SD – Selling Online Discount Coupons

Various on-line businesses provide websites for businesses to sell coupons or certificates
at reduced prices. The retailer contracts with an on-line advertiser to sell vouchers redeemable at the retailer’s business. The retailer will owe sales tax on the amount paid for the voucher when the voucher is redeemed. Sales tax is not due at the time the coupon or certificate is purchased.

Example: A restaurant sells a $50 voucher for $30 through the on-line company. The customer uses the voucher to purchase goods worth $50.

• The restaurant owes sales tax on $30 when the voucher is redeemed.
• Fees the on-line company retains for their services are not subject to sales or use tax. The restaurant may not deduct the amounts retained by the on-line company from the sales price of the voucher.

From: http://www.state.sd.us/drr2/businesstax/publications/newsletter/2011/july.pdf

New Municipal Tax Changes Effective July 1
As of July 1, 2011, four South Dakota communities have implemented new municipal taxes or updated their current city taxes. The municipal tax changes taking effect this month include:

• Canton imposed a 1% gross receipts tax on alcoholic beverages, lodging, eating establishments, and admissions to places of amusement, cultural and athletic events.

• Conde imposed a 2% general sales and use tax rate.

• Sisseton imposed a 1% gross receipts tax on alcoholic beverages, in addition to their current gross receipts tax on lodging and eating establishments.

• Utica imposed a 1% general sales and use tax rate.

See: http://www.state.sd.us/drr2/businesstax/publications/newsletter/2011/july.pdf

South Dakota’s tourism tax rate is 1.5%. The tourism tax rate will NOT reduce on July 1, 2011 as was previously explained. The tourism tax code to use on the tax return remains 700-1. http://www.state.sd.us/drr2/businesstax/tourismtax.htm