|
Do you shop on the Internet, by telephone, or through mail-order catalogs? If so, you probably owe use tax to the state of South Dakota.
The use tax is a tax on merchandise and services that are purchased to be used, stored, or consumed in South Dakota. If no sales tax has been paid on these purchases, you have a use tax obligation (unless the item is held for resale or a South Dakota tax exemption applies).
You will owe both the state 4% rate and applicable municipal tax if you are using, storing, or consuming an item or service within city limits. Not all cities impose a municipal tax. If you have a question on your city's municipal tax rate, view the municipal tax page.
If you know that you owe use tax, you can remit it using the "Use Tax - Everyone's Responsibility" Tax Fact form. Mail the completed form with a check to the following address:
SD Department of Revenue & Regulation
445 East Capitol Avenue
Pierre, SD 57501
Checks should be made out to the South Dakota State Treasurer.
Frequently Asked "Use Tax" Questions |
What kinds of purchases require me to pay South Dakota use tax?
What is the difference between sales tax and use tax?
How long has use tax been part of South Dakota law?
I own a South Dakota business - how do I pay the use tax?
Why do some Internet and catalog companies charge South Dakota sales tax and others don't?
Can I add South Dakota sales tax to my bill from a retailer if no tax is shown?
What if another state's tax is shown on my invoice?
Are there any special rules that apply to the purchase of motorized vehicles, personal watercraft, boats, or ATV's?
What kinds of purchases require me to pay South Dakota use tax?
South Dakota relies heavily on the sales and use tax because there is no personal or corporate state income tax; as a result, virtually all merchandise and services are taxable. Some examples of taxable purchases include:
- Magazine subscriptions
- Books
- Clothes
- Computers and computer services (hardware, software, maintenance agreements, tech support services)
- Jewelry
- Internet services
- Farm machinery and attachments
You should check your billing invoices to see if you were charged South Dakota sales tax. If no sales tax was charged, you may be liable for use tax.
top
What is the difference between sales tax and use tax?
The difference between sales tax and use tax is when it is applied and who is responsible for remitting it. Sales tax applies at the time a purchase of merchandise or services is made; the seller of the item is responsible for collecting, reporting, and remitting the tax. Use tax applies after the purchase is made and no sales tax was charged; the buyer or user of the merchandise or services is responsible for paying the use tax directly to the State.
top
How long has use tax been part of South Dakota law?
Use tax was first implemented in South Dakota in 1939. The use tax promotes tax fairness - it's not fair to South Dakota retailers who are required to charge sales tax on their sales to compete against those who do not charge tax.
top
I own a South Dakota business - how do I pay the use tax?
If you are selling tangible personal property or services subject to sales tax, you should apply for a South Dakota sales tax license so that you can collect and remit the appropriate sales taxes. Line 2 of the South Dakota sales tax return can be used to report use taxable purchases. Complete your application.
If you are selling tangible personal property or services that are exempt from South Dakota sales tax, but you purchase merchandise or services from out-of-state retailers and are not charged South Dakota sales tax, you have a use tax obligation to South Dakota. You can apply for a South Dakota use tax license that will allow you to remit the use tax on your purchases. Complete your application.
top
Why do some Internet and catalog companies charge South Dakota sales tax and others don't?
Internet and catalog companies that charge South Dakota sales tax typically have a business location, employees, or sales representatives that enter South Dakota. This establishes a physical presence within the state, which requires them to become licensed with South Dakota and charge the applicable taxes. Companies without a physical presence can not be required to be licensed; however, some companies without a physical presence may voluntarily become licensed.
top
Can I add South Dakota sales tax to my bill from a retailer if no tax is shown?
You should never add tax to a bill and pay it to a retailer. If a retailer is not showing tax on a bill, chances are that the retailer is not licensed in South Dakota and will not pay the tax to the State. Your best evidence that tax was charged and paid is an actual invoice from the retailer that shows the tax. Contact us at 1-800-829-9188 if you question whether the retailer who is billing you South Dakota tax is properly licensed to collect and remit it.
top
What if another state's tax is shown on my invoice?
South Dakota will grant credit for sales tax that was correctly** paid to another state up to the amount you would owe in South Dakota. If you make a purchase in another state and are charged a sales tax rate equal to your rate in South Dakota, no South Dakota use tax would be due. If you make a purchase in another state and are charged a rate that is less than your rate in South Dakota, you will owe South Dakota the difference in use tax.
**Some retailers mistakenly believe they should collect their state's sales tax when they ship or deliver items to locations outside of their state. If you see another state's tax on an invoice for items you bought from an out-of-state retailer and the items were shipped directly to you in South Dakota, do not pay the tax. If the item is shipped to South Dakota, South Dakota tax applies; if South Dakota sales tax is not charged, you will owe South Dakota use tax. You will not receive credit for another state's tax that has been charged incorrectly; you owe another state's tax only if you pick up your items in that state.
top
Are there any special rules that apply to the purchase of motorized vehicles, personal watercraft, boats, or ATV's?
The sale of motorized vehicles, personal watercraft (such as jet skis) and large boats in South Dakota are subject to a 3% Motor Vehicle tax in lieu of sales tax. South Dakota law defines large boats as "any boat over twelve feet in length or a motorboat, used or capable of being used as a means of transportation on water, except canoes, inflatable boats, kayaks, sailboards, and seaplanes." The 3% MV tax is paid directly to the county treasurer at the time of registration.
The sale of canoes, inflatable boats, kayaks, sailboards, and all-terrain vehicles (ATV's) are subject to the South Dakota state sales/use tax plus applicable municipal tax. When ATV's are titled, proof must be provided to the county treasurer showing that the applicable sales/use tax has been paid.
top
|
