South Dakota Codified Laws 10-45C-7. Seller and third party liability
A certified service provider is the agent of a seller, with whom the certified service provider has contracted, for the collection and remittance of sales and use taxes. As the seller’s agent, the certified service provider is liable for sales and use tax due each member state on all sales transactions it processes for the seller except as set out in this section.
A seller that contracts with a certified service provider is not liable to the state for sales or use tax due on transactions processed by the certified service provider unless the seller misrepresented the type of items it sells or committed fraud. In the absence of probable cause to believe that the seller has committed fraud or made a material misrepresentation, the seller is not subject to audit on the transactions processed by the certified service provider. A seller is subject to audit for transactions not processed by the certified service provider. The member states acting jointly may perform a system check of the seller and review the seller’s procedures to determine if the certified service provider’s system is functioning properly and the extent to which the seller’s transactions are being processed by the certified service provider.
Terms Used In South Dakota Codified Laws 10-45C-7
- Agreement: means the Streamlined Sales and Use Tax Agreement. See South Dakota Codified Laws 10-45C-1
- Certified automated system: means software certified jointly by the states that are signatories to the agreement to calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit to the appropriate state, and maintain a record of the transaction. See South Dakota Codified Laws 10-45C-1
- Certified service provider: means an agent certified jointly by the states that are signatories to the agreement to perform all of the seller's sales tax functions. See South Dakota Codified Laws 10-45C-1
- Fraud: Intentional deception resulting in injury to another.
- Person: means an individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or any other legal entity. See South Dakota Codified Laws 10-45C-1
- Probable cause: A reasonable ground for belief that the offender violated a specific law.
- Seller: means any person making sales, leases, or rentals of personal property or services. See South Dakota Codified Laws 10-45C-1
- State: means any state of the United States and the District of Columbia. See South Dakota Codified Laws 10-45C-1
- Use tax: means the tax levied under chapter 10-46. See South Dakota Codified Laws 10-45C-1
A person that provides a certified automated system is responsible for the proper functioning of that system and is liable to the state for underpayments of tax attributable to errors in the functioning of the certified automated system. A seller that uses a certified automated system remains responsible and is liable to the state for reporting and remitting tax.
A seller that has a proprietary system for determining the amount of tax due on transactions and has signed an agreement establishing a performance standard for that system is liable for the failure of the system to meet the performance standard.
Source: SL 2002, ch 64, § 7.