Motor Fuel

• Depending on what the dyed fuel is being used for will determine the tax rate that is paid.
• State Sales Tax plus applicable municipal sales tax applies to the selling price of dyed fuel when it is. Dyed fuels subject to sales tax are:
  • 072 Dyed Kerosene
  • 171 Dyed Biodiesel Blends
  • 228 Dyed Diesel Fuel
  • 290 Dyed Biodiesel
• Dyed Diesel may be purchased tax exempt if it is for Agriculture use.
• Dyed diesel is sales taxable for use other than agriculture.

Both state and federal law require that most owners of petroleum storage tanks be able to demonstrate financial responsibility for pollution cleanup and third-party liability. The United States Environmental Protection Agency (EPA) has approved the South Dakota Petroleum Release Compensation Fund (PRCF) as an acceptable mechanism for tank owners to demonstrate financial responsibility for corrective action and third-party compensation. PRCF revenues are generated by a two cents per gallon tank inspection fee on petroleum products received, shipped and stored in the state. This fund is used for the clean-up of petroleum spills. Please refer to SDCL 34A-13-20 and Administrative Rule 74:32:02:01 for further information about the Tank Inspection Fee.

• There are a number of motor fuel licenses: Terminal Operator, Supplier, Importer/Exporter, Transporter, Bulk Plant Operator, Ethanol Producer, Blender, Marketer, Tribal Marketer, CNG Vendor, LNG Vendor, LPG Vendor, LPG User, and Highway Contractor. Depending on the type of business you are conducting will determine what licenses you will need for your business.
• Each license grants certain privileges and carries specific responsibilities. An individual or business may hold one or several licenses depending on the business transacted. For more information regarding each license type please refer to the Licenses-Tax Returns section of the Motor Fuel Manual.

You may complete an online application at online Filing and Tax Payment portal. 

No fees are charged for Motor Fuel licenses and there are no bonding requirements (except for individuals who are delinquent in reporting and remitting fuel tax, and to reinstate a revoked license).

A separate license is required for each type of business and for each location in the case of multiple sites.

The secretary may refuse to issue or renew a license for any of the following reason:

• The application is filed by a person whose license has been canceled for cause by the Secretary;
• The applicant has made false or misleading statements in the application;
• The application is filed by a person as a subterfuge for another person whose license has been canceled for cause by the Secretary;
• At the time of application for license renewal, the person is found to have been delinquent in the filing of tax returns or the payment of taxes two or more times during the preceding license year; or
• The applicant was convicted of a crime involving fuel tax or owes fuel tax, penalty, or interest to South Dakota or another state.

You must notify the Department of Revenue when your business has any changes to its name, address, contact information. You can notify the department by sending a letter signed by an owner or officer we have on file for your company.

• In situations where your business changes ownership please contact the Department of Revenue for information on what to do.
  • Please call Alyssa Hudecek at (605) 773-8178.
  • If your business ceases operating you may either cancel your licenses online or notify the Department of Revenue by completing the Request to Cancel Motor Fuel License(s) form or by sending a letter signed by an owner or officer we have on file for your company.
  • If a business changes its name, address, or contact officer a written notice must be submitted to the Department with the updated information.

All records must be preserved for the current year and the three preceding calendar years.

Yes, South Dakota motor fuel tax returns are due for every tax period, even if you did not have any activity during that period.

The filing or payment is due the next business day when a filing or payment due date falls on a Saturday, Sunday, or legal holiday.

Yes, gallons need to be rounded to the nearest whole gallon. For example if 125.78 gallons of alcohol were sold you would round the number to 126.

The following are exempt from fuel excise tax:

• Motor fuel or undyed special fuel removed from a terminal in this state at the rack by the federal government or defense fuel supply center for consumption in any federal government motor vehicle, machinery, equipment, or aircraft.
• Motor fuel or undyed special fuel imported into this state by the federal government or defense supply center for consumption in any federal government motor vehicle, machinery, equipment, or aircraft.
• Trans-mix removed from a terminal in this state at the rack by the terminal operator and transferred to another terminal, or to a licensed supplier for refinement and re-introduction into the pipeline system.
• Undyed special fuel removed from a terminal in this state at the rack delivered directly into a railroad locomotive if the railroad company is also the supplier.
• Motor fuel or undyed special fuel removed from a terminal in this state by an electrical power company of cooperative and directly used for the generation of electricity.
• Motor fuel or special fuel transfers in bulk by pipeline into a terminal or in bulk by pipeline within a terminal. This subdivision does not apply to any transfers for ethyl alcohol or methyl alcohol into a terminal or within a terminal. The subsequent removal of the fuel from the terminal is not exempt from tax.

Any business or person may collect a refund of fuel excise taxes paid when undyed fuel that is accidentally mixed with clear fuel. However, to qualify for this refund, the amount of undyed fuel accidentally mixed must exceed 500 gallons. The claimant must notify the Department of Revenue within five days of the accidental mixture and complete the Affidavit of Accidental Mixing of Undyed Fuel with Dyed Fuel.