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South Dakota: Top 10 Errors Found During Audits

  • Apr 10, 2014 | Gail Cole

 South Dakota audits reveal: Mistakes happen.

Everyone makes mistakes.

Cicero said, “We must not say every mistake is a foolish one.” George Bernard Shaw links mistakes to honor, “A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.” And for James Joyce, mistakes are a launch pad, “A man’s mistakes are his portals of discovery.”

Ideally, we learn from our mistakes—that’s why Cicero, Joyce, and countless others praise them. But is making a mistake enough to learn from it? If recognizing a mistake doesn't spark change, perhaps paying for it will. That’s undoubtedly the belief behind state audits, which slap penalties and fines on taxpayers when mistakes are unearthed.

The South Dakota Department of Revenue has published a list of the top ten errors discovered during audits in South Dakota. It reads, and I quote:

  1. Under-reporting sales, use and/or excise tax due to poor record keeping.
  2. Not remitting use tax on goods and services purchased or used.
  3. Not remitting use tax on items taken from inventory and used for construction projects.
  4. Not remitting use tax on items taken from inventory for business or personal use.
  5. Not remitting use and/or excise tax on owner-furnished materials (OFM).
  6. Not remitting use tax on materials stored in state and taken out of state for construction projects.
  7. Not remitting use tax on equipment brought in from out-of-state.
  8. Exempting sales to taxable customers such as churches and 501(c)3 entities.
  9. Not having valid exemption certificates on file.
  10. Municipal tax and Municipal Gross Receipts Tax (MGRT) reporting errors.

Use tax wins! 6 of the top ten audit-found errors are related to use tax. Proper management of sales tax exemptions takes a distant second place.

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photo credit: Alex E. Proimos via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.