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Stay compliant and informed with our South Dakota Sales Tax Guide, covering everything businesses need to know about compliance, rates, and regulations
Sales tax at a glance
South Dakota sales tax rates & calculations in 2023
South Dakota has a statewide sales tax rate of 4.5%. Depending on the local jurisdiction, total sales tax rates range from 4.5% to 6.5%.
List of local sales tax rates in South Dakota
After the base rate change, the local sales tax rates for the following cities went from 6.5% to 6.2%.
Recent tax rate changes in South Dakota
Effective July 1, 2023, South Dakota decreased its statewide sales tax rate from 4.5% to 4.2%. No other recent statewide sales tax changes have occurred. However, local jurisdictions can adjust their rates at any time.
FAQs
How do you calculate South Dakota sales tax?
To calculate South Dakota sales tax, use this formula:
(State tax rate + local tax rate) x taxable purchase amount
For example, with a state tax rate of 4.2%, local tax rate of 2%, and $100 taxable purchase:
(4.2% + 2%) x $100 = $6.20 sales tax
What are the penalties for not paying South Dakota sales tax?
Penalties for late filing or payment in South Dakota include a 10% penalty applied each month after the due date, up to 20% of the tax due. Interest also accrues at 1.25% per month.
What's the difference between destination-based and origin-based sales tax states?
Destination-based states apply sales tax based on where the customer receives the product or service (the destination). Origin-based states use tax based on where the seller is located (the origin), regardless of customer location.
Is South Dakota a destination-based or origin-based sales tax state?
South Dakota is a destination-based sales tax state. The applicable tax rate is based on where the customer delivers or receives services.
Is South Dakota a Streamlined Sales Tax state?
Yes, South Dakota is a full member state of the Streamlined Sales and Use Tax Agreement (SSUTA).
Sales tax nexus table in South Dakota
FAQs
Do I need a South Dakota seller's permit if I’m only a wholesaler?
You still need a seller's permit because South Dakota taxes wholesale sales without a valid resale certificate. Wholesalers must collect and remit sales tax on sales to end consumers.
Do I need a South Dakota seller's permit if I only sell temporarily in the state?
Yes, even temporary sellers like vendors at craft fairs and markets need a sales tax permit in South Dakota if making taxable retail sales. There is no minimum activity threshold to trigger licensing and collection duties.
Exemptions from sales tax in South Dakota
- Prescription drugs
- Medical devices
- Farm machinery & equipment
- Livestock used for agricultural purposes
- Seed, fertilizers, soil conditioners
- Motor fuel
- Newsprint & ink
- Purchases by religious or private schools
FAQs
Are groceries taxable in South Dakota?
Yes, South Dakota taxes groceries and food products not purchased with SNAP benefits.
Is clothing taxable in South Dakota?
Yes, all clothing and footwear purchases in South Dakota are subject to the full sales tax rate unless specifically exempted.
Are digital products taxable in South Dakota?
Yes, South Dakota taxes digital products like music, movies, and ebooks delivered electronically or by tangible media. Custom software is also taxable.
Is software-as-a-service (SaaS) taxable in South Dakota?
Yes, SaaS and other online software subscriptions are subject to South Dakota sales tax.
Are services taxable in South Dakota?
South Dakota taxes most services, including legal, telecom, landscaping, pet care, and repair services. Professional services like medical and dental are exempt.
Excise taxes in South Dakota (alcohol, tobacco, gasoline, fuel, marijuana)
- Cigarettes: $1.53 per pack
- Tobacco products: 35% of wholesale price
- Marijuana: 19.5% excise tax + 4.5% sales tax
- Gasoline: $0.30 per gallon
- Diesel fuel: $0.30 per gallon
Alcohol sales tax in South Dakota
South Dakota does not have any general sales tax on food and beverages. However, alcohol purchases are subject to excise taxes:
- Beer: $0.27 per gallon + 2% wholesale tax
- Wine: $0.93 per gallon + 2% wholesale tax
- Liquor: $3.93 per gallon + 2% wholesale tax
Remote sellers in South Dakota
Out-of-state sellers with no physical presence can have economic nexus for sales tax if they meet the $100,000 sales or 200 transactions threshold. Remote sellers meeting this threshold must register, collect, file, and remit South Dakota sales tax.
Discretionary taxes in South Dakota (local sales taxes)
Local jurisdictions in South Dakota may levy up to 2% discretionary sales taxes on top of the 4.5% state sales tax rate. Common local taxes fund public transportation and infrastructure projects.
Collecting sales tax in South Dakota
Now, let’s look at the steps to collect sales tax in South Dakota.
How to collect sales tax in South Dakota if you are not based in South Dakota (Out-of-State)
South Dakota’s economic nexus laws require out-of-state sellers to collect and remit sales tax once they meet the $100,000 sales or 200 transactions threshold from South Dakota customers in the current or prior calendar year.
To register for a South Dakota seller's permit, you must file on the Department of Revenue website if you do not have an in-state physical presence. Complete the online or paper application to receive your sales tax license.
Once registered, begin charging South Dakota state sales tax (4.5%) plus any applicable municipal taxes on all taxable sales shipped to South Dakota addresses. You must file regular sales and use tax returns even for periods without sales.
Carefully document all out-of-state sales and maintain thorough sales records. Detailed invoices, shipping reports, and exemption certificates ensure you can validate any sale claimed as exempt or shipped out of state during a South Dakota sales tax audit.
Consider sales tax automation software to accurately calculate rates, file returns, and integrate seamlessly with your accounting, e-commerce, POS, or billing systems. This eliminates compliance headaches so you can focus on growing your South Dakota customer base.
Should you collect sales tax on shipping charges in South Dakota?
If the products sold are taxable, then delivery and shipping charges by South Dakota sellers are generally considered part of the sales price and subject to state and local sales taxes.
However, if all products on the order qualify as exempt, then shipping charges tied directly to that order are also exempt. Ensure your invoices list shipping as a separate line item to avoid confusion. Maintain thorough recordkeeping on taxable vs. exempt sales and corresponding shipping charges.
Filing and paying sales taxes in South Dakota
All retailers registered for a South Dakota sales tax permit must file regular sales and use tax returns with the Department of Revenue, even for periods without taxable sales. You can submit returns and payments online, by phone, or by mail.
Use form EFT-1 to enroll in electronic funds transfer (EFT) for tax payments if you owe $100,000+ annually. EFT accounts receive a one-business-day filing extension. Consider sales tax software to simplify filing.
Sales tax return filing schedule and due dates in South Dakota
The state assigns a monthly, quarterly, semi-annual, annual, or seasonal filing frequency based on your sales volume. Here are the due dates:
Monthly
Quarterly
Annual
Filing penalties in South Dakota
Failing to file returns on time results in a 10% penalty for each month late, up to 20%. Interest accrues monthly at 1.25% of unpaid tax.
FAQs
What are the South Dakota sales tax due dates?
Due dates are the 20th day following the end of each filing period. See schedules above.
I didn’t collect any South Dakota sales tax this period. Do I still need to file a return?
Yes, every retailer must submit a sales tax return for each assigned filing period, even with no tax due.
Can I get an extension on filing my South Dakota sales tax return?
Yes, you can submit form PT-100 to receive an automatic 7-day extension. Longer extensions may be granted if you can show reasonable cause.
Can I amend a South Dakota sales tax return?
If you underreported tax due, file an amended return within 3 years. Submit a revised Form PT-100, applicable schedules, and payment for additional tax plus interest.
What is the penalty for late filing/payment in South Dakota?
10% monthly late penalty up to 20% maximum. 1.25% monthly interest is also added to unpaid tax balances.
Audit & appeals process
The South Dakota DOR routinely conducts sales and use tax audits on registered businesses to ensure compliance. Auditors review your books, records, accounting systems, and previous tax returns.
If the audit uncovers unreported tax liability, you will receive a Notice of Determination detailing the proposed assessment. You then have 60 days to pay the amount due or file a written protest. Filing a protest allows you to present additional documentation or dispute the auditor's findings through appeals.
South Dakota sales tax audit process
The typical audit timeline is as follows:
- Receive audit notice
- Gather and organize records
- Initial interview with the auditor
- Auditor reviews records and tax returns
- Receive audit findings
- Provide additional documentation
- Receive Notice of Determination
- Pay an assessment or file a written protest
What to expect during the audit
The auditor will review your books, accounting records, purchase and sales invoices, bank statements, reseller exemption certificates (if applicable), and previously filed tax returns. You may be asked to explain your internal controls, recordkeeping methods, how taxability decisions are made, and other tax compliance procedures.
Cooperating fully with reasonable requests helps facilitate an efficient audit. However, you should consult with a sales tax professional before providing any documentation that may be self-incriminating.
After the audit – Appealing the results
If you disagree with the auditor's findings, you must file a written protest 60 days after receiving the Notice of Determination. The DOR will then schedule a hearing where you can present evidence supporting your position.
You can appeal to the circuit court and the South Dakota Supreme Court if the DOR denies your protest. Having detailed records and experienced legal counsel is critical for successfully demanding post-audit assessments.
How to register for sales tax in South Dakota
You can register online through the South Dakota DOR website. Provide your business legal name, ownership structure, federal EIN, contact info, start date, NAICS code, products sold, and whether you need tribal tax licenses. There is no fee to obtain your sales tax license.
Registration requirements for online sellers in South Dakota
Out-of-state online retailers with over $100,000 in South Dakota sales or 200+ transactions in the current or prior calendar year have economic nexus and must register to collect sales tax. Refer to the nexus section for more information on licensing requirements.
Cost of registration for a South Dakota sales tax license
South Dakota does not currently charge a fee to obtain a regular retail sales tax license.
More Information & Contacts
For sales and use tax questions, contact the DOR Taxpayer Assistance Center. You can consult an accountant or lawyer familiar with South Dakota sales tax laws. Consider automation software for accurate calculations.
- Authority: South Dakota Department of Revenue (DOR)
- Phone: 1-800-829-9188
- Website: https://dor.sd.gov/
There you have it—a comprehensive guide on South Dakota's sales tax systems. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.
