SALT Report 2788 – The South Dakota Department of Revenue updated its publication regarding the application of sales and use tax to Internet access and Internet-related services. The publication reflects recent changes to the law that were effective July 1, 2013.
According to the publication, sales of the following services are subject to the State sales tax plus any applicable municipal sales taxes:
- Internet access fees
- Internet e-mail services
- Arranging for live chat or conferencing sessions directly on the Internet, such as a webinar session
- Technical assistance and support, such as assistance or support either in person, over the phone, electronically, or via e-mail
- Web hosting and/or domain name registration
- Web site development, without placement
- Web site maintenance, without placement, and
- Real-time streaming video and/or audio
The following Internet related services are not subject to sales tax:
- Web site development that includes placement on the Internet by the same agency
- Web site maintenance that includes placement on the Internet by the same agency, and
- Fees charged by a website owner to place ads on their website
Internet access is subject to state and any applicable municipal sales tax based on the customer’s place of primary use. For purposes of the publication, the customer’s place of primary use is the residential street address or the primary business street address of the customer.
Prepaid Internet cards are those that can be purchased for a specific amount of Internet access time and are subject to sales tax as follows:
- If purchased at a store they are subject to state and municipal sales tax based on the store location, or
- If prepaid cards or any additional minutes are purchased online or by phone they are subject to state and municipal sales tax based on the customer’s place of primary use
The publication provides additional guidance regarding the taxability of Internet equipment, telecommunication services, wireless and portable Internet devices, Web page development, preparing and placing Websites, advertising on Webpages, Web storage and hosting services, products and services for resale, support services, Voice over Internet Protocol (VoIP), Internet sales, and Internet auction services.
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