Services which are purchased by a service provider and delivered to a current customer in conjunction with the services contracted to be provided to the customer are considered to be for resale. Receipts from the sale of a service for resale by the purchaser are not subject to sales tax if the purchaser furnishes an exemption certificate.

1. (1) The service is purchased for or on behalf of a current customer;
2. (2) The purchaser of the service does not use the service in any manner; and

3. (3) The service is delivered or resold to the customer without any alteration or change.

   Example:

   John Customer purchases a subscription to a movie channel from Fantastic Cable Company. Fantastic purchases the right to view the movie channel from Hollywood Movies, a cable movie channel subscription service. The services provided by Hollywood Movies are purchased for resale as Fantastic does not use the service in any way.

In order for the transaction to be a sale for resale, the following conditions must be present:

Source: 18 SDR 3, effective July 14, 1991; 20 SDR 103, effective January 10, 1994; 21 SDR 219, effective July 1, 1995; 28 SDR 178, effective July 1, 2002; 33 SDR 226, effective June 27, 2007.

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

Law Implemented: SDCL 10-45-1(10) , 10-45-4 , 10-45-4.1 , 10-45-20 , 10-46-2.1