South Dakota tax payment plan for sales and excise tax
South Dakota has no income tax, so payment plans cover sales, use and excise tax. State law also lets the Department of Revenue accept a written agreement to pay.
- State income tax
- There is no charge
- Interest for overdue payments
- 1% monthly
- Listing notice given beforehand
- 90 days
- Delay Pay minimum
- A project costing $20,000
Although South Dakota has no income tax, other tax bills still exist
The Department of Revenue individual taxes page says South Dakota is among seven states without a state income tax. Businesses pay no corporate income tax either. Most balances owed here arise from sales and use tax and from construction work subject to the 2% contractor’s excise tax. The state sales and use tax rate is 4.2%. If taxable purchases have no sales tax paid, including some online purchases, you owe use tax.
In South Dakota, those taxes create balances that a payment arrangement can address
Is a South Dakota payment plan available?
The Department has not published a plan with a fee, limit or length. However, state law recognizes this type of payment plan. For payment of a delinquency, a person who owes may sign a written agreement with the Department under SDCL 10-59-47. That law also treats correcting a default under an existing agreement as a method for resolving the debt.
Contact the Business Tax Division to request a payment plan. See the Department of Revenue contact page. Collect your license number, identify the periods you owe and choose a monthly amount you can keep up.
Interest and penalties for overdue sales tax
Interest begins accruing during the month a payment becomes late. During the first month, SDCL 10-59-6 sets the rate at 1% or $5, based on whichever is greater. After that, the rate is 1% each month. Delaying payment to avoid the tax increases the monthly rate to 1.5%.
A return filed more than 30 days late also carries a one-time penalty. The charge equals 10% of the tax or $10, whichever is greater. The Secretary of Revenue may reduce this penalty for reasonable cause. Tax receives the first part of each payment, beginning with the oldest period. Interest is paid next, followed by penalty
Handling an unpaid balance in South Dakota
County officials and liens are used to collect the money. The Department has the authority to file a tax lien. This creates a public claim against property you own because of the debt. After filing the lien, the Department can order a distress warrant from the county treasurer under SDCL 10-59-13. The order directs the sheriff to seize personal property and sell it. Checking and savings accounts also fall within its scope.
Under SDCL 10-59-44, the Secretary, when you fail to file or pay, may also revoke a business tax license, including your sales tax license.
A Top 100 Delinquent Report is published by the Department. It lists business tax debtors, with a lien filed for each listed name. At least 90 days before adding anyone to the list, the Department sends notice by mail. Full payment or a signed written payment agreement during that period keeps your name off the list. Within 10 days after full payment is processed, the names come off the list.
Delaying tax on purchases of large equipment
Some businesses can plan ahead instead of falling behind. The Delay Pay Permit Program gives manufacturing, fabricating and processing firms six more months. Sales or use tax owed on machinery is covered during that extra period. A cost of more than $20,000 is required. Submit your application 30 days before the project begins.
Debt in South Dakota and a plan from the IRS
An agreement with Pierre for sales tax will not help you handle a federal balance The IRS deals with installment agreements on its own Two payment schedules remain separate for a South Dakota business owing both.
Nearby states
Are you in debt to both the Department of Revenue and the IRS at the same time?
Are you facing an IRS balance along with South Dakota sales tax debt? A licensed tax pro can work out one payment approach for both debts on a free call.
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