South Dakota Administrative Rules
Title 64 - REVENUE
Article 64:06 - Sales tax
Chapter 64:06:03 - Products - Interpretive rules
Section 64:06:03:35 - Premiums and gifts

Donors of tangible personal property or any product transferred electronically known as premiums or gifts are regarded as the consumers of the premiums or gifts, and they must pay sales tax when such items are purchased or use tax when the items are removed from stock or purchased exempt from sales tax. Gross receipts from the sale of goods which are to be given away for advertising purposes are taxable. If goods purchased by a retailer for the purpose of resale are subsequently given away for advertising purposes, the retailer must include, under value of merchandise taken from stock for the retailer's own and family use and use of the retailer's employees, the cost of the goods to the retailer and must pay use tax on the cost of the goods. Those goods given without charge to an institution, organization, or group exempt from this tax are not taxable.

Purchasers of property which is to be awarded as prizes, the winning of which depends upon chance or skill, are regarded as the consumers of the property, and the tax applies to gross receipts from the sale of the property to the purchasers.

The operator of a game of skill or a game of chance is the consumer of the property used in connection with such operations, and the tax applies to gross receipts from sales of tangible personal property and any product transferred electronically to the operator.

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

Law Implemented: SDCL 10-45-2, 10-45-2.4, 10-46-2, 10-46-2.2, 10-46-15.4.

Example: A butcher shop donates 50 pounds of beef to the Salvation Army for use in its soup kitchen. The beef is not taxable because it was given to an exempt organization.