Investor Presentaiton
Exemptions (cont.)
Exempt Entities (cont.)
Government entities must provide an exemption certificate to the vendor, or the
vendor must keep documentation to show the purchase was paid with
government funds.
Some government entities are issued exemption numbers that include the letters
"RG". These agencies may include their exemption number on the exemption
certificate.
The governments from other states and the District of Columbia are exempt
from sales tax if the law in that state provides a similar exemption for South
Dakota governments or does not impose a sales tax.
Employee Purchases
The purchase of products or services for the personal use of officials, members, or
employees of exempt entities is subject to sales tax.
State Governments Exempt
from South Dakota Sales Tax:
• Alaska
.
Colorado
Delaware
Indiana
Montana
•
New Hampshire
North Dakota
Ohio
.
Oregon
West Virginia
•
Iowa (motels and hotels are not
exempt)
•
Minnesota (motels, hotels,
beverages, and meals are not
exempt)
Employees or representatives of an exempt entity cannot buy products or services
without paying sales tax if they use a personal check or personal credit card. This
is true even if the exempt entity later reimburses the employee. The exempt entity
must pay the vendor from the exempt entity's funds using that entity's check or credit card.
Exempt Products and Services
State law exempts certain products or services from sales or use tax. Documentation is not required to support these
exemptions. However, if there is any doubt as to the intended use of these items, the purchaser should provide an
exemption certificate to the seller.
For information on exemptions that apply to specific businesses, review the following tax facts:
•
Advertising Agencies
• Financial Institutions
• Manufactured and
Modular Homes
• Schools
•
Agriculture Equipment
.
Hospitals Nonprofit
• Motor Vehicles Sales &
Purchases
•
Telecommunication
Services
Other Exempt Transactions or Products
Coin-Operated Washers and Dryers - Receipts from
coin-operated washers and dryers are not subject to sales
tax. There is an annual license fee paid in lieu of a sales tax
on receipts. Fee amounts are: $20 for each coin-operated
washer and dryer located in municipalities having
populations greater than 1,000 and a $16 fee for each
machine located in municipalities with populations of
1,000 or less.
The sale of coin-operated washers and dryers is taxable.
Controlled Group - Services between controlled group
members are not subject to sales tax if sales tax was paid
on the original purchase.
.
Agriculture Products
• Agriculture Services
•
Health Services, Drugs,
and Medical Devices
• Hotels, Motels and
Campgrounds
•
Motor Vehicles Repairs &
Services
Examples of services exempt from sales tax:
• Health services
•
Educational services
Social services
Agricultural services
Forestry services
Services provided by certain membership organizations
Financial services performed by institutions registered under
bank franchise
Commissions paid by an insurance company to an agent for
the sale of a policy
• Stock and commodity broker service; services of brokers and
•
agents licensed under Title 47
Trucking
Travel agent services
Construction services (see Contractor's Excise Tax Guide)
A controlled group is defined as any corporations or other
entities eligible to file a consolidated federal income tax
return, or entitled to only a single surtax exemption for federal corporate income tax purposes, and includes a controlled
group of corporations as defined at 26 U.S.C. § 1563, as of July 1, 2002.
A controlled group also consists of any subchapter S corporation, limited liability company, limited liability partnership,
general partnership, or limited partnership with at least eighty percent common ownership as if the entity was converted
to or taxed as a subchapter C corporation under the Internal Revenue Code as in effect on January 1, 2002.
Sole proprietors are not part of a controlled group. Controlled group exemptions do not apply to contractor's excise tax.
12 •
January 2022
•
Sales and Use Tax Guide • South Dakota Department of RevenueView entire presentation