South Dakota welcomes Uber
- Sales Tax News
- Jul 22, 2016 | Gail Cole
Beginning July 1, 2016, there are new rules for transportation network companies (TNCs), such as Uber and Lyft, operating in South Dakota. Municipalities may impose additional requirements than the state.
South Dakota now permits TNCs to operate without commercial license plates, so long as the companies ensure both drivers and customers are protected by insurance policies meeting the new state requirements. Under the new law, before companies can allow a person to be a transportation network company driver and participate in the TNC’s digital network, TNCs must require the person to submit an application that includes the following:
- The registration for the personal vehicle that will be used
- Proof of financial responsibility for the personal vehicle of a type and in the amounts required by the TNC
The state is also requiring TNCs to obtain a copy of the driver’s driving record and to conduct or contract out a local and national background check on drivers, as well as a search of the national sex offender registry. Persons failing to meet certain requirements are not permitted to drive for a TNC. Additional details are available in the text of HB 1091.
This is good news for Uber, Lyft, and similar companies hoping to expand into South Dakota. However, because municipalities may impose additional requirements, TNCs are advised to check with city governments before working in a new city. For example, the City of Sioux Falls requires TNCs to pay an annual license fee of $1,500 and obtain a state sales tax license before operating in the city (see city ordinances 124.029 and 124.030). An Uber subsidiary that reportedly applied for a TNC license in Sioux Falls is still waiting for it, because, according to the city licensing specialist, the company has yet to provide proof of having a sales tax license. Charges for intrastate transportation services are taxable in South Datota.
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