Telecommunication tax effective May 1 Beginning May 1, interstate telecommunication services will be subject to South Dakota sales tax.
For mobile telecommunication services used by customers whose primary usage area is in South Dakota, the tax will apply to services regardless of where the service actually originates or terminates. For land-line services, sales tax will apply to telecommunication services that either begin or end in South Dakota that are billed or charged to a service address in South Dakota. Previously, the 4 percent sales tax applied only to those services that both originated and terminated in South Dakota. Such services will continue to be subject to the sales tax under this law.
South Dakota's sales tax does not apply to the following types of services:
* Any 800 or 800-type service unless the service both begins and ends in South Dakota.
* Any sale of a telecommunication service to a telecommunication service provider (including access service) for use in providing any telecommunication services; and
* Any sale of interstate telecommunication service provided to a call center that has been certified by the Secretary of Revenue when the call center has provided an exemption certificate to the telecommunications service provider.
Call centers are physical locations in the state where telephone calls for sales, marketing, customer service or technical support purposes are placed or received. Excluded are insurance, real estate or brokerage companies operating in South Dakota or businesses where telephone calls are primarily made between the same taxpayer or affiliate of the same taxpayer that owns or operates the business. Call centers providing services to other businesses must have a state sales tax permit and owe sales tax on the receipts from businesses located in South Dakota.
Currently 21 other states tax interstate telecommunication services. For more information or to receive a call center application for an exemption certificate, contact the South Dakota Department of Revenue at 1-800-829-9188.