On August 10, 1927 President Calvin Coolidge dedicated a towering wall of a mountain located in the heart of the Black Hills as the future site of a memorial commemorating the spirit of these United States including the independence, growth and strength as well as the restoration of our great country from the ravages of the Civil War.
President Coolidge said, “This memorial will crown the height of land between the Rocky Mountains and the Atlantic seaboard, where coming generations may view it for all time.” That memorial is of course know today as Mount Rushmore featuring the images of four of our Presidents, George Washington, Thomas Jefferson, Abraham Lincoln and Theodore Roosevelt. President Coolidge went on to say “No one can look upon it understandingly without realizing that it is a picture of hope fulfilled.” South Dakota is the proud home of Mount Rushmore, and as such is known as “The Mount Rushmore State.”
The state is named after the Lakota and Dakota Sioux Native American tribes. With a population of 853,175, South Dakota is ranked 46th in the United States based on population. The state is 77,116 square miles and while the Capital is Pierre, the largest city is Sioux Falls, and the 2nd largest is Rapid City.
South Dakota’s 4% state sales tax applies to the gross receipts of all retail sales, including the sale, lease, or rental of tangible personal property or any product transferred electronically, and the sale of services, unless the product or service is specifically exempt by law. Use tax applies to all products and services that are used, stored, or consumed in South Dakota when South Dakota’s sales tax has not been paid.
Cities may impose municipal sales and use tax up to 2% that applies to all products and services that are subject to the state sales or use tax. Cities may also impose a 1% municipal gross receipts tax that is in addition to their sales tax rate on the sale of Alcoholic beverages, Eating establishments, Lodging accommodations, Ticket sales or admissions to places of amusement, athletic and cultural events. But there is neither a fee nor sales tax for admission to Mount Rushmore. Indian tribes are also specifically exempt from South Dakota Sales and Use tax.
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series covering sales tax issues associated with each and every state tax jurisdiction in the United States. We will be publishing "Sales Tax Tuesday" each week during 2015. Who knows, by the end of this year there could be sufficient changes to just start the whole series over again with updated information.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
South Dakota Sales Tax Facts1:
- Sales and Use tax is managed by the South Dakota Department of Revenue.
- South Dakota has been a full member of the Streamlined Sales and Use Tax Agreement since 2006.
- South Dakota has 251 different sales tax jurisdiction. The state rate is 4% and the total rate can range as high as 6% when including local jurisdictions. The average is 5.83% making it the 40th highest average sales tax rate.
- Local taxes can be for imposed at the city, county, school, transportation and other special purpose district levels.
- Sales tax is sourced at the destination address.
- Some common nexus creating activities are: place of business (offices, warehouse, distribution centers, and sales office), employees, including temporary workers or agents operating under the authority of that business (contract workforce).
- South Dakota exempts sales tax on the following services: health, education, social, agricultural, forestry financial, trucking, and travel agencies.
- South Dakota will tax sales to churches, and most civic and non-profit organizations. Gifts and premiums, prepared food, the repair and service of products, and products sold at auction are all taxable sales.
- Exemptions certificates are valid for the following: purposes of resale, if the entity is an Indian tribe, state, local or federal government, non-profit hospitals, and relief agencies. There is no expiration for state exemption certificates.
- Paper returns are due monthly in South Dakota, but business may also file electronically on a quarterly or annual frequency upon approval from the DOR. Zero dollar returns must be filed.
Manual sales and use tax management is prone to error and consumes staff time in pass-through rather than revenue-generating activities. For example, local tax rates in South Dakota can be quite complex compared against local tax rates in other states. South Dakota sales tax may be levied at the city/county/school/transportation and SPD (special purpose district) levels. South Dakota sales tax has numerous local taxing levels that must be monitored and maintained on a regular basis, it is complex and time consuming due to the volume of jurisdictions.
While Mount Rushmore is a huge source of tourism in South Dakota, another event is also a major source of tourist activity and sales tax for the state. The Sturgis Motorcycle Rally held in Sturgis during the first full week of August attracts some 600,000 to the small town of otherwise 6600 people. The South Dakota Department of Revenue devotes considerable energy to the issuance of temporary sales tax licenses and securing bonds from all vendors who plan on selling (or even displaying) a product or providing services at the Rally. The process begins as much as 6-months in advance of the actual gathering. While the rumble of motorcycles at the rally roar day and night for the week, the sales tax results are a boom for the state, county and little town of Sturgis.
When it comes to a big rally of sales tax collection audits by either the South Dakota Department of Revenue, or your own state's taxing authority, the emphasis is always on finding what your business has failed to do properly as it relates to sales/use tax collection and remittance. But you can have the assurance of compliance when you use Avalara that provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity,
1 - State by State Sales Tax - Arizona, Patrick Neu, Avalara - February 23, 2015