The Politics of Sales Tax in South Dakota
- Aug 25, 2014 | Gail Cole
All over the country, politicians are gearing up for the November 2014 midterm elections. There will be 38 gubernatorial elections, 33 Senate elections, and all 435 seats of the 114th Congress are being contested. And then there are local elections.
The South Dakota Department of Revenue is therefore timely. It explains that “[p]olitical organizations or candidates that sell products or services may … have a sales tax liability.” Political organizations and candidates must also pay sales or use tax on all purchases of products and services, “unless a specific exemption applies.”
Political campaigns use a wide variety of services. In South Dakota, taxable services include:
- Campaign managers
- Calling centers
- Phone solicitation
- Survey or polling
- Temporary help
- Paid labor such as walkers, stuffers, and drivers to place or remove and dispose of signs
Numerous products purchased and sold by political campaigns are also subject to sales and use tax. These include, but are not limited to:
- Bumper stickers
- Jackets, t-shirts and hats
- Note pads
- Posters and yard signs
Purchases made for resale are exempt from sales and use tax, so long as a properly completed exemption certificate is provided to the seller at the time of sale. However, promotional items that are given free to the public, contributors or staffers are considered to be used by the campaign or politician, and are therefore subject to sales tax upon purchase.
Advertising is an important part of every political campaign, and the purchase of advertising products is subject to sales tax in South Dakota. Certain advertising services are exempt from sales tax in South Dakota, and certain advertising charges are taxable.
Exempt advertising charges include:
- Charges for preparing an advertisement and placing it in the media.
- Charges by the media for placing your ad in that media.
Taxable advertising charges include:
- Charges to prepare an ad that the preparer does not pace in the media.
- Charges for designing and printing tangible items (fliers, signs, etc).
Media includes billboards, handbills, internet ads, magazines, newspapers, placemats, radio broadcasts and webpages.
It can be trickier than you think to get sales tax right. For example, while the charge to print a newspaper or magazine insert is taxable, the charge to insert the insert in the newspaper or magazine is exempt. Go figure.
Generally, charges that include both preparation and placement of an advertisement online are exempt from sales tax. However, a number of internet related services are taxable in South Dakota. These include the following:
- Web hosting
- Computer graphics or programming services
- Email (including preparing and sending ads by email)
State and municipal sales and use taxes apply to all taxable sales. In addition, the following taxes may apply:
- Municipal gross receipts tax (MGRT) (1%)
- Tourism tax (1.5%)
The Campaign Taxes Fact Sheet is necessary reading for anyone handling sales and use tax on the campaign trail. In addition to the information relayed above, it explains how sales tax does or doesn’t apply to billboards, fundraising, lotteries, and more.
Political campaigns need to get sales tax right. Automated sales tax software does just that—it gets sales tax right. Learn more.