Sales, Use and International Tax Activity Update - May 2009

South Dakota Revises Telecom Taxability

South Dakota has revised certain provisions regarding the imposition of sales and use tax on telecommunications services and ancillary services. Effective 7/1/2009, the imposition sections of both the sales and use tax on telecommunication services has been amended to specify that a tax of 4% is imposed upon the gross receipts (under the sales tax) or upon the privilege of using (under the use tax) any intrastate, interstate, or international telecommunications service that originates or terminates in the state and that is billed or charged to a service address in the state or that both originates and terminates in the state.

In addition, effective 7/1/09, ancillary services are subject to the 4% sales or use tax. Ancillary services are defined as services that are associated with or incidental to the provision of telecommunications services, including detailed telecommunications billing, directory assistance, vertical service and voice mail service.

New definitions are also added to the code for “intrastate telecommunications service,” “interstate telecommunications service,” “international telecommunications service,” “detailed telecommunications billing service,” “directory assistance,” “vertical service,” and “voice mail service.”

(H.B. 1010, Signed by the Governor on 2/25/09, effective on 7/1/09) 5/09

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