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The Basics of Sales Tax Laws in South Dakota

What is Sales Tax?

Sales tax is a tax that is imposed on the sale of goods and services. It is a percentage of the price of the item sold and is collected by the seller on behalf of the state. The money collected from sales tax is used to fund public services and programs in the state.

South Dakota Sales Tax

In South Dakota, sales tax is imposed on most goods and services sold in the state. The current sales tax rate in South Dakota is 4.5%. However, some cities and counties in the state have their own additional sales tax rates.

Who is Required to Collect Sales Tax?

All businesses that sell goods or services in South Dakota are required to collect sales tax from their customers. This includes both brick and mortar stores as well as online retailers.

How to Register for a Sales Tax Permit in South Dakota

If you are a business owner in South Dakota, you will need to register for a sales tax permit with the South Dakota Department of Revenue. You can do this online or by mail. Once you have registered, you will receive a sales tax permit and a tax identification number.

When to Collect Sales Tax

In South Dakota, sales tax must be collected at the time of the sale. This means that the seller must collect the tax from the customer and remit it to the state. Failure to do so can result in penalties and fines.

Exemptions from Sales Tax

There are some items that are exempt from sales tax in South Dakota. These include prescription drugs, certain types of food, and agricultural products. Additionally, sales tax is not collected on sales to the federal government or to certain nonprofit organizations.

How to Report and Pay Sales Tax

Businesses in South Dakota are required to file sales tax returns on a regular basis. The frequency of these returns depends on the amount of sales tax collected. Returns can be filed online or by mail. Payments can be made online or by mail as well.

Penalties for Late or Non-Payment of Sales Tax

Failure to file sales tax returns or pay sales tax on time can result in penalties and interest charges. The amount of these penalties depends on the amount of tax owed and the length of time it is delinquent.

Sales Tax Audits

The South Dakota Department of Revenue may conduct audits of businesses to ensure compliance with sales tax laws. During an audit, the department will review a business's records and transactions to ensure that all sales tax has been collected and remitted properly.

Conclusion

Sales tax is an important source of revenue for the state of South Dakota. As a business owner in the state, it is important to understand the sales tax laws and to comply with them. Failure to do so can result in penalties and fines. By following the guidelines outlined in this article, you can ensure that your business is in compliance with South Dakota's sales tax laws.

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