FOR AN ACT ENTITLED, An Act to  establish a telecommunications gross receipts tax, to provide for its distribution, and to repeal certain property taxes and certain gross receipts taxes paid by certain telecommunications companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
     Section  1.  Terms used in this Act mean:

             (1)    "Department," the South Dakota Department of Revenue;

             (2)    "Engaging in business," carrying on or causing to be carried on any activity with the purpose of direct or indirect benefit;

             (3)    "Mobile service," as defined pursuant to 47 CFR 20.3 as of January 1, 2001;

             (4)    "Secretary," the secretary of the Department of Revenue;

             (5)    "Station," a subscriber service address located in this state with a distinct call number designation or distinct extension number designation. If this is not a defined location, the term, station, means the location of the primary user of telecommunications equipment as determined by the telephone number, authorization code, or billing

address;

             (6)    "Telecommunications company," any person as defined by §  2-14-2, trustee, lessee, receiver, or municipality providing any telecommunications service;

             (7)    "Telecommunications gross receipts tax," the gross receipts tax imposed by this Act.
     Section  2.  The term, telecommunications service, as used in this Act, means the transmission of signs, signals, writings, images, sounds, messages, data, or other information of any nature for two-way communication by wire, radio, light waves, electromagnetic means, or other similar means. The term does not include the provision of terminal equipment used to originate or terminate such service. The term does include radio common carrier services and mobile services.
     Section  3.  The term, gross receipts, as used in this Act, means all revenue of a telecommunications company from the sale at retail of intrastate and interstate telecommunications services. Sale at retail does not include the sale of any telecommunications service by a telecommunications company to another telecommunications company if the service is resold or becomes a component part of the sale by the second telecommunications company. Any hospital, hotel, motel, or place that provides temporary accommodations selling telecommunications services to its patients or guests is not a telecommunications company under this Act.
     Section  4.  The term, interstate telecommunication service, as used in this Act, means any telecommunications service that originates or terminates in this state and is billed to a station in this state.
     Section  5.  There is hereby imposed a tax of three and one-half percent on the gross receipts of any telecommunications company from the sale at retail of any telecommunications service.
     Section  6.  There is created in the state treasury the telecommunications gross receipts tax fund. The secretary shall deposit any revenue collected from the tax imposed by section 5 of this

Act into this fund.
     Section  7.  The secretary shall make distributions from the telecommunications gross receipts tax fund each March, June, September, and December to replace the distributions made to each school district pursuant to chapter 10-33 prior to the repeal of that chapter by this Act. The amount of the distribution to each school district pursuant to this section shall ensure that each school district receives each calendar year as much as the school district received pursuant to chapter 10-33 in calendar year 1999. The secretary shall approve vouchers and the state auditor shall draw warrants to pay each school district its share of the distribution.
     Section  8.  Any municipally owned and operated telecommunications company may annually receive a tax credit for funds transferred from such telecommunications company to a school district. The tax credit reduces any gross receipts tax due pursuant to this Act, and the tax credit may not exceed three hundred thousand dollars in one year.
     Section  9.  The secretary shall make distributions from the telecommunications gross receipts tax fund each March, June, September, and December to each county to replace any revenue from property taxes levied pursuant to subdivision 10-33-17(2) prior to the repeal of that subdivision by this Act. The amount of the distribution to each county pursuant to this section shall ensure that each county receives each calendar year as much as the county received pursuant to subdivision 10-33-17(2) in calendar year 1999. The secretary shall approve vouchers and the state auditor shall draw warrants to pay each county its share of the distribution.
     Section  10.  There shall be deposited in the property tax reduction fund an amount of three million dollars from the gross receipts tax imposed by this Act for the purpose of replacing the property taxes paid by centrally assessed telecommunications company which has been considered local effort and the state shall adjust the relative proportion of local need paid by local effort and state aid pursuant to this amount.

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     Section  11.  The secretary shall transfer any revenues remaining in the telecommunications gross receipts tax fund, after the distributions required by this Act, in the following manner:

             (1)    Sixty percent shall be deposited in the property tax reduction fund. Any revenue deposited in the property tax reduction fund pursuant to this section shall be dedicated to increasing the funds to each school district based on its share of the statewide average daily membership as defined in subdivision 13-13-10.1(1); and

             (2)    Forty percent shall be deposited in the county telecommunications gross receipts fund which is hereby created pursuant to this section.
     Section  12.  The secretary shall distribute to each county an amount equal to one-half of the money deposited in county telecommunications gross receipts fund times the ratio of the assessed valuation of the county to the total assessed valuation of all counties plus one-half of the money deposited in county telecommunications gross receipts fund times the ratio of population of the county to the total population of all counties. The secretary shall base the allocation of money on the most recent assessed valuations as published by the Department of Revenue and the most recent decennial census of the United States Department of Commerce, Bureau of the Census. The secretary shall make distributions from the county telecommunications gross receipts fund each March, June, September, and December. The secretary shall approve vouchers and the state auditor shall draw warrants to pay each county its share of the distribution.
     Section  13.  Any property taxes levied pursuant to chapter 10-33 and payable for calendar year 2001 are due January 31, 2002. Any taxes imposed pursuant to chapter 10-33 and payable on gross receipts for calendar year 2001 are due January 31, 2002.
     Section  14.  Any telecommunications company engaging in a business in this state whose gross receipts from telecommunications services are subject to the telecommunications gross

receipts tax shall file with the department, an application for a telecommunications gross receipts tax license. An application for a license shall be made upon a form prescribed by the secretary and shall set forth the name under which the applicant transacts or intends to transact business, the location of the place of business, and such other information as the secretary may require. The application shall be signed by the owner, if a natural person; in the case of an association or partnership, by a member or partner thereof; or in the case of a corporation or a municipality, by an executive officer thereof or some person specifically authorized by the corporation or the municipality to sign the application, to which shall be attached the written evidence of the person's authority.
     Section  15.  The secretary shall grant and issue to each applicant a telecommunications gross receipts tax license. A license is not assignable and is valid only for the telecommunications company to which it was issued. Any license issued is valid and effective without further payment of fees until canceled or revoked.
     Section  16.  The secretary may refuse to issue a telecommunications gross receipts tax license to any person who is delinquent in payment of other taxes levied by the State of South Dakota. The secretary may also require an applicant to furnish to the state a bond, or other adequate security, as security for payment of any gross receipts tax that may become due, or require a bond or security as a condition precedent to remaining in business as a telecommunications company.
     Section  17.  Any person who is the holder of a telecommunications gross receipts tax license or is a telecommunications company whose receipts are subject to telecommunications gross receipts tax in this state shall file a return and remit the tax on or before the twentieth day of the month following each monthly period. If the telecommunications company files the return and remits the tax by electronic transfer to the state, the telecommunications company shall file the

return and remit the tax on or before the last day of the month following each monthly period.

     The secretary may grant an extension of not more than five days for filing a return and remittance. Unless an extension is granted, penalty or interest under §  10-59-6 shall be paid if a return or remittance is not made on time.
     Section  18.  Any telecommunications company that is the holder of a telecommunications gross receipts tax license and that has failed to file a return, or that has filed a return and has failed to pay the tax due the state under this law on or before the fifteenth of the second month following the reporting period authorized, may no longer continue as a telecommunications company and its telecommunications gross receipts tax license shall be revoked and canceled.
     Section  19.  Any appeal from a decision of the secretary in a contested case shall be taken in accordance with chapter 1-26.
     Section  20.  The secretary may not reinstate the license of a telecommunications company, which has been canceled or revoked as provided in this Act, until all the telecommunications gross receipts tax due the state and a ten dollar reinstatement fee has been paid. The secretary may also require the telecommunications company to file a bond as security for any future liability.
     Section  21.  Any refund or allowance made by any telecommunication service or any amount written off the books of a telecommunications company reporting financial information on an accrual basis may be reported as an uncollectible debt and deducted from the gross receipts of any telecommunications service. If any uncollectible debt is subsequently collected, the amount is subject to the telecommunications gross receipts tax and shall be reported to the department in the month of collection.
     Section  22.  Any telecommunications company subject to the telecommunications gross receipts tax shall keep records of all receipts and telecommunications service sales. The records

are, at all times during business hours of the day, subject to inspection by the department to determine the amount of tax due. The records shall be preserved for a period of three years unless the secretary, in writing, authorized their destruction or disposal at an earlier date.
     Section  23.  The secretary may promulgate rules pursuant to chapter 1-26 concerning:

             (1)      Telecommunications tax licensing, including bonding and filing license applications;

             (2)      The filing of returns and payment of the tax;

             (3)      Determining the application of the telecommunications tax and exemptions;

             (4)      Taxpayer record-keeping requirements; and

             (5)      Determining auditing methods.
     Section  24.  Any person who:

             (1)      Makes any false or fraudulent return in attempting to defeat or evade the telecommunications gross receipts tax is guilty of a Class 6 felony;

             (2)      Fails to pay the telecommunications gross receipts tax due under this Act within thirty days from the date the tax becomes due is guilty of a Class 1 misdemeanor;

             (3)      Fails to keep the records required by this Act or refuses to exhibit these records to the department for the purpose of examination is guilty of a Class 1 misdemeanor;

             (4)      Fails to file a return required by this Act within thirty days from the date the return is due is guilty of a Class 1 misdemeanor;

             (5)      Engages in business as a telecommunications company under this Act without obtaining a telecommunications gross receipts tax license is guilty of a Class 1 misdemeanor;

             (6)      Engages in business as a telecommunications company under this Act after the company's telecommunications gross receipts tax license has been revoked or canceled by the secretary is guilty of a Class 6 felony;

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             (7)      Willfully violates any rule of the secretary for the administration and enforcement of the provisions of this Act is guilty of a Class 1 misdemeanor;

             (8)      Violates either subdivision (2) or subdivision (4) of this section two or more times in any twelve-month period is guilty of a Class 6 felony; or

             (9)      Engages in business as a telecommunications company under this Act without obtaining a telecommunications gross receipts tax license after having been notified in writing by the secretary that the telecommunications company is subject to the provisions of this Act is guilty of a Class 6 felony. However, it is not a violation of this subdivision if the telecommunications company providing any telecommunications service files an application for a telecommunications gross receipts tax license and meets all lawful prerequisites for obtaining such license within three days from receipt of written notice from the secretary.

     For purposes of this section, the term, telecommunications company, includes corporate officers having control, supervision of or charged with the responsibility for making tax returns or payments pursuant to this Act.
     Section  25.  If a corporation subject to the gross receipts tax under this Act fails for any reason to file the required returns or to pay the tax due, any of its officers having control, or supervision of, or charged with the responsibility for making such returns and payments are personally liable for such failure. The dissolution of a corporation does not discharge an officer's liability for a prior failure of the corporation to make a return or remit the tax due. The sum due for such a liability may be assessed and collected as provided by law.

     If the corporate officers elect not to be personally liable for the failure to file the required returns or to pay the tax due, the corporation shall provide the department with a surety bond or certificate of deposit as security for payment of any tax that may become due. The bond or

certificate of deposit provided for in this section shall be in an amount equal to the estimated annual gross receipts multiplied by the applicable sales or gross receipts tax rate. This section does not apply to elected or appointed officials of a municipality if they are bonded pursuant to § §  9-14-6 and 9-14-6.1.
     Section  26.  Any real property owned by a telecommunications company that is used or intended for use in furnishing and providing telecommunication services is exempt from real property taxes levied by the state, counties, municipalities, townships, or other political subdivisions of the state.
     Section  27.  That § 10-59-1 be amended to read as follows:
     10-59-1.   The provisions of this chapter apply to any taxes or fees or persons subject to taxes or fees imposed by this Act, chapters 10-39, 10-39A, 10-39B, 10-43, 10-45, 10-46, 10-46A, 10-46B, 10-47B, 10-52, 32-3, 32-3A, 32-5, 32-5B, 32-6B, 32-9, 32-10, and 34A-13 and § §  22-25-48, 49-31-51, 50-4-13 to 50-4-17, inclusive, and the provisions of chapter 10-45B.
     Section  28.  That § §  10-33-1 to 10-33-30, inclusive, be repealed.
     Section  29.  This Act is effective on January 1, 2002.