1. South Dakota Association of School Business Officials
SOUTH DAKOTA DEPARTMENT OF REVENUE
South Dakota Association of School Business Officials
April 2019
Nick Rea

2. Sales Tax Exempt Entities
Public Schools – Government
Out-of-State Schools exempt as long as reciprocity
Private Schools & Private Religious Schools
501(c)3 nonprofit
Physical location in South Dakota
Must apply for an exemption number from DOR

3. Purchases – Exempt or Taxable?
Exempt Purchases
School funds – School purpose
Examples: books, desks, computers, equipment, Uniforms for sports or band

4. Purchases – Exempt or Taxable?
Taxable Purchases
Personal items for students or staff
Examples: class rings, school pictures, school jackets, t-shirts, or uniforms sold to students
Employee Reimbursable
Fundraising Merchandise
The School owes sales tax at time of purchase or use tax if not charged
Examples: food for concession stands, fruit, candy, wrapping paper

5. Purchases – Exempt or Taxable?
Licensed Suppliers
If the business is not licensed, the school will owe use tax
The school does not need to furnish a certificate of exemption to their suppliers, they are owned and operated by governmental agencies, exempt under SDCL

6. School Organizations – Taxable
School organization purchases are taxable
School exemption does not carryover
Tax due even if purchase is given to school
Booster clubs, student organizations, foundations
PTA/PTO, Student Council, FBLA, FFA

7. Sales – Exempt or Taxable?
Exempt Sales
Educational Services
Student activity or class fees
Food Service for Elementary & Secondary (School Food Service Program)
The school’s receipts from the sale of food to students
Admissions to school events
When the entire net proceeds are spent for educational purposes
Fundraising sales
The school or organization does not owe sales tax on their profit from the sale of these products.

8. Sales – Exempt or Taxable?
Taxable Sales
Food Service at Colleges &
Universities
Surplus sales
Buildings built in shop class
Sales to staff, students or others which are not part of education services

9. Sales – Exempt or Taxable?
Exempt or Taxable? – “Well, it depends”
Camps
Where do the net proceeds go?
Net Proceeds all for educational purposes – Exempt
Net Proceeds not all for educational purposes - Taxable

10. Sales – Exempt or Taxable?
Exempt or Taxable? – “Well, it depends”
School Travel
Who’s paying?
Payments made directly from school funds, by a school check or school credit card - Exempt
When paid for by the individual, even if the individual is reimbursed by the school for the expenses - Taxable

11. Construction (new & remodel)
What is Contractors’ Excise Tax?
2% tax on contractors providing construction services
Why aren’t school projects exempt?
The tax is on the contractor

12. Construction What else do I need to know?
Materials & equipment provided by the school to the contractor
Contractor will owe 2% contractors’ excise tax on the value of the materials & equipment
Contractor will owe sales/use tax on the value of the materials & equipment

13. Wrapping it up Schools are sales tax exempt
Most purchases are exempt but some should be taxed
School organizations are not sales tax exempt
Sales – taxable or exempt?…it depends
Construction – be aware of contractors’ excise tax

14. Information Read All About It! http://dor.sd.gov
Videos, Publications, Guides
Contact Us
Local offices: Aberdeen, Mitchell, Pierre, Rapid City, Sioux Falls, Watertown & Yankton

15. South Dakota Department of Revenue
Questions?
South Dakota Department of Revenue
Sign-up for our
E-Newsletter
@SDRevenue
South Dakota DOR
Nick Rea