Sue Me! South Dakota Taxes Attorney Services
- Jul 20, 2015 | Gail Cole
The provision of legal services is exempt from sales tax in the vast majority of states. However, attorney services are subject to state and local sales tax in South Dakota.
Attorneys with practices based in South Dakota must apply the sales tax rate in effect at the location of their office. Attorneys based in another state who practice in South Dakota must collect use tax on behalf of their clients, at the rate in effect at the location of the client. In the event an attorney does not collect sales or use tax on his services, the client is required to remit use tax directly to the South Dakota Department of Revenue.
Non-resident attorneys who practice in South Dakota must have a sales tax license. Examples include an attorney who enters the state to make a court appearance or take a deposition, or an attorney with representatives or agents working in South Dakota on his behalf.
Non-resident attorneys who perform legal services for South Dakota residents without entering the state or sending representatives or agents to the state are not required to collect South Dakota sales or use tax. In these instances, the South Dakota resident is required to remit use tax on untaxed services.
The South Dakota Department of Revenue provides numerous examples outlining different situations in the legal profession and their tax implications. It also delves into the taxation of reimbursable expenses, resale purchases, and expert consultancy and testimony. Please see the department’s Tax Facts, Attorneys for specifics.
Attorney and other professional services are subject to gross receipts tax in New Mexico and to the general excise tax (GET) in Hawaii. In recent years, extending sales tax to professional services has been considered in several states, including Ohio, Vermont, and Florida (where, for a time, they were taxed). California is currently examining a proposal to tax fifteen types of services, including attorney services. Sales tax will apply to professional services in Puerto Rico as of October 1, 2015.
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