64:06:01:08.03.  Sale of service for resale. Services which are purchased by a service provider and delivered to a current customer in conjunction with the services contracted to be provided to the customer are considered to be for resale. Receipts from the sale of a service for resale by the purchaser are not subject to sales tax if the purchaser furnishes an exemption certificate.

          In order for the transaction to be a sale for resale, the following conditions must be present:

          (1)  The service is purchased for or on behalf of a current customer;

          (2)  The purchaser of the service does not use the service in any manner; and

          (3)  The service is delivered or resold to the customer without any alteration or change.

          Source: 18 SDR 3, effective July 14, 1991; 20 SDR 103, effective January 10, 1994; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002; 33 SDR 226, effective June 27, 2007.

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

          Law Implemented: SDCL 10-45-1(10), 10-45-4, 10-45-4.1, 10-45-20, 10-46-2.1

          Example:

          John Customer purchases a subscription to a movie channel from Fantastic Cable Company. Fantastic purchases the right to view the movie channel from Hollywood Movies, a cable movie channel subscription service. The services provided by Hollywood Movies are purchased for resale as Fantastic does not use the service in any way.