Administrative Rule 64:07 | South Dakota Legislature

64:07:01:01.01. Prime contractor engaged in realty improvement contracts. Any contractor enumerated in the SIC manual of 1987 under Construction (Division C) is included for purposes of this section. The gross receipts resulting from the services performed by a contractor listed in Division C of the SIC manual are subject to the contractor's excise tax, whether or not the results of such services constitute a fixture. If a contractor engages in services not specifically listed in the SIC manual, then the construction, building, or installation services must result in a fixture to realty before the contractor's gross receipts are 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 10-46A-19, 10-46B-18.

Law Implemented: SDCL 10-46A-2, 10-46A-2.1, 10-46A-2.2.

Cross-Reference: Services specifically exempt from tax, SDCL 10-45-12.1.

Reference: Standard Industrial Classification Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President. Copies may be obtained from the Superintendent of Documents, Government Printing Office, Washington, D.C. 20402. Request stock number 041-001-00314-2. The cost of the manual is $24, payable by check, Visa, or MasterCard.

Examples:

(1) A, a telephone equipment installation contractor agrees to install certain telephone equipment for B. This is a listed service under Industry Number 1731 and is therefore subject to the contractor's excise tax.

(2) C contracts with D, a dentist, to install a new dental chair in D's office. This is not a listed service. To determine whether excise tax or sales tax applies, it must first be determined whether or not the dental chair is a fixture. If it is a fixture, it is subject to the contractor's excise tax; if not, it is sales taxable.

Rule 64:07:01:01.02 Rural water systems -- Defined.

64:07:01:01.02. Rural water systems -- Defined. A rural water system is a system that delivers water to rural areas or to an unincorporated township. Private wells that provide water to individuals are not rural water systems even though the individuals may live in a rural area.

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

General Authority:SDCL 10-46B-6, 10-46B-18.

Law Implemented:SDCL 10-36A-1, 10-46B-1, 34A-3A-2(4).

Rule 64:07:01:02 Gross receipts explained.

64:07:01:02. Gross receipts explained. Gross receipts includes the total amount received in consideration of the performance of a realty improvement contract without deductions for any expenses. If a contractor chooses to include the amount of the tax in the contract price, this amount may not be deducted in determining taxable receipts. For purposes of SDCL chapter 10-46B, gross receipts does not include any internal charges or allocations among or between a parent telecommunications company subject to tax under SDCL chapter 10-33 and any wholly-owned subsidiaries thereof or between two subsidiaries that are both wholly owned by the same parent company if the recipient of the services is a telecommunications company subject to tax under SDCL chapter 10-33.

Source: 6 SDR 44, effective November 8, 1979; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; 33 SDR 226, effective June 27, 2007.

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

Law Implemented: SDCL 10-33-26, 10-46A-4, 10-46B-4.

Revenue Ruling: Contractors must pay the contractors' excise tax on receipts from work done for the state and other governmental entities. The tax is to be computed on the total receipts received regardless of whether the receipt is characterized as material, labor, overhead, profit or excise tax. Secretary of Revenue's Revenue Ruling No. 79-3.

Rule 64:07:01:03 Repealed.

64:07:01:03. Ingredient or component materials.Repealed.

Source: 6 SDR 44, effective November 8, 1979; repealed, 11 SDR 1, effective July 19, 1984.

Rule 64:07:01:04 Repealed.

64:07:01:04. Realty improvements made without contract.Repealed.

Source: 6 SDR 44, effective November 8, 1979; repealed, 11 SDR 1, effective July 19, 1984.

Rule 64:07:01:05 Repealed.

64:07:01:05. Installation of irrigation equipment.Repealed.

Source: 6 SDR 44, effective November 8, 1979; repealed, 7 SDR 80, effective February 22, 1981.

Rule 64:07:01:06 Real property repairs.

64:07:01:06. Real property repairs. Repair of items such as central air conditioning equipment, sprinkler systems, and elevators are realty improvements and receipts from such repairs are subject to the contractors' excise tax. Receipts from repairs of household appliances such as refrigerators, dishwashers, and dryers are not subject to the contractors' excise tax but are subject to the tax imposed by SDCL 10-45-4 and 10-45-5.2.

Source: 6 SDR 44, effective November 8, 1979; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

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

Law Implemented:SDCL 10-45-4, 10-45-5.2, 10-46A-2.

Rule 64:07:01:07 Repealed.

64:07:01:07. Prefabricated buildings.Repealed.

Source: 6 SDR 44, effective November 8, 1979; 13 SDR 129, 13 SDR 134, effective July 1, 1987; repealed, 15 SDR 58, effective October 19, 1988.

Rule 64:07:01:07.01 Repealed.

64:07:01:07.01. Manufactured buildings.Repealed.

Source: 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995; repealed, 30 SDR 211, effective July 1, 2004.

Rule 64:07:01:08 "Sweat equity."

64:07:01:08. "Sweat equity." Persons receiving consideration in exchange for labor under a "sweat equity" contract are contractors making realty improvements. The value of the consideration is subject to the contractors' excise tax unless the person performing the "sweat equity" labor receives an exemption certificate from a prime contractor.

Source: 6 SDR 44, effective November 8, 1979; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-46A-19.

Law Implemented:SDCL 10-46A-1, 10-46A-2.1.

Rule 64:07:01:09 Repealed.

64:07:01:09. Prime contracts bid after June 1, 1979, and before April 1, 1980.Repealed.

Source: 7 SDR 80, effective February 22, 1981; repealed, 11 SDR 1, effective July 19, 1984.

Rule 64:07:01:10 Contractors to furnish information on subcontractors.

64:07:01:10. Contractors to furnish information on subcontractors. If requested by the department, a contractor shall furnish a list of all subcontractors, the subcontractors' addresses, and amounts paid to each subcontractor.

Source: 9 SDR 28, effective September 5, 1982; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995.

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

Law Implemented:SDCL 10-46A-7.

Rule 64:07:01:11 Contractors and subcontractors to furnish information on water development projects.

64:07:01:11. Contractors and subcontractors to furnish information on water development projects. Contractors and subcontractors must report all taxes collected under chapters 10-46A and 10-46B for the construction of a water development project included in the state water resources management system which cost $20,000,000 separately on the contractors excise tax form provided by the department.

Source: 20 SDR 103, effective January 10, 1994; 21 SDR 219, effective July 1, 1995.

General Authority:SDCL 10-45-47.1, 10-46A-7, 10-46A-19, 10-46B-6, 10-46B-18.

Law Implemented:SDCL 10-46B-17.

Cross-Reference: Composition of state water plan, SDCL 46A-1-2.

Rule 64:07:01:12 Tax return filing dates for contractors.

64:07:01:12. Tax return filing dates for contractors. Any other person who is the holder of a contractors' excise tax permit or who is a contractor whose receipts are subject to contractors' excise tax in this state shall file a return and make a remittance pursuant to SDCL 10-46A-1.8, 10-46B-1.6.

Source: 23 SDR 118, effective January 27, 1997, 32 SDR 225, effective July 3, 2006; 33 SDR 226, effective June 27, 2007.

General Authority: SDCL 10-46A-19, 10-46B-18, 10-59-38(1).

Law Implemented: SDCL 10-46A-7, 10-46A-1.8, 10-46B-1.6, 10-46B-6.

Rule 64:07:01:13 Contractors as consumers of construction supplies.

64:07:01:13. Contractors as consumers of construction supplies. All contractors or subcontractors, regardless of the kind of contract, engaged in construction work, erecting buildings, building highways, or realty improvements are the consumers of materials and supplies purchased by them for use in their contract work. Suppliers who are licensed under the South Dakota sales and use tax law must remit sales or use tax to the state on sales of materials and supplies to contractors. Contracts referred to in this section are those which do not constitute a sale of tangible personal property. Since they are not sales of tangible personal property, the contractor may not purchase for resale supplies and materials and must pay sales or use tax on the purchases. If the contract is a mixed contract in which some tangible personal property or any product transferred electronically is furnished, the contractor is considered the consumer of all property.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; transferred from § 64:06:02:23, 24 SDR 43, effective October 13, 1997; 35 SDR 48, effective September 8, 2008.

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

Law Implemented: SDCL 10-46-5.

Declaratory Rulings: A contractor who installs a pipe organ in a church is subject to sales and use tax on the materials used in performance of the contract. Secretary of Revenue Declaratory Ruling No. 78-1.

A company which removes forms from septic tanks, which are fabricated by another company, is performing services which become part of tangible personal property and is not performing under a realty improvement contract, and, as such, is subject to the sales tax and not to the contractors' excise tax. Secretary of Revenue Declaratory Ruling No. 81-1.

Rule 64:07:01:14 Furnishing of equipment.

64:07:01:14. Furnishing of equipment. A contractor, by separate contract, who furnishes equipment which is not essential to the realty improvement or structure and is not permanently attached to the realty is considered as making sales of tangible personal property. The sales of such equipment are subject to sales or use tax unless they are sold to a tax exempt entity.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; transferred from § 64:06:02:24, 24 SDR 43, effective October 13, 1997.

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

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

Rule 64:07:01:15 Contracts with governmental agencies.

64:07:01:15. Contracts with governmental agencies. Contractors who have contracts with the United States, the state of South Dakota, and governmental subdivisions have the same sales or use tax liability on their purchases and materials as contractors have with private concerns. They are not entitled to any refund of any South Dakota sales or use tax which they may have paid. If the contractor does not buy in the contractor's own right but is purchasing agent for the government with title passing directly from the seller to the government, the sales or purchases are not subject to sales tax. However, the contractor or subcontractor is liable for use tax if the materials are used or consumed in projects in this state. If a governmental body or sales tax exempt entity furnishes construction materials used by the contractor in a contract, the contractor has a use tax liability even though title never rested in the contractor.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; transferred from § 64:06:02:25, 24 SDR 43, effective October 13, 1997.

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

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

Declaratory Ruling: The sales tax exemption from receipts of sales of tangible personal property to governmental agencies also applies to the gross receipts from sales of services to governmental entities. Secretary of Revenue Declaratory Ruling No. 79-3.

Rule 64:07:01:16 Construction equipment.

64:07:01:16. Construction equipment. If equipment is purchased or brought into the state for use during construction, the equipment is subject to the South Dakota sales or use tax. If new equipment is purchased for construction use, the South Dakota sales tax must be paid to a licensed vendor or the use tax paid to the department on the cost. If used equipment is brought into the state, a use tax must be paid on the fair market value when brought into the state unless sales or use tax has been previously paid.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 21 SDR 219, effective July 1, 1995; transferred from § 64:06:02:26, 24 SDR 43, effective October 13, 1997; 30 SDR 58, effective November 5, 2003.

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

Law Implemented:SDCL 10-45-2, 10-46-2, 10-46-3, 10-46-4.

Rule 64:07:01:17 Gross receipts defined.

64:07:01:17. Gross receipts defined. Gross receipts received by a contractor include any amounts received from interest charges, penalties, or liquidated damages. Interest, penalties, or liquidated damages paid by the contractor may not be deducted from gross receipts.

Source: 17 SDR 4, effective July 18, 1990; 21 SDR 219, effective July 1, 1995; transferred from § 64:06:02:26.02, 24 SDR 43, effective October 13, 1997.

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

Law Implemented:SDCL 10-46A-1, 10-46A-4, 10-46B-1, 10-46B-4.

Rule 64:07:01:18 Repealed.

64:07:01:18. Return and remittance. Repealed.

Source: 24 SDR 43, effective October 13, 1997; 32 SDR 225, effective July 3, 2006; repealed, 33 SDR 226, effective June 27, 2007.

Rule 64:07:01:19 Bond.

64:07:01:19. Bond. A cash bond endorsed in the name of the department or a bond issued by a corporate surety company authorized to do business in South Dakota in an amount sufficient to guarantee payment of contractors' excise tax for a six-month period is required from a contractor engaged in business within the state of South Dakota in the following circumstances:

(1) A contractor has been delinquent in either reporting or paying tax for two reporting periods in a twelve-month period within the last five years;

(2) A contractor is engaged in a type of business which, in the experience of the department, has had problems with tax delinquency; or

(3) A contractor does not have sufficient unencumbered assets in this state to ensure that a possible future delinquent tax liability is collected.

If a contractor has no prior history of excise tax payment, the amount of the bond shall be based upon the contractor's estimate of gross receipts in a six-month period. The contractor's estimate shall be approximately the same as the receipts of similar businesses, and it may be rejected if the department determines that the contractor's figure is not an accurate estimate.

Source: 25 SDR 167, effective July 1, 1999.

General Authority:SDCL 10-46A-19(1), 10-46B-18(1).

Law Implemented:SDCL 10-46A-17, 10-46B-15.

Rule 64:07:01:20 Application of contractors' excise tax to projects involving items used to store and dispense fuel.

64:07:01:20. Application of contractors' excise tax to projects involving items used to store and dispense fuel. Any contractor installing, performing maintenance upon, or repairing items used to store and dispense fuel are subject to contractors' excise tax.

Any contractor installing items used to store and dispense fuel owe contractors' excise tax on the gross receipts and use tax on the items installed and other materials used in the project. However, items used by the contractor upon which sales or use tax was paid are not subject to use tax.

Any contractor performing maintenance upon or repairing items used to store and dispense fuel owe contractors' excise tax on the gross receipts and use tax on any material used to maintain or repair the items. However, items used by the contractor upon which sales or use tax was paid are not subject to use tax.

Typical components of a fuel storage and dispensing system include:

(1) Fuel storage tank which may be located above or below ground;

(2) Fuel storage tank foundation which the fuel storage tank rests upon. The foundation may be located above or below ground;

(3) Fuel dispenser;

(4) Island which is the foundation upon which the fuel dispenser is placed;

(5) Submersible pump which moves the fuel from the tank to a dispenser;

(6) Pump housing which encloses the submersible pump;

(7) Piping which connects the fuel dispensers to the fuel storage tanks. Piping is also used to vent the fuel storage tank and to fill the fuel storage tanks;

(8) Spill container which collects fuel that overflows from the fill pipe. The spill container is usually underground, connected to the fill pipe;

(9) Wiring which brings electricity from a power source directly to the submersible pump, fuel dispensers, lights, monitors, and other electrical equipment;

(10) Electronic monitor which determines the amount of fuel in the tank. It may also detect leaks in the tank. The electronic monitor is usually mounted on or inside the fuel storage tank;

(11) Electronic monitor display unit which displays information collected by the electronic monitor. Typically the display unit is similar to a computer screen and is located in a building used to control the dispensing of the fuel;

(12) Canopy which is a shelter structure over the fuel dispensers; and

(13) Lights which are installed on or near the island, or on the canopy to illuminate the area.

Source: 28 SDR 69, effective November 21, 2001.

General Authority:SDCL 10-46A-19(3).

Law Implemented:SDCL 10-46A-2, 10-46A-2.2.

Rule 64:07:01:20.01 Installation of a fuel storage tank in a fuel storage and dispensing project.

64:07:01:20.01. Installation of a fuel storage tank in a fuel storage and dispensing project. The person placing the tank upon or in the fuel storage tank foundation owes contractors' excise tax on the gross receipts and use tax on the tank and other items used in the project. However, any item used by the contractor upon which sales or use tax was paid is not subject to use tax. Any contractor that installs items that are connected to, installed in, or that become a part of the storage tank owe contractors' excise tax on the gross receipts and use tax on the other materials used in the project. However, any item used by the contractor upon which sales or use tax was paid is not subject to use tax. These contractors do not owe contractors' excise tax or use tax on the storage tank itself.

Source: 28 SDR 69, effective November 21, 2001.

General Authority:SDCL 10-46A-19(3).

Law Implemented:SDCL 10-46A-2, 10-46A-2.2.

Rule 64:07:01:20.02 Installation of piping in a fuel storage and dispensing project.

64:07:01:20.02. Installation of piping in a fuel storage and dispensing project. The person installing piping owes contractors' excise tax on the gross receipts and use tax on the piping and other materials used in the project. However, any item used by the contractor upon which sales or use tax was paid is not subject to use tax. If a separate contractor digs a trench for underground piping, that contractor owes contractors' excise tax on the gross receipts and use tax on the item. However, any item used by the contractor upon which sales or use tax was paid is not subject to use tax. The contractor digging the trench does not owe contractors' excise tax on the piping.

Source: 28 SDR 69, effective November 21, 2001.

General Authority:SDCL 10-46A-19(3).

Law Implemented:SDCL 10-46A-2, 10-46A-2.2.

Rule 64:07:01:20.03 Installation of a canopy in a fuel storage and dispensing project.

64:07:01:20.03. Installation of a canopy in a fuel storage and dispensing project. The person installing the canopy owes contractors' excise tax on the gross receipts and use tax on the canopy and other materials used in the project. However, any item used by the contractor upon which sales or use tax was paid is not subject to use tax. Contractors that install any item that is connected to, or that become a part of the canopy owe contractors' excise tax on the gross receipts and use tax on the other materials used in the project. However, any item used by the contractor upon which sales or use tax was paid is not subject to use tax. These contractors do not owe contractors' excise tax or use tax on the canopy itself.

Source: 28 SDR 69, effective November 21, 2001.

General Authority:SDCL 10-46A-19(3).

Law Implemented:SDCL 10-46A-2, 10-46A-2.2.

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