How to use a South Dakota resale certificate
by February 17, 2024
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
If you buy products exclusively to resale in the state of South Dakota, you can avoid paying sales tax on your purchases by presenting a South Dakota resale certificate at checkout. Always keep in mind that you should only use your resale certificate to buy items you intend to resell, rent or that you intend to use as a component part of an item for resale. Any other use of the resale certificate is usually considered unlawful.
Let’s dig in to the rules and regulations for using (and accepting) a resale certificate in South Dakota.
How to use a South Dakota resale certificate
South Dakota provides resellers with an exemption certificate. If you wish to buy items for resale, fill out the entire certificate and present it to your vendor.
Here’s a helpful resource from the state on how to complete a South Dakota resale certificate here.
If you are not registered to collect sales and use tax in South Dakota, you can use a Uniform Sales and Use Tax Certificate (Multijurisdictional) to buy items for resale from South Dakota vendors. Also keep in mind that vendors reserve the right to refuse to accept a resale certificate.
Important to note: In South Dakota, the buyer, not the vendor, is ultimately on the hook if use of a resale certificate turns out to be fraudulent. In other words, if state taxing authorities discover that you used a resale certificate for items you did not intend to resell you will be on the hook to pay the unpaid sale tax, plus penalties.
Accepting a South Dakota resale certificate
If you are a South Dakota retailer and a buyer presents you with a resale certificate for a tax exemption, you should do the following:
- Ensure the resale certificate is properly filled out – If the resale certificate is not completely filled out you could be on the hook for penalties. See more on the South Dakota Certificate of Exemption Instructions on the South Dakota Department of Revenue’s page.
- Verify that your buyer’s sales tax ID is valid – Online verification is not available, but you may call in and verify the information provided on the South Dakota Exemption Certificate. If your buyer’s sales tax ID is from another state, use this tool to verify sales tax IDs in all U.S. states.
- Keep a copy of the resale certificate – Do this in case of an audit. You can keep a copy in electronic or paper form.
- Don’t participate in fraud – This one is a no-brainer, but South Dakota’s Exemption Form instructions are careful to point out that if you collude with a buyer to avoid sales tax you could be on the hook for fines and penalties.
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