CHAPTER 10-46A
REALTY IMPROVEMENT CONTRACTOR'S EXCISE TAX
10-46A-1 Tax imposed on prime contractor's receipts from realty improvement contracts--Rate of tax.
10-46A-1.1 Effective date--Application to contracts, sales and change orders.
10-46A-1.2 Contracts subject to tax imposed by chapter 10-46B.
10-46A-1.3 Tax measured by gross receipts upon accrual basis.
10-46A-1.4 Payment of tax on cash basis.
10-46A-1.5 Taxes on receipts of worthless accounts.
10-46A-1.6 10-46A-1.6. Repealed by SL 2006, ch 61, § 4, eff. Feb. 6, 2006.
10-46A-1.7 10-46A-1.7. Repealed by SL 2007, ch 65, § 6.
10-46A-1.8 Filing return and remitting tax-Time for filing and remittance--Extension--Penalty for untimely return or remittance.
10-46A-2 Prime contractors and subcontractors subject to tax.
10-46A-2.1 Subcontractors--Definition--Certificate issued by prime contractor--Tax liability--Misuse of certificate--Government entities not to issue certificates.
10-46A-2.2 Prime contractor--Definition.
10-46A-3 Total contract price as basis of tax--Purchased materials.
10-46A-4 Gross receipts defined--Items not deductible.
10-46A-5 Improvement without contract taxable when sold within four years after completion--Exceptions--Determination of gross receipts.
10-46A-5.1 Tax imposed on improvements built for lease--Credit against tax on sale--Due date--Exemptions.
10-46A-6 10-46A-6. Repealed by SL 1980, ch 100, § 5.
10-46A-7 Administration of tax--Sales tax provisions applicable.
10-46A-8 Report and payment of tax.
10-46A-8.1 10-46A-8.1. Repealed by SL 2006, ch 61, § 12, eff. Feb. 6, 2006.
10-46A-9 10-46A-9. Repealed by SL 2017, ch 66, § 2.
10-46A-10 10-46A-10. Repealed by SL 1980, ch 100, § 7.
10-46A-11 Municipal tax on contractors--Rate--Restitution.
10-46A-12 Contractors may list excise and use taxes as separate line item on contracts and bills.
10-46A-12.1 Contractor to post excise tax license number with building permit for realty improvement project.
10-46A-12.2 When building permit not required.
10-46A-13 Personal liability of officers, managers, or partners of entity failing to file returns or pay tax--Security in lieu of liability--Bonded municipal officials exempt.
10-46A-13.1 Violation of chapter as criminal offense--Classification.
10-46A-14 Restriction on application of rate increase.
10-46A-15 Contractor's excise tax license required--Application.
10-46A-16 Issuance of license--Assignment prohibited.
10-46A-17 Refusal to issue license for failure to pay tax--Bond.
10-46A-18 Exemption for floor laying.
10-46A-18.1 Exemption of repair shops, locksmiths, and locksmith shops.
10-46A-19 Promulgation of rules.
10-46A-1. Tax imposed on prime contractor's receipts from realty improvement contracts--Rate of tax.
There is imposed an excise tax upon the gross receipts of all prime contractors engaged in realty improvement contracts, at the rate of two percent.
Source: SL 1979, ch 84, § 12A; SL 1980, ch 100, § 1; SL 1984, ch 92, §§ 1, 1A; SL 1985, ch 92.
10-46A-1.1. Effective date--Application to contracts, sales and change orders.
This chapter is effective on May 1, 1984, and applies to:
(1) All realty improvement contracts bid after April 30, 1984;
(2) All realty improvement contracts under which construction commences after April 30, 1984, if there is no bid;
(3) Receipts from sales of real property pursuant to § 10-46A-5 if the contract to sell the property is executed after April 30, 1984.
Change orders or other amendments, made after April 30, 1984, to realty improvement contracts or purchase contracts entered into prior to May 1, 1984, shall be taxed at the rate and under the provisions of this chapter which were in effect on the date of the original contract.
Source: SL 1984, ch 92, § 2.
10-46A-1.2. Contracts subject to tax imposed by chapter 10-46B.
The tax imposed upon contractors performing realty improvement contracts for those persons subject to tax under chapter 10-28, 10-33, 10-35, 10-36 or 10-36A or any municipal telephone company subject to chapter 9-41 or any rural water system is not subject to this chapter and the contracts are subject to the contractors' excise tax imposed by chapter 10-46B.
Source: SL 1984, ch 92, § 3; SL 2005, ch 78, § 15; SL 2010, ch 65, § 1, eff. Feb. 24, 2010; SL 2018, ch 65, § 1; SL 2021, ch 49, § 11.
10-46A-1.3. Tax measured by gross receipts upon accrual basis.
The secretary of revenue shall allow contractors to report and pay contractor's excise tax measured by gross receipts upon an accrual basis if:
(1) The contractor has not changed his basis in the previous calendar year;
(2) The contractor's records are kept in a manner which may be audited to determine whether contractor's excise tax and use tax are paid for all realty improvement contracts;
(3) The contractor has made a written request to the secretary of revenue for authority to pay tax on the accrual basis; and
(4) Authority to pay tax on the accrual basis applies only to realty improvement contracts commencing after the authority is granted.
Source: SL 1990, ch 93, § 1; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.
10-46A-1.4. Payment of tax on cash basis.
If the secretary of revenue has granted a contractor the authority to report and pay contractor's excise tax on the accrual basis and the contractor requests in writing for the authority to report and pay the tax on the cash basis, the secretary may grant such authority if assessment and collection of taxes are not jeopardized.
Source: SL 1990, ch 93, § 2; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.
10-46A-1.5. Taxes on receipts of worthless accounts.
Taxes paid on gross receipts represented by accounts found to be worthless and actually charged off for income tax purposes, may be credited upon a subsequent payment of the tax. If such accounts are thereafter collected by the contractor, the tax shall be paid upon the amount so collected.
Source: SL 1990, ch 93, § 3.
10-46A-1.8. Filing return and remitting tax-Time for filing and remittance--Extension--Penalty for untimely return or remittance.
Any person who holds a license issued pursuant to this chapter or who is a person whose receipts are subject to the tax imposed by this chapter shall, except as otherwise provided in this section, file a return, and pay any tax due, to the Department of Revenue on or before the twentieth day of the month following each monthly period. The return shall be filed on forms prescribed and furnished by the department.
If the person remits the tax by electronic transfer to the state, the person shall file the return by electronic means on or before the twentieth day of the month following each period and remit the tax on or before the twenty-fifth day of the month following each period.
The secretary may require or allow a person to file a return, and pay any tax due, on a basis other than monthly. The return and remittance is due the twentieth day of the month following the reporting period or at a time otherwise determined by the secretary.
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.
Source: SL 2007, ch 65, § 8; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011; SL 2017, ch 65, § 4.
10-46A-2. Prime contractors and subcontractors subject to tax.
Prime contractors and subcontractors subject to the tax imposed by § 10-46A-1 include without limitation those enumerated in the Standard Industrial Classification Manual of 1987 as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President: construction (division c).
Source: SL 1979, ch 84, §§ 12B, 12D; SL 1980, ch 100, § 2; SL 1988, ch 108, § 6; SL 1993, ch 101, § 1.
10-46A-2.1. Subcontractors--Definition--Certificate issued by prime contractor--Tax liability--Misuse of certificate--Government entities not to issue certificates.
For the purpose of this chapter, a subcontractor is a person contracting with a prime contractor to perform all or part of a realty improvement the prime contractor has contracted to perform. For highway construction projects, a subcontractor includes any person contracting with a prime contractor to perform any of the following services as part of the project: traffic control, striping, flagging, operation of pilot cars, signing, landscaping, seeding, sodding, mulching, and erosion control. A prime contractor shall issue a certificate to a subcontractor showing the prime contractor's valid contractors' excise tax license number. The form shall be prescribed by the secretary of revenue. Any subcontractor who fails to retain a certificate and a record of project designations is considered a prime contractor and is subject to tax under this chapter. Any person not a prime contractor who provides a certificate is liable for tax equal to the amount of tax the person accepting the certificate would have been liable for if the certificate had not been issued. The tax is due at the time the person accepting the certificate would have been required to pay the tax. In addition to any tax or interest due, persons who are not prime contractors providing certificates are liable for a penalty of ten percent of the tax. The United States, the State of South Dakota, or any other state or public or municipal corporation in this state may not issue a certificate.
Source: SL 1984, ch 92, § 6; SL 1990, ch 94; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.
10-46A-2.2. Prime contractor--Definition.
For the purpose of this chapter, a prime contractor is a person entering into a realty improvement contract or a contract for construction services as enumerated in division c of the Standard Industrial Classification Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President, with the United States and its instrumentalities, the State of South Dakota and its subdivisions, or any other state or public corporation, or person as defined in § 10-45-1. If a contractor engages in services not specifically listed in division c of the Standard Industrial Classification Manual, 1987, then the services must entail the construction, building, installation, or repair of a fixture to realty before the gross receipts are subject to the tax imposed by § 10-46A-1. Operative builders, industry number 1531, as enumerated in the Standard Industrial Classification Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President, are prime contractors regardless of whether they perform construction work themselves or contract with other contractors. A person who is not primarily in the business of making realty improvements and regularly employs persons for the purpose of repairing, maintaining or making realty improvements for his own use and who repairs, maintains or makes a realty improvement for his own use with his regular employees is not a prime contractor and is not liable for the tax herein.
Source: SL 1984, ch 92, § 7; SL 1985, ch 93, § 1; SL 1988, ch 108, § 7; SL 1988, ch 120, § 3; SL 1993, ch 101, § 2.
10-46A-3. Total contract price as basis of tax--Purchased materials.
The tax imposed by this chapter applies to the total contract price including all labor and materials. Materials include those purchased by the contractor and those purchased by the person who let the contract or his designee.
Source: SL 1979, ch 84, § 12E; SL 1980, ch 100, § 3; SL 1984, ch 92, § 4.
10-46A-4. Gross receipts defined--Items not deductible.
For the purpose of this chapter, the term, gross receipts, means the amount received directly or indirectly in money, credits, property, or other money's worth in consideration of the performance of realty improvement contracts within this state, without any deduction on account of the cost of the property sold, the cost of materials used, the cost of services or labor purchased, amounts paid for interest or discounts or any other expenses whatsoever, nor may any deduction be allowed for losses. Gross receipts include those materials furnished to the prime contractor or subcontractor by the owner or the lessee of the realty improvement. For the purposes of measuring the tax imposed by this chapter, gross receipts include the greater of the cost or fair market value of materials used by a contractor or subcontractor in the performance of a contract regardless of whether the contractor or subcontractor owns or furnishes the materials.
Source: SL 1979, ch 84, § 12J; SL 1984, ch 92, § 5.
10-46A-5. Improvement without contract taxable when sold within four years after completion--Exceptions--Determination of gross receipts.
If any person, except for a person making an isolated or occasional realty improvement and who does not hold himself out as engaging in the business of making realty improvements, makes a realty improvement without a realty improvement contract and subsequently sells the property containing the realty improvement or the realty improvement at any time subsequent to the commencement of the project and within four years of its completion, the gross receipts from the sale of the realty improvement shall be subject to the excise tax imposed on the gross receipts of contractors engaged in realty improvement contracts. In determining the gross receipts from the sale of such realty improvements when land or land and improvements completed four years prior to sale are included in the sale, land and such improvements shall be valued at cost or fair market value, whichever is greater, and the portion of the gross receipts attributable to land or land and improvements completed four years prior to sale shall be deducted from the sale price.
Source: SL 1979, ch 84, § 12L; SL 1980, ch 100, § 4.
10-46A-5.1. Tax imposed on improvements built for lease--Credit against tax on sale--Due date--Exemptions.
There is imposed a tax at the rate provided in § 10-46A-1, on the fair market value of the improvement upon any person who builds a building for lease to himself or others, with a value of over one hundred thousand dollars. If the realty improvement becomes subject to tax under § 10-46A-5, credit for tax due under that section is given for any tax paid under this section. The tax imposed by this section is due the next reporting date after the improvement is used or leased. The tax imposed by this section does not apply to the United States, the State of South Dakota and its subdivisions, or public or municipal corporation in the State of South Dakota. This section applies only to buildings substantially completed after April 30, 1984.
Source: SL 1984, ch 92, § 8.
10-46A-7. Administration of tax--Sales tax provisions applicable.
The secretary of revenue is hereby charged with the enforcement and administration of the provisions of this chapter, and as to licensing and reports, it shall be administered in the same manner as the tax imposed by chapter 10-45. For enforcement and interest purposes §§ 10-45-24 to 10-45-52, inclusive, and all amendments that may hereafter be made thereto shall apply to and be available and said sections are by reference incorporated herein.
Source: SL 1979, ch 84, §§ 12G, 12I; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 35, eff. Apr. 12, 2011.
10-46A-8. Report and payment of tax.
The tax imposed shall be reported and paid pursuant to § 10-46A-1.8, upon the receipts received under the contract during the period.
Source: SL 1979, ch 84, § 12F; SL 1984, ch 91, § 1; SL 1998, ch 70, § 1; SL 2007, ch 65, § 7.
10-46A-11. Municipal tax on contractors--Rate--Restitution.
Any municipality may impose an excise tax on contractors gross receipts in a similar manner as imposed by this chapter; provided however, that the same shall be adopted in conformity with chapter 10-52 and the rate thereof shall not exceed one-half percent. Municipalities that have a non-ad valorem tax in effect as provided for in chapter 10-52 may not continue the tax imposed by this section on or after April 1, 1980.
Source: SL 1979, ch 84, § 12K; SL 1980, ch 100, § 8.
10-46A-12. Contractors may list excise and use taxes as separate line item on contracts and bills.
A contractor may list the contractor's excise tax and any use tax imposed under chapter 10-45, 10-46, or 10-52 as a separate line item on all contracts and bills, both for public and private entities. The line item for excise and use taxes is a part of the contractor's total bill and is collectible from all entities, both public and private.
Source: SL 1980, ch 100, § 10; SL 1988, ch 120, § 1.
10-46A-12.1. Contractor to post excise tax license number with building permit for realty improvement project.
A contractor shall post his excise tax license number assigned pursuant to this chapter with the building permit for a realty improvement project.
The provisions of this section and 10-46B-10.1 do not require a building permit if the political subdivision where the realty improvement is located does not require a building permit.
Source: SL 1989, ch 115, § 1.
10-46A-12.2. When building permit not required.
The provisions of §§ 10-46A-12.1 and 10-46B-10.1 do not require a building permit if the political subdivision where the realty improvement is located does not require a building permit.
Source: SL 1989, ch 115, § 3.
10-46A-13. Personal liability of officers, managers, or partners of entity failing to file returns or pay tax--Security in lieu of liability--Bonded municipal officials exempt.
If a corporation, limited liability company, limited partnership, limited liability partnership, or limited liability limited partnership subject to tax under this chapter fails for any reason to file the required returns or to pay the tax due, any of the corporate officers, member-managers or managers of limited liability companies, or partners of partnerships that control, supervise, or are charged with the responsibility of filing the returns or remitting tax payments shall be personally liable for the failure. The dissolution of a corporation, limited liability company, limited partnership, limited liability partnership, or limited liability limited partnership does not discharge an officer, member-manager, manager, or partner's liability for a prior failure of the corporation, limited liability company, limited partnership, limited liability partnership, or limited liability limited partnership to file 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, limited liability company member-managers or managers, or partners elect not to be personally liable for the failure to file the required returns or to pay the tax due, the corporation, limited liability company, limited partnership, limited liability partnership, or limited liability limited partnership shall provide the Department of Revenue 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 excise tax rate. This section does not apply to elected or appointed officials of a municipality if bonded pursuant to §§ 9-14-6 and 9-14-6.1.
Source: SL 1981, ch 105; SL 1982, ch 120, § 1; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2009, ch 49, § 4; SL 2011, ch 1 (Ex. Ord. 11-1), § 35, eff. Apr. 12, 2011.
10-46A-13.1. Violation of chapter as criminal offense--Classification.
Any person who:
(1) Makes any false or fraudulent return in attempting to defeat or evade the tax imposed by this chapter is guilty of a Class 6 felony;
(2) Fails to pay tax due under this chapter within sixty days from the date the tax becomes due is guilty of a Class 1 misdemeanor;
(3) Fails to keep the records and books required by § 10-45-45 or refuses to exhibit these records to the secretary of revenue or the secretary's agents for the purpose of examination is guilty of a Class 1 misdemeanor;
(4) Fails to file a return required by this chapter within sixty days from the date the return is due is guilty of a Class 1 misdemeanor;
(5) Engages in business under this chapter without obtaining a contractor's excise tax license is guilty of a Class 1 misdemeanor;
(6) Engages in business under this chapter after the person's contractor's excise tax license has been revoked by the secretary of revenue is guilty of a Class 6 felony;
(7) 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
(8) Engages in business under this chapter without obtaining a contractor's excise tax license after having been notified in writing by the secretary of revenue that the person is a contractor subject to the provisions of the contractors' excise tax laws is guilty of a Class 6 felony. It is not a violation of this subdivision if the person engaging in business files an application for a contractor's excise 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, person, includes corporate officers, member-managers or managers of limited liability companies, or partners that control, supervise, or are charged with the responsibility of filing tax returns or remitting tax payments pursuant to § 10-46A-13.
Source: SL 1988, ch 121, § 1; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2004, ch 96, § 3; SL 2009, ch 49, § 5; SL 2011, ch 1 (Ex. Ord. 11-1), § 35, eff. Apr. 12, 2011.
10-46A-14. Restriction on application of rate increase.
No tax increase imposed after March 9, 1984, may be levied on the gross receipts of realty improvement contracts bid or entered into on or before the effective date of the tax increase.
Source: SL 1984, ch 93, § 4.
10-46A-15. Contractor's excise tax license required--Application.
Every contractor or person engaging in a business in this state whose receipts are subject to tax under this chapter shall file with the Department of Revenue an application for a contractor's excise tax license. Every application shall be made upon a form prescribed by the secretary of revenue and shall set forth the name under which the applicant transacts or intends to transact business, the location of the applicant's place or places of business, and such other information as the secretary of revenue may require.
Source: SL 1989, ch 116, § 1; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2006, ch 56, § 2; SL 2011, ch 1 (Ex. Ord. 11-1), § 35, eff. Apr. 12, 2011.
10-46A-16. Issuance of license--Assignment prohibited.
The secretary of revenue shall grant and issue to each applicant a contractor's excise tax license. A license is not assignable and shall be valid only for the person in whose name it is issued. Any license issued is valid and effective without further payment of fees until canceled or revoked.
Source: SL 1989, ch 116, § 2; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.
10-46A-17. Refusal to issue license for failure to pay tax--Bond.
The secretary of revenue may, at his discretion, refuse to issue a license to any person who is delinquent in payment of contractor's excise tax or use tax levied by the State of South Dakota. He may also, in his discretion, require an applicant to furnish bond to the state, or other adequate security, as security for payment of any contractor's excise tax and use tax that may become due, or require a bond or security as a condition precedent to continuing in business as a contractor.
Source: SL 1989, ch 116, § 3; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.
10-46A-18. Exemption for floor laying.
The following service enumerated in the Standard Industrial Classification Manual of 1987 as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President, is exempt from the provisions of this chapter: industry no. 1752 floor laying and other floor work, not elsewhere classified.
Source: SL 1991, ch 108, § 1.
10-46A-18.1. Exemption of repair shops, locksmiths, and locksmith shops.
The following services enumerated in the Standard Industrial Classification Manual of 1987 as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President, are exempt from the provisions of this chapter: repair shops and related services, not elsewhere classified (industry no. 7699) but only locksmiths and locksmith shops.
Source: SL 1998, ch 71, § 1.
10-46A-19. Promulgation of rules.
The secretary of revenue may promulgate rules pursuant to chapter 1-26 concerning:
(1) Licensing, including bonding and filing license applications;
(2) The filing of returns and payment of the tax;
(3) Determining the application of the tax and exemptions;
(4) Taxpayer record-keeping requirements; and
(5) Determining auditing methods.
Source: SL 1995, ch 53, § 3; SL 2003, ch 272 (Ex. Ord. 03-1), § 82; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.
