Tax Cybrary

Sales Tax State Activity Update - March 2008  

South Dakota Defines Telecommunications

South Dakota imposes sales and use tax on the gross receipts received from the provision of telecommunication services provided that (1) it originates and terminates in the state or (2) it originates or terminates in the state and is billed or charged to a service address in the state.  The definition of the term “telecommunications service” in the statute has been further defined by the passage of a recent bill.

Under the bill, new sections have been added to Chapters 10-45 (sales tax) and 10-46 (use tax) to further define the term “telecommunications service”.  The term is now defined as:  “the electronic transmission, conveyance, or routing of voice, data, audio, video or any other information or signals to a point, or between or among points.  The term, telecommunications service, includes such transmission, conveyance, or routing in which computer process applications are used to act on the form, code, or protocol of the content for purposes of transmission, conveyance, or routing without regard to whether such service is referred to as voice over internet protocol services or is classified by the Federal Communications Commission as enhanced or value added.

The bill specifies that telecommunications service does not include:

• Data processing and information service (where the purchaser’s primary purposes is the processed data or information);
• Installation or maintenance of wiring or equipment on a customer’s premises;
• Tangible personal property;
• Advertising, including directory advertising;
• Billing and collection services provided to third parties;
• Internet access service;
• Radio and television audio and video services, regardless of the medium, including the furnishing of transmission, conveyance and routing of such services by the programming service provider;
• Ancillary services;
• Digital products delivered electronically, including but not limited to software, music, video, reading materials, or ring tones.

The bill did not contain an emergency clause and therefore will be effective beginning 7/1/08.

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