Summer is here. Along with the blossoms come all of the different license plates in our area. Tourist season is here and what does that mean to you? Have you ever wondered about the additional tourism tax?
In addition to collecting and remitting state and city sales tax, there is an additional 1.5% tourism sales tax that is imposed for tourism promotion in South Dakota. The tax applies to any business which primarily earns monies from visitors. There are two categories of businesses subject to this tax.
First, there are year-round payers which are the following types of businesses: hotels and lodging establishments, campgrounds, motor vehicle rentals (rented for less than 28 days), recreational equipment rentals, recreational services, spectator events, and visitor attractions.
Second, for certain taxpayers, the tourism tax applies only during certain months. These “visitor-intensive” businesses are required to collect and remit the additional 1.5% tourism tax only during the months of June, July, August, and September. The applicable businesses are those with 50% or more of their total annual gross receipts occurring during those four months. Examples of visitor-intensive businesses include: antique shops, candy stores, rock shops, arts/crafts shops, marinas, jewelry stores, and novelty shops.
To determine if you are subject to collecting and remitting the tourism tax, first pinpoint which category your business falls under—either a year-round tourism business, or possibly a visitor intensive one. Next, if you are not subject to the year-round tax, analyze your gross receipts from June through September. For example, cabin rentals would be subject year-round. An antique shop would be subject only if 50% of the income occurs during June thru September. A confusing factor, a business might think they only have to collect and remit during June thru September because that is when most of their business occurs. However, if your business falls under the category of collecting year-round, looking at gross receipts for eligibility determination is not needed. Only if you are a visitor-intensive business are you required to assess your gross receipts to determine eligibility for the four month period. If you need assistance determining if you should be collecting and remitting tourism tax, contact the professionals at Ketel Thorstenson today.