Gross receipts resulting from services performed by the owner of a rental facility are taxable if they are offered as an optional service to the renter and are separately charged.

1. (1) Ann Adams rents an office from the U Rent It Agency for $1,000 a month. Included in the rental fee are electricity, heat, water, and janitorial services. For an additional $25 per month, U Rent It will provide security guard services. The $1,000 rental fee is not taxable, but the $25 optional service is subject to tax.

2. (2) Sam Smith rents an apartment from Condo Heaven. The basic rent of $1,000 a month includes the apartment, parking space, water, and garbage collection. For an additional $10 a month, the owner will provide weekly laundry and dry cleaning pickup and delivery. The $1,000 rental fee is not subject to tax, but the $10 laundry fee is a taxable service.

   Declaratory Ruling: Rental of boat slips for more than 28 days, where the lessor provides a night guard, gasoline service, towing service, and a check-in system for boat owners, is the providing of a service rather than the rental of tangible personal property, and, as such, is subject to the sales tax. Secretary of Revenue Declaratory Ruling No. 80-9.

Examples:

Source: 17 SDR 4, effective July 18, 1990; 21 SDR 219, effective July 1, 1995.

General Authority: SDCL 10-45-47.1 , 10-46-35.1 , 10-46-40.

Law Implemented: SDCL 10-45-4.1 , 10-45-5.2 , 10-45-7 , 10-45-12.1 , 10-46-2.1.