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HOSPITALITY INDUSTRY. 4% States Sales TaxUp to 2% Municipal Sales Tax1% Municipal Gross Receipts Tax1.5% Tourism Tax TAXES THAT MAY APPLY TO RECEIPTS.

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Presentation on theme: "HOSPITALITY INDUSTRY. 4% States Sales TaxUp to 2% Municipal Sales Tax1% Municipal Gross Receipts Tax1.5% Tourism Tax TAXES THAT MAY APPLY TO RECEIPTS."— Presentation transcript:

1 HOSPITALITY INDUSTRY

2 4% States Sales TaxUp to 2% Municipal Sales Tax1% Municipal Gross Receipts Tax1.5% Tourism Tax TAXES THAT MAY APPLY TO RECEIPTS March 15, 2012 See the Municipal Tax Information Bulletin for municipal tax rates.

3 MUNICIPAL GROSS RECEIPTS TAX Municipalities may elect to apply a 1% Municipal Gross Receipts Tax to any one or combination of the following: Lodging Alcohol Eating Establishments – Prepared Food Admissions to Places of Amusement March 15, 2012 See the Municipal Tax Information Bulletin for municipal tax rates. Municipalities may elect to apply a 1% Municipal Gross Receipts Tax to any one or combination of the following:

4 MUNICIPAL TAX INFORMATION BULLETIN March 15, 2012 Municipal Sales TaxGross Receipts Tax – In Addition to Municipal Sales Tax City Jan 11 Rate General Code Jan 11 Gross Receipts Tax Tax CodeLodging Eating EstablishmentsAlcoholAdmissions Aberdeen2.00% 001-2 1.00% 001-1XXXX Blunt1.00% 034-2 1.00% 034-1X Mitchell2.00% 243-2 1.00% 242-1XXX Presho2.00% 291-2 July 2011 See the Municipal Tax Information Bulletin for municipal tax rates.

5 TOURISM TAX Lodging – Hotels, Lodging Places, and Campgrounds Visitor Attractions – includes any business conducted on the site of a visitor attraction. Water Slides, Wave Pools, Amusement Parks, Human Mazes, Miniature Golf Courses Visitor Intensive Businesses – If 50% or more of total annual sales of entire business are from sale of products (excluding services) during June through September, then tourism tax applies on all receipts during June through September. Gift shops, T-shirt Shop, Souvenir Shop, Jewelry Stores March 15, 2012 The above is not a complete listing. See the Tourism Tax Facts for additional information.

6 FRANCHISE Royalty fees paid strictly for the right to use the franchisors name are not subject to sales or use tax. A franchisor may provide products and services subject to sales tax. Examples: training, accounting, reservation fees, marketing contribu­tions, gift certificates, quality assurance inspections, consulting, advertising, promotions, and software, GDS fees, Frequent Flyer Miles, Internet, virtual tours, guest satisfaction surveys, 800 Express, calls transferred. If the fees for taxable items are itemized, sales or use tax only applies to the taxable charges. When taxable sales are included within the royalty fee, and not separately stated, the entire royalty payment is subject to state sales tax, plus applicable municipal sales tax. March 15, 2012 The above list is not all inclusive. Additional information is available in the Franchise Tax Facts

7 FRANCHISE – EXEMPT SERVICES March 15, 2012 The following items are exempt from sales or use tax when sold by a franchisor to a franchisee: Advertising that is prepared and placed in the media (TV, Radio) Items that are sold in the regular course of the franchisees business Royalty fees if no services or property are included Travel agency fees that are passed directly to the franchisee with no markup.

8 Examples: Bed and Breakfasts, Cabins, Condominiums, Hunting Lodges, Guest Ranches, Hostels, Hotels, Motels, Resorts, Tourist Homes, Timeshare Rentals, Vacation Home Rentals, Campgrounds, Cabins, Camping Resorts, Organizational Camps, Park Units, Recreational Vehicle Parks, Trailer Parks, Youth Camps LODGING AND CAMPGROUNDS IF RENTED FOR 28 CONSECUTIVE DAYS OR LESS March 15, 2012

9 LODGING AND CAMPGROUNDS Transient Guest: Any person that resides in a lodging establishment or campground less than 28 consecutive days. Rental of lodging or campgrounds to a person for 28 or more consecutive days is exempt from sales tax. Casual or occasional: The rental of lodging or campsites for 10 or less days in a calendar year is not subject to sales tax. Any lodging or campsite that has a sales tax license is not a casual or occasional business. March 15, 2012 See the Hotel, Motel, and Campground Tax Facts for additional information.

10 LODGING - WHAT TAX APPLIES? Description 4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Lodging or campground rentals to transients guestsxxxx Lodging or campground rentals to same company or guest for 28 or more consecutive daysExempt Cancellation Feesxxxx No Show Feesxxxx Deposit or guarantee fee - Tax is due when customer stays or deposit is forfeited. Tax is refunded if deposit is refunded.xxxx Cribs, Cots, Roll-away bedsxxxx Occupational Tax SDCL 9-55-7 BID (Not paid to State)Exempt -- Resort Feesxxxx Pet Fees or Deposit -Tax is refunded if deposit is refunded.xxxx Meeting room rentalxx -- Parking, including Valet Parkingxx-- Damage chargesxx-- Free Rooms - provided at no charge to guest: Motel receives no compensation from guest or any other entityExempt Motel receives compensation for the room from a travel club or franchisorxxxx Motel receives a service or product in exchange for the roomxxxx Municipal taxes apply when the sale is in a city that imposes the tax. March 15, 2012

11 Description 4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax In-room safe - optional chargesxx-- In-room safe - mandatory chargexxxx Refrigerators - optional chargesxx-- Pay per view movies and video gamesxx-- Rentals of DVD players, movies or video gamesxx-- TAX ON CHARGES FOR IN ROOM EQUIPMENT March 15, 2012 Municipal taxes apply when the sale is in a city that imposes the tax.

12 Description 4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Internet access feesxx -- Printing chargesxx -- Copy or fax chargesxx-- Telephone charge by motel to guest (The telephone companys charge to the motel is subject to sales tax.)Exempt Laundry and Dry Cleaning: Coin operated laundry -Subject to an annual license fee paid to the Special Tax Division of Department of Revenue.Exempt Laundry service performed by hotel for guestsxx -- Laundry service provided by independently owned laundry (The laundry company owes state and municipal sales tax on their charge.)Exempt Service fees charged in addition to the fee charged by the independently owned laundryxx -- March 15, 2012 Municipal taxes apply when the sale is in a city that imposes the tax. MISCELLANEOUS SERVICES

13 Description 4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Transportation - Shuttle, taxi, or limousine service Originates and terminates within the same cityxx -- Originates and terminates in SD but not in the same cityx-- Originates or terminates outside SDExempt Tours - Tour operator owes the tax on receipts from sale of tour Tours within the same city, no destinations outside that cityxx 1 x Tours within SD, no destinations outside SD, but not all within the same cityx -- x Tours to or from destinations outside SDExempt Rooms sold to a tour operator (The lodging establishment owes the tax.)xxxx Commission the lodging establishment receives from the sale of a tourExempt March 15, 2012 Municipal taxes apply when the sale is in a city that imposes the tax. 1 Tours subject to municipal sales tax, are subject to municipal gross receipts tax IF the tour charge includes tickets or admissions to places of amusement, lodging, or restaurant meals. TRANSPORTATION AND TOURS

14 Description 4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Mini-bar - food or drinks sold in guest roomxx Room servicexxx All food or drinks sold by restaurant or barxxx Food and drinks sold through vending machines: Dispensed into cups, glasses or bowlsxxx Prepackaged, bottled or canned food or drinksxx SALE OF FOOD AND DRINKS Chart is available in the Hotels, Motels and Campgrounds Tax Facts. March 15, 2012 Municipal taxes apply when the sale is in a city that imposes the tax. Food and drink provided to the guest at no charge is subject to state and municipal use tax. Municipal gross receipts does not apply to food or drinks given away.

15 Resort Fee – A resort or facility may charge an additional fee use of their facility such as waterslides, golf courses, tennis courts, swimming pools etc. Resort fees are included in the receipts subject to the state and municipal sales tax, municipal gross receipts tax, and tourism tax. OTHER TAXES OR FEES March 15, 2012 Municipal Occupational Tax on Lodging - may be imposed by a business improvement district per SDCL 9-55-7. This may be called a lodging fee, BID tax, pillow tax, or occupancy tax. It is not included in the receipts subject to sales tax. Sioux Falls Lodging Tax – is in addition to the state and municipal sales tax, municipal gross receipts tax, and tourism taxes. It is not included in the receipts subject to sales tax.

16 GIFT SHOPS – TOURISM TAX If a gift shop is distinct from the business in which it is located and 50% or more of the gift shops total receipts are during June through September, the gift shop will owe tourism tax on their receipts during June through September. A gift shop is distinct from the business in which it is located if: 1.The gift shop is physically separate from the other business, such as a motel. This may include a separate cash register or walls separating the gift shop from the remainder of the business. In some hotels the gift shop is down the hall from the front desk and appears to the customer to be as separate as the hotels restaurant; or 2.The gift shop is operated by a person other than the owner of the business in which it is located. Items sold at the registration desk are not subject to tourism tax. Tourism tax is in addition to state, municipal and municipal gross receipts taxes. March 15, 2012

17 REWARDS PROGRAMS March 15, 2012 Lodging establishments may participate in reward programs. These programs provide a variety of rewards to the customer after a certain number of stays or points are accumulated. Rewards may be a free night, retailer gift certificates, airline tickets or other merchandise. The lodging establishment pays a fee which is put into a fund to reimburse the hotel or airline for rewards used for free lodging or tickets. What is subject to sales or use tax? 1.Amounts the lodging establishment contributes to the rewards program are subject to state and applicable municipal sales or use tax, based on the motel location. 2.Amounts the lodging establishment receives from the rewards program for free nights guests have redeemed are subject to state, municipal, municipal gross receipts, and tourism tax.

18 RESERVATION SYSTEMS 1.Fees to use a reservation system, such as the reservation systems provided by a franchisor for their franchisees, are subject to sales or use tax. 2.Charges by global distribution systems are subject to sales or use tax. This type of service provides a single point of access for reserving airline seats, hotel rooms, rental cars, etc. These systems are used by travel agencies and reservation services to provide their customers with up to date information on availability and rates. The actual reservations are made through the travel agent or reservation service. These fees may be charged to the franchisor and passed on to the franchisee. Any charges passed on to the franchisee are subject to sales or use tax. March 15, 2012

19 RESERVATION AGENCIES Fees received by companies providing reservation services to various lodging and campground establishments that are based on the sale of a room or camping site are not subject to sales tax. When a business is paid a fee to take reservations, but the fee is not based on the sale of a room or camping site, the fee is subject to sales tax. (For instance, a motel pays a flat fee per year to the reservation agency) A lodging establishment owes tax on the total charge to the customer for the room without deduction for amounts paid to or retained by the reservation service. A.Rooms at a South Dakota motel are booked through Js reservation service. Js collects the room charge of $100 plus tax of $8.50. Js sends $98.50 to the motel and retains $10 for their service. The motel owes tax on the total charge of $100. Js reservation service does not owe sales tax on the $10 they retain. B.Another motel uses a reservation service; however, the customer pays the motel directly. The motel collects $100 plus tax of $8.50. The motel sends a commission to the reservation service of $10. The motel owes tax on the room charge of $100. The reservation service does not owe sales tax on the $10 commission paid by the motel. March 15, 2012

20 PURCHASES FOR RESALE Items purchased to sell to customers can be purchased for resale. Items which are sold to customers may included: Mini-bar food or drinks Gift shop items Products sold through vending machines Items that are provided to customers for their use are subject to tax. Ash traysIce bucketsTowels SoapShampoo Robes March 15, 2012

21 HUNTING LODGES A hunting lodge is selling a service, not tangible personal property, therefore there are items that cannot be purchase for resale. The following are examples of items that are taxable when purchased if provided or included in the charge for the lodging or hunting package: Food and Drinks Souvenirs Ammunition Example: A pheasant lodge, located outside city limits, is providing a hunting package of 3 days of guided hunting, lodging, meals, drinks and snacks. One fee covers the entire package. No items are sold separately from the package. The lodge owes sales or use tax when purchasing the food, drink, etc. The lodge also owes state tax and tourism tax on the entire package. More information is available in our Hunting & Fishing Service Tax Fact March 15, 2012

22 USE TAX When sales tax is not properly charged, use tax applies. Retailer pays Sales Tax - Purchaser pays Use Tax. Use tax is the same rate as the state and municipal sales tax. Applies to the purchase price-including freight or delivery charges. Example: You purchase blankets online for $500 + $50 shipping. Use tax is due on $550. If a product or service is exempt from sales tax, it is also exempt from use tax. The majority of audit assessments are for use tax. Review all purchase invoices for items that are subject to sales or use tax. Pay use tax on items taken from inventory to use or give away. March 15, 2012

23 Supplies, materials, equipment or services used by the facility are subject to sales tax when purchased. If the supplier does not charge sales tax, use tax is due at the same tax rate as sales tax. The state use tax rate is 4%, plus applicable municipal use tax, and is payable to the Department of Revenue in the filing period in which the lodging establishment or campground receives the supplies or services. accounting services beds, bedding coffee pots, cups coffee, tea, mints, water cleaning supplies and equipment computer or internet services consulting services drapes electronic lock systems furniture ice bucket ice machine Key cards and holders laundry bags laundry supplies and equipment office supplies pens, stationery, note pads pool supplies soaps, shampoos shower caps toilet paper towels TVs accounting services beds, bedding coffee pots, cups coffee, tea, mints, water cleaning supplies and equipment computer or internet services consulting services drapes electronic lock systems furniture ice bucket ice machine Key cards and holders laundry bags laundry supplies and equipment office supplies pens, stationery, note pads pool supplies soaps, shampoos shower caps toilet paper towels TVs WHAT IS USE TAX DUE ON? Examples of products and services subject to use tax: March 15, 2012

24 COMPLIMENTARY FOOD AND DRINKS All complimentary food or drink is subject to state and municipal sales or use tax. Disposable containers provided for use with complimentary food or drinks are subject to state and municipal sales or use tax. Examples: paper plates, cups, glasses, bowls. March 15, 2012

25 EVENTS – MEETINGS What tax applies to the receipts? Rental of Room – subject to state and municipal sales tax Equipment rental – optional – subject to state and municipal sales tax. Food – optional – subject to state and municipal sales tax and municipal gross receipts tax. Can the facility purchase products or services for resale? Items the facility provides to customers are subject to sales or use tax at the time of purchase. Items purchased to rent or sale to a specific customer may be purchased for resale. These charges are itemized on customers invoice. If any item purchased to rent or sale to a customer is used by the facility, use tax is due on the cost of that item. Items that have had sales or use tax paid on them, that are later rented will be subject to sales tax on the rental charge also. Examples of Equipment: Projectors, Microphones, Computers, TVs, Tables, Chairs, Linens March 15, 2012

26 EXAMPLE March 15, 2012 A facility has meeting rooms. Each room is provided with tables, chairs, table linens and free wireless Internet. Coffee is provided with the room. Available for an additional charge are: PA system, Microphone jacks, VCR, DVD, front and rear screen projectors, spotlights, printing, and catering. The facility has an inventory of equipment available for lease to customers – this equipment is not used by the facility. The motel owes state and municipal sales tax on the charges for the room and the optional equipment or services sold. The motel owes state and municipal sales or use tax on their purchase of the tables, chairs, table linens, and internet service. Use tax is also due on the cost of the coffee, the coffee pots, cups, sugars, and creams provided with the free coffee service.

27 IS THE CUSTOMER EXEMPT FROM SALES TAX? The sale of products and services to the following entities is exempt from South Dakota sales and use tax. Indian Tribes United States government agencies State of South Dakota Public or municipal corporations of the State of South Da­kota Municipal or volunteer fire or ambulance departments Public schools, including K-12, universities, and technical institutes supported by the State of South Dakota or public or municipal corporations of South Dakota. Non-profit hospitals Religious or private schools approved by the Department Relief agencies approved by the Department (List is on Departments website) Foreign Diplomats that have a tax exempt card that indicates they are exempt from tax on their purchase. Documentation must show payment was made directly by the exempt entity. More information is available in the Exempt Entities Tax fact March 15, 2012

28 IS THE CUSTOMER EXEMPT FROM SALES TAX? Purchases made by individuals working for an exempt entity that pay with their own funds or credit card are not exempt from sales tax, even if they will be reimbursed by their employer. Example: state employees on state business paying with their own funds March 15, 2012

29 Governments from other states or the District of Columbia, including public schools and state universities, are exempt from sales tax if the law in that state provides a similar exemption for South Dakota governments. Purchases of lodging made directly by the govern­ments from the following states are exempt from South Dakota sales tax: Alaska Colorado Delaware Indiana Montana New Hampshire North Dakota Ohio Oregon West Virginia Purchases of lodging made directly by the govern­ments from the following states are exempt from South Dakota sales tax: Alaska Colorado Delaware Indiana Montana New Hampshire North Dakota Ohio Oregon West Virginia OTHER STATES GOVERNMENTS March 15, 2012

30 DOCUMENTATION FROM GOVERNMENT The seller may document an exempt government sale by: 1.Obtaining an exemption certificate; or 2.Keeping documentation to show the purchase was paid from government funds. Documentation may include a purchase order or a check stub. Government entities do not need to provide an exemption number on the exemption certificate. Exemption certificates are only valid for purchases made by and paid directly by the exempt entity the exemption certificate is for. When a purchase is made with a government credit card, an imprint or copy of the credit card must be kept as documentation. March 15, 2012

31 FEDERAL GOVERNMENT TRAVEL CARDS Federal Government Travel Cards have a blue border and feature a U.S. flag and a large jet. The card is imprinted with: For Official Government Travel Only. These cards can be used for meals, lodging, rental cars, and similar travel-related venues. Travel cards start with 4486, 4614, 5568, or 5565. Purchases made with Travel cards that have a sixth digit of 1,2,3, or 4 are subject to sales tax. Purchases made with Travel cards that have a sixth digit of 0, 6, 7, 8, or 9 are exempt from sales tax. The government credit card number must be kept as documentation if the purchase is exempt. Purchases made with Federal Government GSA SmartPay® 2 Fleet Cards, Purchase Cards, and Department of Interior Cards are exempt from sales tax. March 15, 2012

32 DIPLOMATIC EXEMPTION CARD March 15, 2012 Deer : Cards are intended to be used solely in connection with personal purchases. Cardholder has limited exemptions from sales, occupancy, restaurant/meal, and other similarly imposed taxes. (Example, cards may read EXEMPT FROM TAXES IMPOSED ON PURCHASES OF HOTEL STAYS, RESTAURANT MEALS, AND RENTAL CARS.) Eagle : Cards are intended to be used solely in connection with personal purchases. Cardholder is exempt from sales, occupancy, restaurant/meal, and other similarly imposed taxes without restriction. Buffalo : Cards are intended to be used solely in connection with official purchases. Cardholder/mission limited exemptions from sales, occupancy, restaurant/meal, and other similarly imposed taxes. (Example, such cards may read EXEMPT FROM TAXES IMPOSED ON PURCHASES OVER $300; NOT VALID AT HOTELS.) Owl: Cards are intended to be used solely in connection with official purchases. Cardholder/mission is exempt from sales, occupancy, restaurant/meal, and other similarly imposed taxes without restriction. Deer : Cards are intended to be used solely in connection with personal purchases. Cardholder has limited exemptions from sales, occupancy, restaurant/meal, and other similarly imposed taxes. (Example, cards may read EXEMPT FROM TAXES IMPOSED ON PURCHASES OF HOTEL STAYS, RESTAURANT MEALS, AND RENTAL CARS.) Eagle : Cards are intended to be used solely in connection with personal purchases. Cardholder is exempt from sales, occupancy, restaurant/meal, and other similarly imposed taxes without restriction. Buffalo : Cards are intended to be used solely in connection with official purchases. Cardholder/mission limited exemptions from sales, occupancy, restaurant/meal, and other similarly imposed taxes. (Example, such cards may read EXEMPT FROM TAXES IMPOSED ON PURCHASES OVER $300; NOT VALID AT HOTELS.) Owl: Cards are intended to be used solely in connection with official purchases. Cardholder/mission is exempt from sales, occupancy, restaurant/meal, and other similarly imposed taxes without restriction. Exemptions are listed on front of card. The validity of a Diplomatic Tax Exemption Card can be verified on-line at https://ofmapps.state.gov/tecv/ or by contacting OFM by telephone at (202) 895-3500, x2. Please visit www.state.gov/ofm/tax/ for additional information.

33 March 15, 2012

34 Restaurants, bars, casinos, hotels, boarding houses, drugstores, drive-in restaurants, lunch counters, snack bars, cafeterias, caterers, sandwich shops, cafes, and any similar place of business that sells prepared food and beverages. More information is available in the Bar/Restaurant Tax Fact RESTAURANTS AND BARS March 15, 2012

35 WHAT IS SUBJECT TO SALES TAX? Product 4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Sale of all food productsXXX-- Sale of all beveragesXXX-- Sale of all alcoholXXX -- Tips: Mandatory – added to the billXXX-- Discretionary – voluntary-- Cover Charge to enter a barXXX-- March 15, 2012

36 Containers provided free of charge to the customer that are used to hold a food or beverage sold can be purchased for resale and are not subject to state and municipal sales or use tax. Examples may include: Condiment containers Disposable cups, glasses, hot cup sleeves, lids Disposable food trays Doggie bags Paper or plastic bags Pizza boxes and liners Styrofoam containers CONTAINERS March 15, 2012 Does it hold the product sold? Is it provided free to the customer?

37 Containers the retailer reuses are subject to state and municipal sales or use tax when purchased. Examples may include: Pitcher Plates, glasses, cups Plastic trays or baskets Serving trays CONTAINERS March 15, 2012

38 Items that are not containers are subject to state and municipal sales or use tax when purchased. Examples may include: Disposable eating utensils Disposable plates provided with pizza in a box Disposable towelettes Napkins Placemats Stir Sticks Straws Sword picks Table clothes or covers Tripods used in pizza boxes to hold lid up Utensils ITEMS THAT ARE NOT CONTAINERS March 15, 2012

39 DISCOUNTS - PROMOTIONS Coupons : Retailer receives NO reimbursement – Not taxable Retailer receives reimbursement from a third party – Taxable Complimentary meals – State use tax and municipal use tax Complimentary beverages – State use tax and municipal use tax Meal Replacements: if an error is made in preparing food or drink and an the item is replaced, but still charged for, the amount charged is subject to tax, no use tax is due on the returned item. Buy one get one free – this is a condition of sale – you must buy one to get one. State sales tax, municipal tax, municipal gross receipts tax applies to the charge. No additional tax is due on the one given free with the required purchase. March 15, 2012

40 CATERING Subject to state sales tax, municipal tax, municipal gross receipts tax based on the location of the catered event. Caterer can purchase the following items for resale: Food Disposable containers: plates, glasses, cups, bowls Taxable purchases : Napkins, utensils, reusable plates, glasses, cups, bowls, serving platters, all tools and equipment used to provide service. March 15, 2012

41 ENTERTAINMENT Entertainment services - subject to state and municipal sales or use tax. Cover charges to enter a bar when they have entertainment - subject to state sales tax, municipal sales tax, municipal gross receipts tax. (no tourism tax) If a bar has a cover charge, the entertainers service may be purchased for resale. Because many entertainers (bands) are not licensed, it is the retailers responsibility to remit state and municipal use tax on the amounts paid the entertainer if they are not charged sales tax. March 15, 2012

42 RESALE PURCHASES Items to be sold to customers may be purchased by the restaurant or bar for resale. Examples: Food – includes condiments such as ketchup, mustard, salt, pepper, olive oil Beverages Clothing items – T-shirts, jackets, caps Food provided to customers at no charge is subject to state and municipal sales or use tax when purchased or when removed from a tax unpaid inventory. Examples: Popcorn Hors Doeuvres Free Drinks March 15, 2012

43 USE TAXABLE ITEMS Air Filter Systems Amusement Machines Appliances – ovens, microwaves, coolers, glass washers, sinks Banners Bookkeeping Fees Cash registers Cleaning Equipment and Supplies Cleaning Service Coin Counters Computer Systems and Software Coolers Entertainment: Bands, Magicians Furniture: Tables, Chairs, Barstools Gaming Supplies: Cards, Dice and Cups, Poker Chips Internet Access Keg Taps Kitchen Items: pots, pans, cooking utensils Magazine or Newspaper Subscriptions Menus Office Supplies Signs Uniforms Examples of products and services subject to use tax: March 15, 2012 List is not all inclusive.

44 VENDING MACHINES 1 Prepared food includes food served in containers such as glasses, cups, bowls. Examples: hot soup, coffee, hot chocolate 2 Other Items includes prepackaged food (pop, candy bars, chips), other items such as razors, combs, toothbrush, shampoo. Product4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Vending Machines, Purchase ofXX-- Vending Machine RepairsXX-- Sales from Vending Machines: Prepared Foods 1 XXX-- Other Items 2 XX-- Commissions for placement of vending machine at business Exempt March 15, 2012

45 AMUSEMENT MACHINES 1 A $12 decal is purchased annually in lieu of the municipal sales tax. Decal is purchased from the Department of Revenues Special Tax Division. Product4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Amusement Machines 1 XExempt-- Amusement Machine Repairs 1 XExempt-- Amusement Machine Receipts 1 XExempt-- Toys and other products that may be won in an amusement machine are subject to use tax when purchased. XX-- Commissions for placement of vending machine at business Exempt March 15, 2012

46 VIDEO LOTTERY Amusement machine decal is not required for video lottery machines. Product4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax Video Lottery MachinesXExempt-- Video Lottery Machine RepairsXExempt-- ReceiptsExempt March 15, 2012

47 COIN OPERATED WASHER AND DRYERS Washer and Dryer permits must be obtained from the Departments Special Tax Division. Product4% State Sales Tax Up to 2% Municipal Sales Tax 1% Municipal Gross Receipts Tax 1.5% Tourism Tax MachinesXX-- Machine receiptsExempt -- Sale of soaps and products to use in machines XX -- March 15, 2012

48 GROSS RECEIPTS Gross receipts include the total amount received for a product or service excluding sales tax that is itemized on the invoice. March 15, 2012 Example of invoice:Hamburger$ 10.00 Sales tax 7%$.70 Total$ 10.70 Gross receipts are $10.00. Total State, municipal sales, and municipal gross receipts tax due is $.70 Example of invoice:Hamburger$ 10.00 Sales tax 7%$.70 Total$ 10.70 Gross receipts are $10.00. Total State, municipal sales, and municipal gross receipts tax due is $.70 Example of invoice: Drink$10.00 Determine taxable receipts by dividing $10.00 by 1.07 (state, municipal sales and municipal gross receipts tax total rate is 7%) $10.00 ÷ 1.07 = $9.35 Gross receipts are $9.35. Total State, municipal sales, and municipal gross receipts tax due is $.65. Example of invoice: Drink$10.00 Determine taxable receipts by dividing $10.00 by 1.07 (state, municipal sales and municipal gross receipts tax total rate is 7%) $10.00 ÷ 1.07 = $9.35 Gross receipts are $9.35. Total State, municipal sales, and municipal gross receipts tax due is $.65. Bars are allowed to back tax out of their gross receipts. Tax may also be backed out of Amusement and Vending machine receipts.

49 EMPLOYEE MEALS March 15, 2012 Meals furnished at no cost to an employee are subject to state and municipal use tax on the restaurants cost of items provided. Meals sold to employees are subject to state, municipal, and municipal gross receipts tax on the amount the meal is sold for.

50 GIFT CERTIFICATES March 15, 2012 The sale of a gift certificate is not subject to sales tax. Sales tax applies when the gift certificate is redeemed for taxable products or services.

51 Tourism Tax applies to: Hotels, Lodging, and Campgrounds Motor Vehicle Rentals (cars, pickups, and vans) Recreational Equipment Rentals Recreational Services Spectator Events Visitor Attractions Visitor-Intensive Businesses TOURISM TAX March 15, 2012

52 SPECTATOR EVENTS AND VISITOR ATTRACTIONS March 15, 2012 Includes any business conducted on the site of the visitor attraction or spectator event. Tourism Tax applies to (list is not all inclusive): Admissions Parking Sales of products or services Sales of food and drinks Transportation Examples of Visitor Attractions: Examples of Spectator Events: Auto Races Carnivals Craft shows Music Festivals Fairs Rodeos Sporting Events Stage Shows Amusement Park Antique Exhibits Bumper Carts Animal Exhibit Miniature Golf Course Playhouses Racetracks Reptile Exhibits Shooting Preserves

53 RECREATIONAL SERVICES RECREATIONAL EQUIPMENT RENTAL March 15, 2012 Amusement Rides Fishing Ponds Tours Fishing and Hunting Guides Shooting Ranges Trail Rides Examples of Recreational Equipment (rented for 28 days or less) Bicycles Firearms Campers Skis Watercraft Examples of Recreational Services:

54 VISITOR INTENSIVE BUSINESS March 15, 2012 Tourism tax applies on sales made during June, July, August, and September IF 50% or more the total annual gross (all taxable sales) are from the sale of products (not services) during the months of June, July, August, and September. Antique Shop Book Store Candy Store Flea Market Gift Shop Indigenous Arts/Crafts Shop Jewelry Lapidary Shop (stones/jewelry) Leather Goods Shop Marina Novelty Shop Pottery Shop Rock Shop Souvenir Shop T-Shirt Shop Visitor Intensive Businesses are: List includes all businesses listed in SDCL 10-45D-1(7). And can also be found in the Tourism Tax Fact.

55 REPORTING TOURISM TAX March 15, 2012 Tourism tax is reported on the sales tax return in the city/special jurisdiction section of the return. The code for Tourism Tax is 700-1 The rate of Tourism Tax is 1.5% See Tourism Tax Facts for additional information. City & Special Jurisdiction Tax Calculation Detail: City/Special Jurisdiction Name CodeTaxableRateTax Due Tourism Tax700-110000.001.5150.00

56 March 15, 2012 Visit our Website: www.state.sd.us/drr2. Select Business Tax, then Publications.www.state.sd.us/drr2. Related Tax Facts: Bars/Restaurants Exempt Entities Exemption Certificate Franchise Operations Hotels, Motels & Campgrounds Hunting & Fishing Services Municipal Tax Information Bulletin Tourism Tax PUBLICATIONS

57 March 15, 2012 Visit our Website: www.state.sd.us/drr2www.state.sd.us/drr2 Call Toll Free:1-800-829-9188 Email the Business Tax Division: bustax@state.sd.usbustax@state.sd.us To lookup addresses for municipal tax information use: Available online at: www.state.sd.us/drr2www.state.sd.us/drr2 For information on Electronic Filing and Paying: www.state.sd.us/drr2www.state.sd.us/drr2


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