South Dakota Senate Bill SB202

South Dakota 2023 Regular Session

• Introduced: 2/1/23
• Refer: 2/1/23
• Report Pass: 2/15/23
• Report Pass: 2/21/23

Caption

Clarify the application of the state sales tax on certain goods purchased by a retailer and given to a customer without charge as part of a taxable retail sale.

Impact

If enacted, SB202 would amend Chapter 10-46 of the South Dakota laws, creating a clear exemption for specific types of transactions. This change could have significant implications for retailers, particularly those who frequently engage in promotional activities or distribution of free items as a marketing strategy. By establishing this exemption, the bill aims to encourage businesses to provide promotional gifts while alleviating any potential confusion about tax liabilities on such items.

Summary

Senate Bill 202 is a legislative measure introduced in the South Dakota Legislature aimed at clarifying the state's sales tax application on certain goods. Specifically, the bill proposes that the gross receipts from sales of tangible personal property that a retailer purchases and subsequently provides to customers at no charge, as part of a taxable retail transaction, will be exempt from the sales tax. The intention is to clearly delineate situations where retailers could offer products without passing the tax burden onto their customers, thereby simplifying the tax code around promotional items and gifts.

Sentiment

The sentiment surrounding SB202 appears to be supportive, primarily from the business community who see the bill as a practical response to the complexities of tax regulations. Supporters believe that the bill streamlines processes and encourages businesses to offer promotional goods without fear of incurring sales tax penalties. However, there may be concerns about the fiscal implications for state revenue, with some lawmakers questioning whether exemptions might lead to a decrease in total tax revenues.

Contention

Notable points of contention include debates around the potential loss of tax revenues for the state, as well as whether the exemptions might lead to abuses of the intended policy. Some critics argue that without careful regulation, the bill could encourage retailers to provide goods without charge excessively, undermining the tax base. Additionally, the disparity in opinions regarding the necessity of the bill reflects a broader discussion about the balance between supporting local businesses and ensuring equitable tax collection.