricity, any product transferred electronically, and other tangible supplies or equipment which purchased for providing their service and must pay sales tax to suppliers on such items or use tax to the state. Soap and other items which are dispensed to a customer and a charge made to the customer may be purchased exempt from tax as items for resale, however the gross receipts from items of tangible property or any product transferred electronically dispensed by a coin operated laundry are subject to sales tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-46-2, 10-46-2.2.

Rule 64:06:02:19 Repealed.

64:06:02:19. Communication service.Repealed.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995; repealed, 29 SDR 177, effective July 2, 2003

Rule 64:06:02:20 Communication service -- Exempt charges.

64:06:02:20. Communication service -- Exempt charges. Charges for connection or reconnection of telephones are taxable services. Charges for directory advertising, boldface listing, and for listing in the directory classified section are exempt.

Source: SL 1975, ch 16, § ; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-4, 10-45-5.2, 10-45-6.1.

Rule 64:06:02:20.01 Sale of telephone directories.

64:06:02:20.01. Sale of telephone directories. The purchase of telephone directories for distribution to subscribers is not for resale and sales tax applies at the time of purchase.

Source: 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-2, 10-46-2.

Rule 64:06:02:21 Communication service -- Billing and collection.

64:06:02:21. Communication service -- Billing and collection. Gross receipts resulting from collection or billing services performed by a collection company or billing company for communication companies are subject to sales or use tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995; 29 SDR 177, effective July 2, 2003.

General Authority:SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented:SDCL 10-45-5.2, 10-45-6.1, 10-46-2.1.

Rule 64:06:02:21.01 Repealed.

64:06:02:21.01. Communication service -- 800-number telephone services.Repealed.

Source: 18 SDR 3, effective July 14, 1991; 21 SDR 219, effective July 1, 1995; repealed, 28 SDR 178, effective July 1, 2002.

Rule 64:06:02:21.02 Repealed.

64:06:02:21.02. Communication service -- Cellular telephone services.Repealed.

Source: 19 SDR 42, effective September 29, 1992; 21 SDR 219, effective July 1, 1995; repealed, 28 SDR 178, effective July 1, 2002.

Rule 64:06:02:22 Communication service -- Radio stations.

64:06:02:22. Communication service -- Radio stations. Radio stations are deemed to be primarily engaged in selling advertising services and gross receipts from such sales are exempt. Charges for transmission of radio messages from person to person are subject to tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-6.1, 10-45-12.1.

Rule 64:06:02:22.01 Satellite systems.

64:06:02:22.01. Satellite systems. Charges for connection of a satellite system for homeowner use are subject to sales tax. Contractor's excise tax must be remitted on all charges for the connection of a commercial system. The cost of installing poles or lines between the satellite dish and the building is subject to the contractor's excise tax.

Source: 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46A-19, 10-46B-18.

Law Implemented:SDCL 10-45-5.2, 10-46A-2, 10-46B-2.

Examples:

(1) A, a homeowner, contracts with B to install a satellite dish in the homeowner's yard for personal use. The cost of installation and connection of the system are subject to sales tax.

(2) KSD, a television station, installs a satellite system for commercial purposes. The cost of installing and connecting the system are subject to contractor's excise tax.

(3) The Rest Easy motel installs a satellite system for use by its patrons. The installation and connection costs are subject to the contractor's excise tax.

Rule 64:06:02:23 Transferred.

64:06:02:23. Transferred to § 64:07:01:13.

Rule 64:06:02:24 Transferred.

64:06:02:24. Transferred to § 64:07:01:14.

Rule 64:06:02:25 Transferred.

64:06:02:25. Transferred to § 64:07:01:15.

Rule 64:06:02:26 Transferred.

64:06:02:26. Transferred to § 64:07:01:16.

Rule 64:06:02:26.01 Repealed.

64:06:02:26.01. Contractor defined.Repealed.

Source: 17 SDR 4, effective July 18, 1990; 21 SDR 219, effective July 1, 1995; repealed, 24 SDR 43, effective October 13, 1997.

Rule 64:06:02:26.02 Transferred.

64:06:02:26.02. Transferred to § 64:07:01:17.

Rule 64:06:02:27 Repealed.

64:06:02:27. Decorators, painters, and paperhangers.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:28 Dentists and dental laboratories.

64:06:02:28. Dentists and dental laboratories. Dentists render a service to their patient and the gross receipts derived from this source are not subject to sales tax. If a dentist regularly sells tangible personal property such as mouthwashes, tooth brushes and the like, the dentist must have a sales tax license and report tax on the sales of such tangible personal property. Dentists who maintain laboratories and fabricate dentures or items for their patients are considered the consumers of the materials used in fabrication.

Dental laboratories that sell equipment, instruments, furniture, or dental supplies or render a repair or technical service, except preparation of dentures, to dentists, must report tax on such sales.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-2, 10-45-4, 10-46-2.

Declaratory Ruling: Gold and silver inserted into patients' teeth by dentists are exempt from sales tax. Secretary of Revenue Declaratory Ruling No. 77-15.

Rule 64:06:02:29 Repealed.

64:06:02:29. Electricians.Repealed.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; repealed, 15 SDR 58, effective October 19, 1988.

Rule 64:06:02:30 Repealed.

64:06:02:30. Electricians -- Repair services.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:31 Exterminators -- Taxable services -- Consumers.

64:06:02:31. Exterminators -- Taxable services -- Consumers. The gross receipts of an exterminator are subject to sales tax unless performed for an exempt entity. Persons who fall within this taxable classification are those engaged in the business of exterminating insects, rodents and other pests.

Exterminators are the consumers of the disinfectants, chemicals, and supplies used in their service.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-2, 10-46-2.

Rule 64:06:02:32 Florists and nursery operators.

64:06:02:32. Florists and nursery operators. Florists and nursery operators selling flowers, wreaths, plants, shrubs, roots, bulbs, trees, seeds, and other tangible personal property at retail are liable for tax on their gross sales, even if such merchandise is produced by the seller. If shrubbery, young trees, and similar items are sold and as part of the transaction the seller transplants them for the purchaser for a lump sum or flat rate, the entire receipts from the transaction are subject to the tax.

If a South Dakota florist receives an order pursuant to which the florist sends instructions to a second florist for delivery of flowers to a point outside South Dakota, tax is due on total receipts of the sending florist.

If a South Dakota florist receives telegraphic instructions from another florist, whether located within or outside South Dakota, for delivery of flowers, the receiving florist is not liable for tax on receipts which the florist may realize from the transaction. If orders originate in South Dakota, tax is due from the South Dakota florist who first received the order and gave telegraphic instructions to the second florist.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-2.

Rule 64:06:02:32.01 Seeding and sodding.

64:06:02:32.01. Seeding and sodding. The laying of sod or the planting of seeds is subject to sales tax. If sodding or seeding is done in conjunction with earth moving or landscaping, it is subject to the contractor's excise tax.

Source: 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46A-19, 10-46B-18.

Law Implemented:SDCL 10-45-5.2, 10-46A-1, 10-46B-1.

Examples:

(1) A retaining wall is installed, contouring of the yard is done, and the lawn is sodded under one contract. This is subject to excise tax.

(2) The contractor merely levels the dirt, then lays the sod. This is subject to sales tax.

(3) A contractor received the bid to put up a fence and seed the highway ditch in a single contract. This is subject to excise tax.

Rule 64:06:02:33 Repealed.

64:06:02:33. Transportation service.Repealed.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; repealed, 22 SDR 6, effective July 23, 1995.

Rule 64:06:02:34 Freight, delivery, and other transportation charges.

64:06:02:34. Freight, delivery, and other transportation charges. If the charges made by a transportation company to a retailer for transporting tangible personal property are included in the amount the retailer charges for the property, receipts from such charges are includable in the retailer's taxable receipts whether the charge is included in the sales price or stated separately.

Source: SL 1975, ch 16, § 1; 2 SDR 40, effective December 8, 1975; 9 SDR 28, effective September 5, 1982; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 23 SDR 2, effective July 15, 1996; 24 SDR 43, effective October 13, 1997; 30 SDR 211, effective July 1, 2004; 33 SDR 226, effective June 27, 2007.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-1(4), 10-45-2.

Example:

(1) Johnson Tire Company hires Smith Parcel to deliver a tire from its Mitchell store to a customer in Parkston. Johnson charges the Parkston customer for the cost of the tire plus shipping and handling. Johnson's taxable gross receipts from the sale of the tire include the charge made for shipping and handling.

Rule 64:06:02:34.01 Repealed.

64:06:02:34.01. Resale of transportation services.Repealed.

Source: 22 SDR 6, effective July 23, 1995; 23 SDR 2, effective July 15, 1996; repealed, 30 SDR 211, effective July 1, 2004.

Rule 64:06:02:34.02 Repealed.

64:06:02:34.02. City garbage haulers not exempt from tax.Repealed.

Source: 22 SDR 6, effective July 23, 1995; repealed, 23 SDR 2, effective July 15, 1996.

Rule 64:06:02:34.03 Chartered flights.

64:06:02:34.03. Chartered flights. Chartered air flights are taxable if they have a point of origin and a destination point within the state of South Dakota.

Source: 22 SDR 6, effective July 23, 1995; 24 SDR 43, effective October 13, 1997.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-2.

Rule 64:06:02:34.04 Repealed.

64:06:02:34.04. Suburban area defined.Repealed.

Source: 22 SDR 6, effective July 23, 1995; 22 SDR 9, effective October 21, 1995; repealed, 22 SDR 43, effective October 1, 1995.

Rule 64:06:02:34.05 Repealed.

64:06:02:34.05. Origin and destination.Repealed.

Source: 23 SDR 2, effective July 15, 1996; 28 SDR 178, effective July 1, 2002; repealed, 30 SDR 211, effective July 1, 2004.

Rule 64:06:02:34.06 Transportation company defined.

64:06:02:34.06. Transportation company defined. A transportation company is a business enterprise primarily engaged in performing transportation services for money, credits, property, or other consideration.

Source: 23 SDR 2, effective July 15, 1996; 30 SDR 211, effective July 1, 2004.

General Authority:SDCL 10-45-47.1(3).

Law Implemented:SDCL 10-45-71, 10-45-72, 10-46-58, 10-46-59, 10-52-11.

Rule 64:06:02:34.07 Transportation service defined.

64:06:02:34.07. Transportation service defined. A transportation service is the movement of persons.

Source: 23 SDR 2, effective July 15, 1996; 30 SDR 211, effective July 1, 2004.

General Authority:SDCL 10-45-47.1(3).

Law Implemented:SDCL 10-45-71, 10-45-72, 10-46-58, 10-46-59, 10-52-11.

Rule 64:06:02:34.08 Repealed.

64:06:02:34.08. Exempt fuel transportation.Repealed.

Source: 23 SDR 2, effective July 15, 1996; repealed, 30 SDR 211, effective July 1, 2004.

Rule 64:06:02:34.09 Repealed.

64:06:02:34.09. Small package delivery companies.Repealed.

Source: 23 SDR 2, effective July 15, 1996; repealed, 24 SDR 43, effective October 13, 1997.

Rule 64:06:02:34.10 Resale of solid waste tipping fees.

64:06:02:34.10. Resale of solid waste tipping fees. Tipping fees charged at a landfill, dump, material recovery facility, transfer station, recycling site, rubble site, or other similar site to a commercial solid waste carrier may be sold for resale. If a solid waste carrier provides a valid exemption certificate, no sales tax is due on the tipping fee. Any tipping fee charged to an individual or business that is not purchasing tipping fees for resale is subject to the state sales tax.

Any person or business disposing of its own solid waste is not in the business of solid waste disposal and may not purchase a tipping fee for resale.

The gross receipts of a solid waste carrier, private or public, or any other entity charging for solid waste disposal are subject to the state sales tax. No deduction is allowed for tipping fees or any other fees passed on to the customer, even if separately charged.

Source: 24 SDR 43, effective October 13, 1997; 28 SDR 178, effective July 1, 2002.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-12.1, 10-45-61.

Rule 64:06:02:35 Repealed.

64:06:02:35. Freight -- F.O.B. source of supply.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 2 SDR 40, effective December 8, 1975.

Rule 64:06:02:36 Repealed.

64:06:02:36. Freight -- F.O.B. destination.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 2 SDR 40, effective December 8, 1975.

Rule 64:06:02:37 Repealed.

64:06:02:37. Funeral directors, undertakers, and morticians.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:38 Garage and service stations.

64:06:02:38. Garage and service stations. Garage and service stations are subject to sales tax. Receipts from the sale of motor fuel subject to motor fuel tax are exempt. Taxable charges include repair work, car washing, towing, greasing, tire patching, storage, and any other services performed in a garage or service station. If a garage or service station employs a second garage or service station to perform services for a customer, the one making the charge to the customer shall report the tax to the state.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995; 29 SDR 177, effective July 2, 2003.

General Authority:SDCL 10-45-47.1(3).

Law Implemented:SDCL 10-45-5.

Rule 64:06:02:38.01 Tax on towing services.

64:06:02:38.01. Tax on towing services. State sales tax and municipal sales tax on a towing service shall be determined by the destination of the vehicle towed.

Source: 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-52-4.

Law Implemented:SDCL 10-45-5, 10-45-5.2, 10-52-2, 10-52-4.

Examples:

(1) A's car breaks down in a rural area of South Dakota. A hires a towing service to tow the car into the nearest town for repairs. That town is located in South Dakota and has a municipal sales tax. The place of destination determines what tax is due, so both South Dakota sales tax and the town's sales tax apply.

(2) A's car breaks down in South Dakota. A is close to the Minnesota border, so A hires a towing service to tow the car into a Minnesota town for repairs. Neither South Dakota sales tax nor any South Dakota municipal sales tax applies.

(3) A's car breaks down in a rural area of South Dakota. A's home is located close by, but not within a municipality. A hires a tow truck from the nearest town to tow the car home. South Dakota sales tax applies to the towing service, but no municipal sales tax applies because the destination is not located within a municipality.

Rule 64:06:02:39 Garage and service stations -- Resale.

64:06:02:39. Garage and service stations -- Resale. Garages and service stations may purchase items for resale exempt from sales tax. Supplies which are consumed by a garage or service station and equipment are subject to sales tax when purchased from a supplier.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-2, 10-46-2, 10-46-9.

Rule 64:06:02:40 Janitorial supplies and services.

64:06:02:40. Janitorial supplies and services. Gross receipts from engaging in the business of furnishing janitorial supplies or services are subject to sales tax. A janitorial business is the consumer of supplies and equipment and shall pay sales or use tax on the cost of such items.

Source: SL 1975, ch 16, § 1; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-5, 10-46-2.

Rule 64:06:02:41 Jewelers and watch repair.

64:06:02:41. Jewelers and watch repair. Gross receipts from retail sales of jewelry and other merchandise by a jewelry store are subject to sales tax. Charges for repair services by a jeweler or watch repair person are also subject to sales tax. Parts which become a part of a repaired item may be purchased by a jeweler or watch repair person exempt from sales tax because they are resold to the customer. A jeweler or watch repair person must pay use tax on the cost of equipment and supplies which the jeweler or watch repair person consumes unless the South Dakota sales tax has been paid to a licensed supplier.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-2, 10-45-5, 10-46-2.

Rule 64:06:02:42 Linen and towel supply.

64:06:02:42. Linen and towel supply. Gross receipts of a linen and towel supply business are taxable. Taxable receipts include those received from the sale of products and charges for rental or use of supplies. Charges to cafes and others for uniforms and for towels used by barbers and linens used by motels and hotels are examples of taxable receipts.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 29 SDR 177, effective July 2, 2003.

General Authority:SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented:SDCL 10-45-5, 10-46-2.

Rule 64:06:02:43 Machine work.

64:06:02:43. Machine work. Sales tax applies to charges of machine shops and other similar businesses for fabrication of tangible personal property for consumers.

Fabrication includes any operation which results in creation or production of an article or which is a step in a process or series of operations resulting in creation or production of an article.

Sales tax applies to the gross receipts of machine works from retail sales of tangible personal property and from repair services.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-2, 10-45-5, 10-46-9.

Rule 64:06:02:44 Mattress rebuilding.

64:06:02:44. Mattress rebuilding. Mattress rebuilding is a repair service subject to sales tax because it restores tangible personal property to or near its former condition. The entire charge for rebuilding a mattress is subject to sales tax. Materials which become part of a mattress may be purchased exempt from tax by the mattress rebuilder because they pass ultimately to the customer. Other equipment and supplies purchased by a mattress rebuilder are subject to sales or use tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-5, 10-46-2.

Rule 64:06:02:45 Oculists and ophthalmologists.

64:06:02:45. Oculists and ophthalmologists. Services of oculists and ophthalmologists are not subject to sales tax if they render professional services confined to examination, surgery, and treatment of the eyes.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-2, 10-45-4, 10-45-12.1.

Rule 64:06:02:46 Repealed.

64:06:02:46. Optometrists.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 11 SDR 1, effective July 19, 1984.

Rule 64:06:02:47 Repealed.

64:06:02:47. Opticians.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 2 SDR 40, effective December 8, 1975.

Rule 64:06:02:48 Repealed.

64:06:02:48. Oculists and optometrists -- Property incidentally consumed.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 11 SDR 1, effective July 19, 1984.

Rule 64:06:02:49 Repealed.

64:06:02:49. Optical supply houses and opticians.Repealed.

Source: SL 1975, ch 16, § 1; 2 SDR 2, effective July 17, 1975; 7 SDR 80, effective February 22, 1981; 11 SDR 1, effective July 19, 1984; repealed, 12 SDR 111, effective January 12, 1986.

Rule 64:06:02:50 Pawnbrokers.

64:06:02:50. Pawnbrokers. As used in this section, "pawnbroker" means a person who is primarily engaged in the business of lending money and who accepts tangible personal property or any product transferred electronically as security for the loan. If the property is redeemed within a specified time, sales tax applies to any commission, storage fees, or other similar charges made by the pawnbroker. If payment is not made within the specified time, the property is forfeited to the pawnbroker, to whom title to the property passes. If the pawn broker thereafter sells the property at retail, the gross receipts are subject to sales tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 15 SDR 58, effective October 19, 1988; 21 SDR 219, effective July 1, 1995; 22 SDR 6, effective July 23, 1995; 22 SDR 43, effective October 1, 1995; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1.

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-45-12.1.

Rule 64:06:02:51 Pet grooming.

64:06:02:51. Pet grooming. Gross receipts from engaging in the business of clipping, styling, or manicuring household pets are subject to sales tax. Taxable gross includes items of merchandise sold and the service performed. Persons or firms providing such services are the consumers of supplies and equipment which is used or consumed by them in rendering their services.

Source: SL 1975, ch 16, § 1; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-5.2.

Rule 64:06:02:52 Photographers, photo developers, and finishers.

64:06:02:52. Photographers, photo developers, and finishers. Gross receipts from photography, photo developing, finishing, and tinting are taxable. Sales of photostat copies by a photostat producer, frames, films, and other articles at retail are sales of tangible property subject to sales tax. Sales of photographs by commercial or portrait photographers are taxable. Sales of equipment to a photographer and supplies which do not become part of the product ultimately passing to a customer are subject to sales or use tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 18 SDR 3, effective July 14, 1991; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-5, 10-45-12.1, 10-45-20, 10-46-2.

Rule 64:06:02:53 Practitioners in healing arts.

64:06:02:53. Practitioners in healing arts. Charges for professional services by physicians, surgeons, chiropractors, podiatrists, osteopaths, and physical therapists are not taxable.

Sales of tangible personal property and any product transferred electronically to practitioners of the healing arts by South Dakota drug or medical supply houses are considered a sale to the consumer and subject to tax.

The purchase of X-ray equipment, operating room furniture and fixtures, and all other tangible personal property or any product transferred electronically used or consumed is subject to sales tax if purchased from a licensed dealer or subject to the use tax if purchased from an unlicensed dealer.

Source: SL 1975, ch 16, § 1; 2 SDR 2, effective July 17, 1975; 11 SDR 1, effective July 19, 1984; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-45-5, 10-45-12.1, 10-46-2, 10-46-2.2.

Declaratory Ruling: A business that provides microfiches of individuals' personal and medical history to be carried with them for emergency situations and which also keeps the histories in a data bank for use when a microfiche reader is not available, does not provide a health service and is subject to the sales tax. Secretary of Revenue Declaratory Ruling No. 80-7.

Rule 64:06:02:54 Repealed.

64:06:02:54. Piano tuners.Repealed.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; repealed, 15 SDR 58, effective October 19, 1988.

Rule 64:06:02:55 Repealed.

64:06:02:55. Plumbers and plumbing contractors -- Retail sales.Repealed.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; repealed, 15 SDR 58, effective October 19, 1988.

Rule 64:06:02:56 Repealed.

64:06:02:56. Plumbers -- Installation and repair.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:57 Printers, engravers, multigraphers, and mimeographers.

64:06:02:57. Printers, engravers, multigraphers, and mimeographers. Printers, engravers, multigraphers, and mimeographers shall pay sales tax on the full charges made by them for their work unless the work is done for resale. Sales tax applies to charges for printing books, pamphlets, and brochures; to charges for setting copy in type and assembling art work plate in form; to engravers' charges for making metal plates; and to electrotypers' charges for making electrotypes or matrices.

Source: SL 1975, ch 16, § 1; 7 SDR 80, effective February 22, 1981; 11 SDR 1, effective July 19, 1984; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-2, 10-45-4, 10-45-5.2.

Rule 64:06:02:58 Repair services.

64:06:02:58. Repair services. All charges for repair services, including maintenance agreements, are subject to sales tax. Repair of personal property or any product transferred electronically is a service in which property is restored to or near its former condition or usefulness. A person engaged in the repair business must have a sales tax license and report tax on the gross receipts.

Items purchased by a repair person which become part of the repaired property may be purchased exempt from sales tax by the repair person. The charges to the customer for the parts and service are taxable. Tools, equipment, and supplies consumed by a repair person are subject to sales tax when purchased. A business is liable for use tax on all items of tangible personal property and any product transferred electronically used by the business even though an item may have been especially fabricated to produce a product for a particular customer, is completely consumed in completing the customer's order, and the cost of the item is included in the charge to the customer.

A person who occasionally does some repair work but does not hold out to the public that the person does repair work is not considered to be in a repair business subject to sales tax.

Source: SL 1975, ch 16, § 1; 2 SDR 2, effective July 17, 1975; 13 SDR 129, 13 SDR 13,4, effective July 1, 1987; 20 SDR 103, effective January 10, 1994; 21 SDR 219, effective July 1, 1995; 29 SDR 177, effective July 2, 2003; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-5.

Rule 64:06:02:59 Retirement and nursing homes.

64:06:02:59. Retirement and nursing homes. If tangible personal property or any product transferred electronically, including food, is furnished to residents by the operator of a retirement or nursing home, a taxable retail sale is made and the operator is subject to tax on those sales. Sales tax on food shall be calculated according to § 64:06:02:72 or upon actual charges.

Upon prior written approval the department may allow operators of retirement or nursing homes to pay sales tax passed on by suppliers in lieu of requiring operators to become licensed and pay sales tax directly to the department.

Source: SL 1975, ch 16, § 1; 9 SDR 28, effective September 5, 1982; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-46-2, 10-46-2.2.

Rule 64:06:02:60 Shoe repairers.

64:06:02:60. Shoe repairers. Gross receipts from repair services of shoe repairers are subject to sales tax. If shoes or other merchandise are sold such items are also subject to sales tax. Repair supplies such as soles and heels may be purchased exempt from sales tax by the shoe repairers because they ultimately pass to their customers and become part of the taxable charge. A shoe repairer must pay use tax on the cost of equipment and supplies which do not become part of items repaired, unless the South Dakota sales tax has been paid to a licensed supplier.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-5, 10-46-2.

Rule 64:06:02:61 Repealed.

64:06:02:61. Sign painters.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:62 Repealed.

64:06:02:62. Tax return preparation.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:63 Tire treading.

64:06:02:63. Tire treading. The gross receipts from tire retreading are subject to sales tax. If tire retreading operators purchase second hand tires and retread them, the sale of the tires is taxable. If the customer furnishes the tire, the entire charge for retreading the tire is subject to sales tax. Materials which become a part of a retread tire may be purchased exempt from tax by the tire shop. Equipment and supplies which do not become a part of a retread tire are subject to sales tax if purchased from a licensed vendor by a tire shop.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1.

Law Implemented:SDCL 10-45-5.

Rule 64:06:02:64 Upholsterers.

64:06:02:64. Upholsterers. Persons engaged in reupholstering furniture belonging to others are engaged in repair service subject to sales tax. An upholsterer must report tax on receipts from customers for the service and materials. Materials which become part of repaired furniture may be purchased exempt, but supplies and equipment are subject to sales or use tax.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-5.

Rule 64:06:02:65 Sales to veterinarians.

64:06:02:65. Sales to veterinarians. Veterinarians are primarily engaged in the business of rendering professional services to the owners of animals through the diagnosis, medication, and treatment of such animals and the performance of surgical operations on such animals. Veterinarians may purchase for resale medicines, bandages and dressings, serums, appliances, and tonics used by them in connection with the performance of their services if such items are injected into or placed on the animal. All other items of tangible personal property and any product transferred electronically used by veterinarians in connection with the performance of their services are subject to sales or use tax. Laboratory services purchased for a current customer may be purchased for resale.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 23 SDR 118, effective January 27, 1997; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-4, 10-45-2.4, 10-46-2, 10-46-2.2.

Rule 64:06:02:66 Repealed.

64:06:02:66. Sales by veterinarians.Repealed.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; repealed, 23 SDR 118, effective January 27, 1997.

Rule 64:06:02:67 Repealed.

64:06:02:67. Warranty parts and service.Repealed.

Source: SL 1975, ch 16, § 1; repealed, 5 SDR 60, effective January 25, 1979.

Rule 64:06:02:68 Repealed.

64:06:02:68. Well drillers.Repealed.

Source: SL 1975, ch 16, § 1; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; repealed, 19 SDR 42, effective September 29, 1992.

Rule 64:06:02:69 Repealed.

64:06:02:69. Amusements and athletic contests.Repealed.

Source: 2 SDR 2, effective July 17, 1975; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:70 Amusement devices -- Mechanical.

64:06:02:70. Amusement devices -- Mechanical. The operators or owners of coin operated mechanical machines and devices which are placed in businesses belonging to others are retailers and must hold a retail sales tax license to report the entire gross receipts from the operation of such machines and devices, and pay the sales tax thereon.

Source: 2 SDR 2, effective July 17, 1975; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 32 SDR 225, effective July 3, 2006.

General Authority: SDCL 10-45-47.1(1).

Law Implemented: SDCL 10-58-3.

Rule 64:06:02:71 Repealed.

64:06:02:71. Hospitals -- Nonprofit, charitable, private.Repealed.

Source: 2 SDR 2, effective July 17, 1975; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:06:02:72 Hospitals -- Taxable charges and subsistence.

64:06:02:72. Hospitals -- Taxable charges and subsistence. The sale of food and all other items of tangible personal property or any product transferred electronically to hospital patients (except those sales exempted by SDCL 10-45-14.6), visitors, employees, officials, members, and others is subject to sales tax. Sales to patients of drugs prescribed by prescription are exempt. Sales tax on food furnished to patients shall be computed at $9.66 per patient day.

Newborn care is not included as patient care for purposes of sales tax on food furnished to patients.

If subsistence is allowed or granted to a hospital employee in lieu of salary, sales tax shall be remitted on the basis of $69 per person per month.

Source: 2 SDR 2, effective July 17, 1975; 7 SDR 80, effective February 22, 1981; 12 SDR 111, effective January 12, 1986; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 15 SDR 58, effective October 19, 1988; 21 SDR 219, effective July 1, 1995; 29 SDR 177, effective July 2, 2003; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-45-14, 10-45-14.1, 10-45-14.6.

Declaratory Ruling: Public alcohol treatment facilities approved and funded by the state division of alcoholism are not political subdivisions of the state and are not exempt from sales tax. Secretary of Revenue Declaratory Ruling No. 80-4.

Rule 64:06:02:73 Hospitals -- Nontaxable charges.

64:06:02:73. Hospitals -- Nontaxable charges. Charges for a hospital room, prescription drugs, and hospital services are exempt from sales tax.

Source: 2 SDR 2, effective July 17, 1975; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 29 SDR 177, effective July 2, 2003.

General Authority:SDCL 10-45-47.1(3).

Law Implemented:SDCL 10-45-7, 10-45-14, 10-45-14.1.

Examples: Examples of nontaxable charges include: oxygen, anesthetics, intravenous solutions, plasma, drugs, antibiotics, operating room anesthetist, blood transfusions, nursery, laboratory, delivery room, basal metabolism, treatments and x-rays.

Rule 64:06:02:74 Hospitals -- License required -- Purchases for members or employees taxable.

64:06:02:74. Hospitals -- License required -- Purchases for members or employees taxable. Hospitals must hold a sales tax license and file returns on forms provided by the department.

Sales tax must be paid on personal items furnished to officials, members, or employees without charge. If subsistence is furnished without charge or without an allowance in lieu of salary, tax shall be paid on $69 per person per month. Sisters and chaplains are considered members or employees; students are not.

Source: 2 SDR 2, effective July 17, 1975; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1

Law Implemented:SDCL 10-45-2, 10-45-14, 10-45-14.1.

Rule 64:06:02:75 Lodging establishments.

64:06:02:75. Lodging establishments. Sales of supplies and equipment to a lodging establishment are taxable. Lodging establishments are the consumers of supplies and equipment which are consumed or used by them in rendering their services. If the sales tax on such items is not paid to a South Dakota licensed supplier when they are purchased, the cost of such items must be reported as a use tax item on the sales tax return. Examples of such items include paper cups, plastic cups, laundry bags, soap, shower caps, toilet tissue, facial tissue, shoe polish, toilet bands, stationary, consumables and refreshments provided as a convenience to the guest, cleaning products, and other items consumed on the premises by the lodging establishment.

Charges to a lodging establishment by a laundry, linen, or towel supply company are taxable. A lodging establishment does not retail such items but purchases them or uses the services for the purpose of providing sleeping accommodations.

Laundry and dry cleaning establishments must report tax on their charges for services to hotel, motel, or tourist home guests even though payment is received from the hotel, motel, or tourist home. Hotels, motels, and tourist homes are considered agents for laundry and dry cleaning establishments and do not report tax to the department on receipts which are collected for a laundry or dry cleaner.

Source: 2 SDR 2, effective July 17, 1975; 11 SDR 1, effective July 19, 1984; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 15 SDR 58, effective October 19, 1988; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002.

General Authority:SDCL 10-45-47.1(3), 10-45D-13(3), 10-46-35.1(3), 10-52A-7(3).

Law Implemented:SDCL 10-45-2, 10-45-7, 10-45D-2, 10-46-2, 10-52A-2.

Declaratory Ruling: Rental of boat slips for more than 28 days, where the lessor provides a night guard, gasoline service, towing service, and a check-in system for boat owners, is the providing of a service rather than the rental of tangible personal property, and, as such, is subject to the sales tax. Secretary of Revenue Declaratory Ruling No. 80-9.

Rule 64:06:02:76 Specialty cleaners.

64:06:02:76. Specialty cleaners. Gross receipts from the business of furnishing specialty cleaning services are subject to sales tax. A specialty cleaner is one which holds itself out to the public as providing any cleaning service. A specialty cleaner is the consumer of supplies and equipment and must pay sales or use tax on the cost of such items.

Source: 2 SDR 2, effective July 17, 1975; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-5, 10-46-2.

Examples: Examples include but are not limited to cleaners of: furniture, floor coverings, heating and cooling systems, walls, ceilings, plumbing and windows, and all other cleaning services to real or personal property.

Rule 64:06:02:77 Reserved.

64:06:02:77. Reserved.

Rule 64:06:02:78 Computer services -- Software.

64:06:02:78. Computer services -- Software. The gross receipts from the sale of computer software, technical services and attendant appliances, equipment, and facilities are subject to the retail occupational sales tax.

A computer is an electronic device that accepts information in digital or similar form and manipulates the information for a result based on a sequence of instructions. Computer software is a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.

The following are examples of the services, appliances, equipment, and facilities which are taxable:

(1) Tangible personal property or any product transferred electronically such as instructions, directions, models, and layout sheets which are elements of technical service transactions;

(2) Designing and implementing of computer systems;

(3) Designing of storage and data retrieval systems;

(4) Consulting services;

(5) Feasibility studies;

(6) Evaluation of bids;

(7) Providing of technical assistance;

(8) Fees or access charges for access to data bases or networks; and

(9) Fees or access charges for access to software, programs, or computer systems.

Source: 2 SDR 40, effective December 8, 1975; 7 SDR 80, effective February 22, 1981; 12 SDR 111, effective January 12, 1986; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 31 SDR 214, effective July 6, 2005; 35 SDR 48, effective September 8, 2008.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-45-4, 10-45-5.2.

Rule 64:06:02:79 Computer services -- Software -- Prewritten programs.

64:06:02:79. Computer services -- Software -- Prewritten programs. The sale of a prewritten computer program is the sale of tangible personal property subject to sales tax. The term, prewritten computer software, includes any prewritten upgrade, which is not designed and developed by the author or other creator to the specifications of a specific purchaser. The combining of two or more prewritten computer software programs or prewritten portions thereof does not cause the combination to be other than prewritten computer software. Prewritten computer software also includes software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to another person. If a person modifies or enhances prewritten computer software of which the person is not the author or creator, the person is deemed to be the author or creator only of such person's modifications or enhancements. Prewritten computer software or a prewritten portion thereof that is modified or enhanced to any degree, when such modification or enhancement is designed and developed to the specifications of a specific purchaser, remains prewritten computer software; unless there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for such modification or enhancement, then such modification or enhancement does not constitute prewritten computer software.

Source: 2 SDR 40, effective December 8, 1975; 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 31 SDR 214, effective July 6, 2005.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-2, 10-45-4, 10-45-5.2.

Rule 64:06:02:80 Computer services -- Computer programming.

64:06:02:80. Computer services -- Computer programming. Computer programming services include the designing and writing of custom programs and the modification or enhancements to prewritten computer software when there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for such modification or enhancement.

General Authority: SDCL 10-45-47.1(3)

Law Implemented: SDCL 10-45-2, 10-45-4, 10-45-5.2.

Rule 64:06:02:81 Repealed.

64:06:02:81. Location of use of services.Repealed.

Source: 11 SDR 1, effective July 19, 1984; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 19 SDR 42, effective September 29, 1992; 21 SDR 219, effective July 1, 1995; repealed, 28 SDR 178, effective July 1, 2002.

Rule 64:06:02:81.01 Taxability of nonresident attorney services used in South Dakota.

64:06:02:81.01. Taxability of nonresident attorney services used in South Dakota. Any person using services in South Dakota that are provided by a nonresident attorney is liable for use tax on the cost of the services if sales tax is not paid.

Source: 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995; 24 SDR 180, effective July 1, 1998; 31 SDR 214, effective July 6, 2005; 41 SDR 173, effective May 14, 2015.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-4, 10-45-4.1, 10-45-5.2, 10-45-108, 10-46-2.1, 10-46-18.1.

Examples:

(1) Carl Client hires Linda Lawyer, an Iowa attorney, to represent Carl in a South Dakota lawsuit. Linda does not have a license to practice law in South Dakota but, pursuant to SDCL 16-18-2, is admitted to represent Carl in Carl's lawsuit. Linda must obtain a South Dakota sales tax permit. Linda does not pay sales tax on gross receipts from the services provided by Linda to Carl because Linda's office is in Iowa. Carl will owe use tax because the service is used for a lawsuit in South Dakota.

(2) Ivana Inventor, a South Dakota resident, hires Adam Attorney, a Minnesota attorney, to obtain a patent for Ivana. Adam is not licensed to practice law in South Dakota and is not required to comply with SDCL 16-18-2. Adam's legal services to obtain the patent are used by Ivana in South Dakota and Ivana is liable for use tax.

Rule 64:06:02:82 Accessories, equipment, and repair or replacement parts on motor vehicles.

64:06:02:82. Accessories, equipment, and repair or replacement parts on motor vehicles. Additional accessories or equipment added to motor vehicles are not subject to sales or use tax if they are included in the bill of sale and the amount upon which the motor vehicle excise tax is based.

Source: 12 SDR 111, effective January 12, 1986; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-2, 10-46-2, 10-46-3.

Rule 64:06:02:83 Rental facilities.

64:06:02:83. Rental facilities. Gross receipts resulting from services performed by the owner of a rental facility are taxable if they are offered as an optional service to the renter and are separately charged.

Source: 17 SDR 4, effective July 18, 1990; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46-35.1, 10-46-40.

Law Implemented:SDCL 10-45-4.1, 10-45-5.2, 10-45-7, 10-45-12.1, 10-46-2.1.

Examples:

(1) Ann Adams rents an office from the U Rent It Agency for $1,000 a month. Included in the rental fee are electricity, heat, water, and janitorial services. For an additional $25 per month, U Rent It will provide security guard services. The $1,000 rental fee is not taxable, but the $25 optional service is subject to tax.

(2) Sam Smith rents an apartment from Condo Heaven. The basic rent of $1,000 a month includes the apartment, parking space, water, and garbage collection. For an additional $10 a month, the owner will provide weekly laundry and dry cleaning pickup and delivery. The $1,000 rental fee is not subject to tax, but the $10 laundry fee is a taxable service.

Rule 64:06:02:84 Hunting and fishing rights.

64:06:02:84. Hunting and fishing rights. A landowner who exclusively grants to another the right to hunt or fish on the landowner's property for an annual or seasonal fee is not subject to tax on that amount. A written agreement, filed with the register of deeds, containing the terms of the contract, including the price for the grant and a legal description of the property, is evidence of a grant of property rights which is not taxable. Any services provided by the landowner are subject to tax.

A landowner who allows hunting or fishing on the landowner's property, not under an exclusive grant in writing, is subject to tax on the gross receipts.

Source: 17 SDR 4, effective July 18, 1990; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002.

General Authority:SDCL 10-45-47.1(3), 10-45D-13(3).

Law Implemented:SDCL 10-45-4.1, 10-45-5.2, 10-45-7, 10-45-8, 10-45D-2.

Examples:

(1) Farmer Brown agrees to lease land for hunting purposes to the ABC corporation. A written agreement is entered into stating the fee charged, the description of the land to be hunted on, and the time hunting may occur. Farmer Brown also agrees to release a certain number of birds during the hunt and to plant cover crops on the land to be hunted. Additionally, Farmer Brown will provide a new access road and a campground area for the hunters to stay at. The agreement is filed with the Register of Deeds.

Although an agreement is entered into which suggests a nontaxable lease of real property, services are furnished which are taxable. Because the services are not separately stated, the entire amount of the fee is subject to tax.

If separate fees are listed for the leasehold interest and the services provided, tax is due only on the services provided.

(2) Each year Farmer Smith allows hunters to come onto Farmer Smith's land to hunt and fish. Farmer Smith charges $50 a person to hunt and $15 a person to fish. Farmer Smith limits the number of hunters to five and fishers to seven and only allows them on the property from 8 o'clock a.m. until 5 o'clock p.m. All of Farmer Smith's gross receipts from allowing hunting and fishing on the property are taxable.

Rule 64:06:02:85 Real estate brokers.

64:06:02:85. Real estate brokers. Any commission received by a real estate broker or agent, under any type of agency agreement, is subject to the state sales tax unless the commission is otherwise specifically exempted. Any fee originating from the sale of real property sold in the state of South Dakota, regardless of the broker's or agent's residence, is subject to sales tax. Municipal sales tax applies to any sale of real property located within the municipality's limits.

Source: 17 SDR 4, effective July 18, 1990; 28 SDR 178, effective July 1, 2002

General Authority:SDCL 10-45-47.1(3).

Law Implemented:SDCL 10-45-5.2.

Examples:

(1) A real estate broker takes a listing on a home in Pierre. Under the multiple listing agreement, another agent sells the property. The listing broker collects the commission and the state and city sales tax. The broker then distributes the selling agent's percentage of the commission and the applicable sales tax to the selling agent. The listing broker remits state and city sales tax on that portion of the commission to which the broker was entitled. The selling agent remits state and city sales tax on the portion the selling agent received.

(2) A real estate broker takes an exclusive listing on an acreage in rural South Dakota. The broker collects the commission and state sales tax after the property is sold and remits the sales tax to the department.

Rule 64:06:02:86 Marina defined.

64:06:02:86. Marina defined. For the purpose of the tax imposed by SDCL 10-45D-7, a marina is a business that owns or operates secure moorings for boats at a dock or basin. A marina includes any supply, repair, and other facilities provided in addition to secure moorings. A secure mooring is a boat slip or other device used to dock or store a boat for an extended period of time. The ability to tie a boat to a space for a short period, such as during dinner, is not a secure mooring.

Source: 24 SDR 43, effective October 13, 1997; 28 SDR 178, effective July 1, 2002.

General Authority:SDCL 10-45D-13(3).

Law Implemented:SDCL 10-45D-12.

Rule 64:06:02:87 Taxation of persons providing medical expert testimony or consulting services.

64:06:02:87. Taxation of persons providing medical expert testimony or consulting services. Medical expert consulting services and medical expert testimony associated with litigation are not health services and the gross receipts for providing such services are subject to sales tax. Services provided to a patient associated with diagnosis or treatment are health services and are not subject to sales tax pursuant to SDCL 10-45-12.1. Services concerning diagnosis or treatment that are incidental to consulting services associated with litigation constitute health services and are not subject to sales tax.

Source: 24 SDR 97, effective January 25, 1998; 24 SDR 137, effective April 15, 1998.

General Authority:SDCL 10-45-47.1, 10-46-35.1.

Law Implemented:SDCL 10-45-4, 10-45-4.1.

Rule 64:06:02:88 Travel agency reservation services.

64:06:02:88. Travel agency reservation services. Any gross receipts received by a retailer providing reservation services to a travel agency are subject to sales tax. If the charge by the retailer for providing a reservation service is subject to a discount, then only the actual gross receipts received by the retailer are subject to sales tax.

This section applies to any receipts the retailer receives from airline boarding fees, hotel and motel reservation fees, and automobiles, buses, trains, cruise lines, and other transportation reservation fees.

If the retailer provides tangible personal property or any product transferred electronically that is an integral component of the reservation service to a travel agency, then the retailer is deemed to be the user of the tangible personal property or the product transferred electronically and is liable for use tax on the purchase price of the tangible personal property and the product transferred electronically if sales tax has not previously been paid.

Source: 24 SDR 180, effective July 1, 1998; 35 SDR 48, effective September 8, 2008; 38 SDR 214, effective June 21, 2012.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-4, 10-45-2.4, 10-45-5, 10-46-2, 10-46-2.2.

Example:

Zeus Travel, Inc. provides reservation services to ABC Travel Agency. As part of the contract between Zeus and ABC, ABC shall pay Zeus $500 each month for use of the reservation service. If ABC books 100 trips each month using Zeus' reservation service, then Zeus will give ABC a $500 discount on the monthly fee. If ABC is eligible for the discount, Zeus may deduct $500 from its gross receipts.

As part of the reservation service, Zeus provides ABC with a tangible personal property such as a computer and software. The computer, software, and other tangible personal property are integral components to the reservation service provided by Zeus. Zeus is liable for use tax on the computer and other tangible personal property provided to ABC.

Rule 64:06:02:89 Professional employer organization -- Definition of co-employment relationship.

64:06:02:89. Professional employer organization -- Definition of co-employment relationship. A co-employment relationship results from a contract between a professional employer organization and a client company. In order for a co-employment relationship to exist, the contract must stipulate that:

(1) The professional employer organization assumes the responsibilities listed in this subdivision, including the payment of wages, salaries, payroll taxes, payroll deductions, workers compensation costs, insurance premiums, welfare benefits, and retirement benefits, and preparing and filing necessary tax returns and other documents as required by state or federal law;

(2) The client company must be the employer to any existing employees prior to the contractual relationship with the professional employment organization;

(3) The client company retains primary control over the hiring, firing, wage rates, salary increases, training, and directing the day-to-day activities of the co-employees;

(4) If the contractual relationship between the professional employer organization and the client company is terminated, then the co-employees' employment with the professional employer organization is also terminated;

(5) If a co-employee leaves the employment of the client company, that co-employee's employment is terminated with the professional employer organization; and

(6) The professional employment organization does not manage or direct the operation of the client company's business.

Source: 25 SDR 167, effective July 1, 1999; 29 SDR 177, effective July 2, 2003.

General Authority:SDCL 10-45-47.1(3).

Law Implemented:SDCL 10-45-97.

Rule 64:06:02:89.01 Application for a professional employer organization permit.

64:06:02:89.01. Application for a professional employer organization permit. Each professional employer organization, doing business in South Dakota, must be approved by the Department as a professional employer organization, as defined in SDCL 10-45-97 and § 64:06:02:89. The professional employer organization must apply in writing to the secretary on a form provided by the secretary. The form shall contain the applicant's name and address and client's name and address. A copy of the contract between the professional employer organization and the client must be filed with the form.

If a professional employer organization does not meet the qualifications of SDCL 10-45-97 and § 64:06:02:89 the organization will be required to pay sales tax on all fees charged between the organization and the client with no deduction for actual disbursements, including appropriate reserves, for the wages, salaries, payroll taxes, payroll deductions, workers' compensation costs, insurance premiums, welfare benefits, retirement benefits, and other employee benefits of its co-employees, unless otherwise exempt pursuant to SDCL chapter 10-45.

Source: 38 SDR 214, effective June 21, 2012.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-96, 10-45-97.

Rule 64:06:02:90 Definition of terms.

64:06:02:90. Definition of terms. Terms used in §§ 64:06:02:90 to 64:06:02:92, inclusive, mean:

(1) "Air-to-ground radiotelephone service," a radio service, as that term is defined in 47 C.F.R. 22.99 (October 1, 2001), in which common carriers are authorized to offer and provide radio telecommunications service for hire to subscribers in aircraft;

(2) "Ancillary services," any service that is associated with or incidental to the provision of telecommunications services, including detailed telecommunications billing, directory assistance, vertical service, and voice mail services;

(3) "Call-by-call basis," any method of charging for telecommunications services where the price is measured by individual calls;

(4) "Communications channel," a physical or virtual path of communications over which signals are transmitted between or among customer channel termination points;

(5) "Customer," the person or entity that contracts with the seller of telecommunications services. If the end user of telecommunications services is not the contracting party, the end user of the telecommunications service is the customer of the telecommunications service, but this sentence only applies for the purpose of sourcing sales of telecommunications services under §§ 64:06:02:90 to 64:06:02:92, inclusive. A customer does not include a reseller of telecommunications service, or, for mobile telecommunications service, a serving carrier under an arrangement to serve the customer outside the home service provider's licensed service area;

(6) "Customer channel termination point," the location where the customer either initiates or receives the communications;

(7) "End user," the person who utilizes the telecommunications service. In the case of an entity, the term end user means the individual who utilizes the service on behalf of the entity;

(8) "Home service provider," the same as that term is defined in Section 124(5) of Pub. L. No. 106-252 (Mobile Telecommunications Sourcing Act) (July 28, 2000);

(9) Mobile telecommunications service," the same as that term is defined in Section 124(7) of Pub. L. No. 106-252 (Mobile Telecommunications Sourcing Act) (July 28, 2000);

(10) "Place of primary use," the street address representative of where the customer's use of the telecommunications service primarily occurs, which must be the residential street address or the primary business street address of the customer. In the case of mobile telecommunications services, "place of primary use" must be within the licensed service area of the home service provider;

(11) "Post-paid calling service," the telecommunications service obtained by making payment on a call-by-call basis either through the use of a credit or payment mechanism such as a bank card, travel card, credit card, debit card, or by charge made to a telephone number which is not associated with the origination or termination of the telecommunications service. A post-paid calling service includes a telecommunications service, except a prepaid wireless calling service, that would be a prepaid calling service except it is not exclusively a telecommunications service;

(12) "Prepaid calling service," the right to access exclusively telecommunications services, which must be paid for in advance and which enables the origination of calls using an access number or authorization code, whether manually or electronically dialed, and that is sold in predetermined units or dollars of which the number declines with use in a known amount;

(13) "Prepaid wireless calling service," a telecommunications service that provides the right to utilize mobile wireless service as well as other non-telecommunications services, including the download of digital products delivered electronically, content and ancillary services, which must be paid for in advance and is sold in predetermined units or dollars of which the number declines with use in a known amount;

(14) "Private communication service," a telecommunications service that entitles the customer to exclusive or priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel or channels;

(15) "Service address,":

(a) The location of the telecommunications equipment to which the customer's call is charged and from which the call originates or terminates, regardless of where the call is billed or paid;

(b) If the location in subsection (a) of this subdivision is not known, service address means the origination point of the signal of the telecommunications service first identified by either the seller's telecommunications system or in information received by the seller from its service provider, where the system used to transport such signals is not that of the seller; and

(c) If the locations in subsection (a) and (b) of this subdivision are not known, service address means the location of the customer's place of primary use.

Source: 28 SDR 178, effective July 1, 2002; 33 SDR 226, effective June 27, 2007; 35 SDR 165, effective December 23, 2008.

General Authority: SDCL 10-45-108.

Law Implemented: SDCL 10-45-108.

Rule 64:06:02:91 Default sourcing rule for telecommunications services.

64:06:02:91. Default sourcing rule for telecommunications services. Except for the telecommunications services listed in § 64:06:02:92, the sale of telecommunications service sold on a call-by-call basis shall be sourced to each level of taxing jurisdiction where the call originates and terminates in that jurisdiction or each level of taxing jurisdiction where the call either originates or terminates and in which the service address is also located. A sale of telecommunications service sold on a basis other than a call-by-call basis, is sourced to the customer's place of primary use.

Source: 28 SDR 178, effective July 1, 2002.

General Authority:SDCL 10-45-108.

Law Implemented:SDCL 10-45-108.

Rule 64:06:02:92 Rules for sourcing specific telecommunications services.

64:06:02:92. Rules for sourcing specific telecommunications services. The sales of these telecommunications services shall be sourced to each level of taxing jurisdiction as follows:

(1) A sale of mobile telecommunications service, other than air-to-ground radiotelephone service and prepaid calling service, is sourced to the customer's place of primary use as required by Pub. L. No. 106-252 (Mobile Telecommunications Sourcing Act) (July 28, 2000);

(2) A sale of post-paid calling service is sourced to the origination point of the telecommunications signal first identified by either the seller's telecommunications system, or information received by the seller from its service provider, where the system used to transport such signals is not that of the seller;

(3) A sale of prepaid calling service or a sale of a prepaid wireless calling service is sourced as tangible personal property. However, in the case of a sale of a prepaid wireless calling service, the seller may source the sale to the location associated with the mobile telephone number;

(4) A sale of private communication service is sourced as follows:

(a) Service for a separate charge related to a customer channel termination point is sourced to each level of jurisdiction in which such customer channel termination point is located;

(b) Service where all customer channel termination points are located entirely within one jurisdiction or levels of jurisdiction is sourced in such jurisdiction in which the customer channel termination points are located;

(c) Service for segments of a channel between two customer channel termination points located in different jurisdictions when each segment is separately charged, is sourced 50% in each level of jurisdiction in which the customer channel termination points are located;

(d) Service for segments of a channel located in more than one jurisdiction or levels of jurisdiction and each segment is not separately billed, is sourced in each jurisdiction based on the percentage determined by dividing the number of customer channel termination points in such jurisdiction by the total number of customer channel termination points;

(5) The sale of Internet access service is sourced to the customer's place of primary use; and

(6) The sale of an ancillary service is sourced to the customer's place of primary use

Source: 28 SDR 178, effective July 1, 2002; 33 SDR 226, effective June 27, 2007.

General Authority: SDCL 10-45-108.

Law Implemented: SDCL 10-45-108.

Rule 64:06:02:93 Exemption of continuing education programs.

64:06:02:93. Exemption of continuing education programs. The sales tax exemption for continuing education programs in SDCL 10-45-12.1 applies only to instructional classes approved by the governing board of an occupation with continuing education requirements. Nonmembers of the occupation who attend the class are not exempt from sales tax.

Source: 29 SDR 177, effective July 2, 2003.

General Authority:SDCL 10-45-47.1(3).

Law Implemented:SDCL 10-45-4.

Rule 64:06:02:94 Repairs to rental inventory.

64:06:02:94. Repairs to rental inventory. The gross receipts for parts, repairs, maintenance items, and maintenance services on rental inventory are subject to sales or use tax.

Source: 33 SDR 226, effective June 27, 2007.

General Authority: SDCL 10-45-47.1(3).

Law Implemented: SDCL 10-45-1.5, 10-45-20.6.

Rule 64:06:02:95 Repealed.

64:06:02:95. Definition of telecommunications services. Repealed.

Source: 33 SDR 226, effective June 27, 2007; repealed, 35 SDR 48, effective September 8, 2008.

Rule 64:06:02:96 Repealed.

64:06:02:96. Definition of ancillary services. Repealed.

Source: 33 SDR 226, effective June 27, 2007; repealed, SL 2009, ch 47, § 9, effective July 1, 2009.

Rule 64:06:02:97 Repealed.

64:06:02:97. Definition of interstate telecommunications services. Repealed.

Source: 33 SDR 226, effective June 27, 2007; repealed, SL 2009, ch 47, § 10, effective July 1, 2009.

Rule 64:06:02:98 Application of municipal gross receipts tax to fitness club.

64:06:02:98. Application of municipal gross receipts tax to fitness clubs. For the purpose of applying the provisions of SDCL chapter 10-52A, a pass or membership to a fitness club is not considered an admission to a place of amusement or athletic event.

Source: 37 SDR 48, effective September 21, 2010.

General Authority: SDCL 10-52A-7(3).

Law Implemented: SDCL 10-52A-2.

Rule 64:06:02:99 Application of tourism tax to fitness clubs.

64:06:02:99. Application of tourism tax to fitness clubs. For the purpose of applying the provisions of SDCL subdivision 10-45D-1(4), a pass or membership to a fitness club is not considered a recreational service or rental of recreational equipment.

Source: 37 SDR 48, effective September 21, 2010.

General Authority: SDCL 10-45D-13(3).

Law Implemented: SDCL 10-45D-1(4).

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