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Exemptions Sellers A seller does not have to collect sales tax when a purchaser gives a seller a completed exemption certificate at the time of sale. The exemption certificate is used to: Claim exemption for: ⇒ Products or services intended to be resold; or → Products or services used for an exempt purpose. Document that the purchaser is an exempt entity. The purchaser can give a "single purchase" certificate for just one transaction or a blanket certificate that applies to future purchases of qualifying exempt items. Exemption certificates do not expire unless the information on the certificate changes; however, we recommend updating exemption certificates every three to four years. South Dakota businesses with permit numbers containing UT (use tax) or ET (contractor's excise tax) cannot buy products or services for resale. Any purchaser that provides an invalid exemption certificate with the intent to evade payment of the tax is guilty of a Class I misdemeanor and may be fined up to 50% of the tax in addition to the tax. A purchaser from a state that does not issue sales tax permits may use their FEIN, driver's license number, or state-issued ID number on the exemption certificate. A business that purchases an item for resale, but later uses that item is responsible for reporting and paying use tax on that item. Exemption certificates may be obtained on our website at https://dor.sd.gov or by calling 1-800-829-9188. More information available in the Exemption Certificate Tax Fact. Exempt Entities Direct Payment Permit Visit our Tax Facts for more information on various topics: https://sddor.seamlessdocs.com/sc/publications-tax- facts/ A direct payment permit allows the holder to purchase products and services without sales tax. The holder reports and pays the use tax on their purchases directly to the department. Only taxpayers with a sales, use, manufacturer, or wholesaler tax license may qualify for a direct payment permit. For further information, review the direct payment permit application. Sales for Resale A business that purchases items to sell, rent, or lease to others in the normal course of its business may purchase those items exempt from sales tax. Specific criteria must be met before a business can purchase services for resale. For information on services that can be purchased for resale, view the Exemption Certificate Tax Fact, the tax fact(s) for that service, or call 1-800-829-9188. Exempt Entities State law exempts certain entities from paying South Dakota sales tax or use tax on their purchases. These entities include: Indian tribes • United States government agencies • South Dakota governments including state, county and municipal • Municipal or volunteer fire or ambulance departments · Public schools, including K-12, universities and technical institutes • • Relief agencies Non-profit hospitals • South Dakota religious and private schools Relief agencies and religious and private schools must apply to the department and be approved for exempt status. Their exemption number must be included on the exemption certificate. The exemption numbers for relief agencies include an "RA"; private schools include an "RS". South Dakota Department of Revenue · Sales and Use Tax Guide ⚫January 2022 • 11

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