64:06:01:68.  Sourcing rules for direct mailing. Notwithstanding § 64:06:01:63, a purchaser of direct mail that is not a holder of a direct pay permit may provide to the seller in conjunction with the purchase an exemption certificate claiming direct mail.

          Upon receipt of an exemption certificate claiming direct mail, the seller is relieved of all obligations to collect, pay, or remit the applicable tax and the purchaser is obligated to pay or remit the applicable tax on a direct pay basis. An exemption certificate claiming direct mail shall remain in effect for all future sales of direct mail by the seller to the purchaser until it is revoked in writing. A purchaser of direct mail that provides the seller with documentation of direct pay permit is not required to provide an exemption certificate claiming direct mail.

          If the purchaser of direct mail does not provide the seller with documentation of a direct pay permit or an exemption certificate claiming direct mail, the transaction shall be sourced as either:

          (1)  Advertising and promotional direct mail. The purchaser may provide information to show each jurisdiction to which the advertising and promotional direct mail shall be delivered to the recipients. Upon receipt of the delivery information, the seller shall collect the tax according to the delivery information provided by the purchaser. In the absence of the intent to evade tax, the seller is relieved of any further obligation to collect tax on any transaction where the seller has collected tax pursuant to the delivery information provided by the purchaser. If the purchaser of advertising and promotional direct mail does not provide the seller with delivery information, the seller shall collect the tax according to subdivision 64:06:01:63(5); or

          (2)  Other direct mail. The seller shall collect the tax according to subdivision 64:06:01:63(3) which is sourced to the address for the purchaser in the business records of the seller.

          Nothing in this rule limits a purchaser's obligation for sales or use tax to any state to which the direct mail is delivered. The purchaser shall source the sale to the jurisdictions to which the direct mail is delivered to the recipients and must report any sales or use tax due.

          Source: 29 SDR 177, effective July 2, 2003; 31 SDR 214, effective July 6, 2005; 37 SDR 48, effective September 21, 2010.

          General Authority: SDCL 10-45-108.

          Law Implemented: SDCL 10-45-94.1, 10-45-108.

          64:06:01:68.01.  Definition of terms used in direct mail sourcing rule. Terms used in § 64:06:01:68 mean:

          (1)  "Advertising and promotional direct mail," any direct mail as defined in SDCL 10-45-94.1 if the primary purpose of the direct mail is to attract public attention to a product, person, business, or organization, or to attempt to sell, popularize, or secure financial support for a product, person, business, or organization. As used in this section, the term, product, means any tangible personal property, product transferred electronically, or service;

          (2)  "Other direct mail," any direct mail as defined in SDCL 10-45-94.1 that is not advertising and promotional direct mail regardless of whether advertising and promotional direct mail is included in the same mailing. Other direct mail includes a transactional direct mail that contains personal information specific to the addressee, any legally required mailings, and other non-promotional direct mail delivered to existing or former shareholders, customers, employees, or agents.

          Other direct mail does not include the development of billing information or the provision of any data processing service that is more than incidental.

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

          General Authority: SDCL 10-45-108.

          Law Implemented: SDCL 10-45-94.1, 10-45-108.