Persons engaged in the business of selling tangible personal property and any product transferred electronically to purchasers who give such property away in the advertising of their business or products, as premiums in connection with the sale of any other property, as prizes, or for any other reason are engaged in the business of selling tangible personal property and products transferred electronically for use or consumption and not for resale. Such vendors must have a retail sales tax license and collect sales tax on all items used for advertising purposes, premiums, or prizes.

Example: A bar gives away beer hats to its customers as an advertising gimmick. The person selling the hats to the bar must collect and remit sales tax on the hats.

Source: SL 1975, ch 16, § 1; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995; 35 SDR 48, effective September 8, 2008.

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.