SOUTH DAKOTA DEPARTMENT OF REVENUE South Dakota Association
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SOUTH DAKOTA DEPARTMENT OF REVENUE South Dakota Association of School Business Officials April 2019 Nick Rea
Sales Tax Exempt Entities • Public Schools – Government • Out-of-State Schools exempt as long as reciprocity • Private Schools & Private Religious Schools • 501(c)3 nonprofit • Physical location in South Dakota • Must apply for an exemption number from DOR
Purchases – Exempt or Taxable? • Exempt Purchases • School funds – School purpose • Examples: books, desks, computers, equipment, Uniforms for sports or band
Purchases – Exempt or Taxable? • Taxable Purchases • Personal items for students or staff • Examples: class rings, school pictures, school jackets, t-shirts, or uniforms sold to students • Employee Reimbursable • Fundraising Merchandise • The School owes sales tax at time of purchase or use tax if not charged • Examples: food for concession stands, fruit, candy, wrapping paper
Purchases – Exempt or Taxable? • Licensed Suppliers • If the business is not licensed, the school will owe use tax • The school does not need to furnish a certificate of exemption to their suppliers, they are owned and operated by governmental agencies, exempt under SDCL 10 -45 -10
School Organizations – Taxable • School organization purchases are taxable • School exemption does not carryover • Tax due even if purchase is given to school • Booster clubs, student organizations, foundations • PTA/PTO, Student Council, FBLA, FFA
Sales – Exempt or Taxable? • Exempt Sales • Educational Services • Student activity or class fees • Food Service for Elementary & Secondary (School Food Service Program) • The school’s receipts from the sale of food to students • Admissions to school events • When the entire net proceeds are spent for educational purposes • Fundraising sales • The school or organization does not owe sales tax on their profit from the sale of these products.
Sales – Exempt or Taxable? • Taxable Sales • Food Service at Colleges & Universities • Surplus sales • Buildings built in shop class • Sales to staff, students or others which are not part of education services
Sales – Exempt or Taxable? • Exempt or Taxable? – “Well, it depends” • Camps • Where do the net proceeds go? • Net Proceeds all for educational purposes – Exempt • Net Proceeds not all for educational purposes - Taxable
Sales – Exempt or Taxable? • Exempt or Taxable? – “Well, it depends” • School Travel • Who’s paying? • Payments made directly from school funds, by a school check or school credit card - Exempt • When paid for by the individual, even if the individual is reimbursed by the school for the expenses - Taxable
Construction (new & remodel) • What is Contractors’ Excise Tax? • 2% tax on contractors providing construction services • Why aren’t school projects exempt? • The tax is on the contractor
Construction • What else do I need to know? • Materials & equipment provided by the school to the contractor • Contractor will owe 2% contractors’ excise tax on the value of the materials & equipment • Contractor will owe sales/use tax on the value of the materials & equipment
Wrapping it up • Schools are sales tax exempt • Most purchases are exempt but some should be taxed • School organizations are not sales tax exempt • Sales – taxable or exempt? …it depends • Construction – be aware of contractors’ excise tax
Information • Read All About It! http: //dor. sd. gov • Videos, Publications, Guides • Contact Us • 1 -800 -829 -9188 • Bus. Tax@state. sd. us • Local offices: Aberdeen, Mitchell, Pierre, Rapid City, Sioux Falls, Watertown & Yankton
Questions? South Dakota Department of Revenue @SDRevenue South Dakota DOR Nick Rea Nicholas. Rea@state. sd. us 605 -773 -8211 Sign-up for our E-Newsletter
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