South Dakota Administrative Rules
Title 64 - REVENUE
Article 64:06 - Sales tax
Chapter 64:06:02 - Services - Interpretive rules
Section 64:06:02:88 - Travel agency reservation services

Universal Citation: SD Admin Rules 64:06:02:88
Current through Register Vol. 50, page 114, March 25, 2024

Any gross receipts received by a retailer providing reservation services to a travel agency are subject to sales tax. If the charge by the retailer for providing a reservation service is subject to a discount, then only the actual gross receipts received by the retailer are subject to sales tax.

This section applies to any receipts the retailer receives from airline boarding fees, hotel and motel reservation fees, and automobiles, buses, trains, cruise lines, and other transportation reservation fees.

If the retailer provides tangible personal property or any product transferred electronically that is an integral component of the reservation service to a travel agency, then the retailer is deemed to be the user of the tangible personal property or the product transferred electronically and is liable for use tax on the purchase price of the tangible personal property and the product transferred electronically if sales tax has not previously been paid.

General Authority: SDCL 10-45-47.1(3), 10-46-35.1(3).

Law Implemented: SDCL 10-45-4, 10-45-2.4, 10-45-5, 10-46-2, 10-46-2.2.

Example:

Zeus Travel, Inc. provides reservation services to ABC Travel Agency. As part of the contract between Zeus and ABC, ABC shall pay Zeus $500 each month for use of the reservation service. If ABC books 100 trips each month using Zeus' reservation service, then Zeus will give ABC a $500 discount on the monthly fee. If ABC is eligible for the discount, Zeus may deduct $500 from its gross receipts.

As part of the reservation service, Zeus provides ABC with a tangible personal property such as a computer and software. The computer, software, and other tangible personal property are integral components to the reservation service provided by Zeus. Zeus is liable for use tax on the computer and other tangible personal property provided to ABC.

Disclaimer: These regulations may not be the most recent version. South Dakota may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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