S.D. Admin. R. 64:07:01:13
All contractors or subcontractors, regardless of the kind of contract, engaged in construction work, erecting buildings, building highways, or realty improvements are the consumers of materials and supplies purchased by them for use in their contract work. Suppliers who are licensed under the South Dakota sales and use tax law must remit sales or use tax to the state on sales of materials and supplies to contractors. Contracts referred to in this section are those which do not constitute a sale of tangible personal property. Since they are not sales of tangible personal property, the contractor may not purchase for resale supplies and materials and must pay sales or use tax on the purchases. If the contract is a mixed contract in which some tangible personal property or any product transferred electronically is furnished, the contractor is considered the consumer of all property.
S.D. Admin. R. 64:07:01:13
General Authority: SDCL 10-46-35.1(3).
Law Implemented: SDCL 10-46-5.
Declaratory Rulings: A contractor who installs a pipe organ in a church is subject to sales and use tax on the materials used in performance of the contract. Secretary of Revenue Declaratory Ruling No. 78-1.
A company which removes forms from septic tanks, which are fabricated by another company, is performing services which become part of tangible personal property and is not performing under a realty improvement contract, and, as such, is subject to the sales tax and not to the contractors' excise tax. Secretary of Revenue Declaratory Ruling No. 81-1.