S.D. Sales Tax for Giving Away Food (?) Suspended Temporarily

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August 9, 2011; Source: Sioux Falls Argus Leader  |  A bizarre law in South Dakota requires programs that give away food to the needy to pay a sales tax to Feeding South Dakota, the organization that supplies them with food. Until now the law was seldom enforced, but after a 2010 audit revealed the fact that the programs owed the tax, plans were made to begin taxing approximately 275 nonprofits as of October 1. That date has now been extended by the governor to March 1, 2012, giving legislators enough time to try to get the law changed so that it exempts the nonprofits. It appears that a number of legislators are stepping forward to do just that. Are any of our readers familiar with such taxes in other states? – Ruth McCambridge

  • Michael Wyland

    As a South Dakotan, I am somewhat familiar with this issue.

    The state, like most states, I presume, is combing the revenue statutes to asssure that all legally enforceable taxes are collected. The sales tax on fees collected to support food distribution had been on the books in South Dakota for decades, but the tax had never been collected. When the state’s Department of Revenue discovered this, it had no choice but to announce that the tax would be collected in the future (no attempt would be made to collect taxes for prior transactions).

    The Governor (a former nonprofit ED) and several legislators responded almost immediately to address the situation, and it is expected that the SD Legislature will pass a law exempting the affected transactions.

    [NOTE: The SD Legislature meets in January, February, and part of March each year.]