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Municipal Gross Receipts Tax (MGRT)

Applicable Statutes & Rules

The Department is the administrative and enforcement agency for municipal sales and use taxes. Municipal tax is reporting on the state tax returns. All receipts subject to state sales tax are subject to city sales or use tax if the sale is sourced to a city imposing a tax (exception is satellite TV which is not subject to local tax per federal law.) Retailers licensed for sales tax are considered licensed for municipal sales tax purposes.

SDCL 10-52 authorizes municipalities to impose a Municipal Sales and Use tax in accordance with SDCL 10-45 and 10-46.
SDCL 10-52A authorizes municipalities to impose a MGRT on eating establishments, lodging accommodations, admissions to places of amusement, alcohol sales.

Rates

General Rate

Sales and use tax rate of up to two percent. City tax applies to sales products and services delivered within the city. This includes products delivered electronically.

Municipal Gross Receipts Tax (MGRT)

Any municipality may impose an additional municipal gross receipts tax at a rate of 1% on the gross receipts of all leased or rentals of hotels, motel, campsites, or other lodging accommodations within the municipality for periods of less than twenty-eight consecutive days, or sales of alcoholic beverages as defined in SDCL 35-1-1, or establishments where the public is invited to eat, dine, or purchase and carry out prepared food for immediate consumption, or ticket sales or admissions to places of amusement, athletic, and cultural events, or any combination thereof.

Municipalities may use the tax collected for the purpose of land acquisition, architectural fees, construction costs, payments for civic center, auditorium, or athletic facility buildings, including the maintenance, staffing, and operations of such facilities and the promotion and advertising of the city, its facilities, attractions, and activities.

City Tax Changes

A city tax changes can only be effective July 1 and January 1. SDCL 10-52-9. The city are required to notify the Department of the finalized changes at least 90 days prior to the effective date. This provides time for notification to affected businesses.

Rate Increases

Accrual Basis: The sales tax rate in effect at the time of the sale applies to the sale. Sales made during December, 2013, are subject to the tax rate in effect during December. Sales made in January, 2014, are subject to the tax rate in effect in January. It does not matter when the actual payment for the sale is received.
Cash Basis: The sales tax rate in effect at the time payment is received applies to that payment. A sale made in December, 2013, but paid for in January, 2014, is subject to the tax rate in effect in January.

Exceptions: Construction materials for contracts bid or awarded prior to the date of the rate increase are not subject to the tax rate increase if the contractor documents the contract was bid or awarded prior to the effective date of the rate increase. Contractors need to give written documentation to the supplier or vendor the contract was bid prior to the city tax rate change, then the supplier will charge municipal sales tax at the rate at the time of the bid.

New Taxes

Tax changes are applied according to the taxpayers method of reporting.

Accrual basis taxpayers pay the tax in effect at the time the sale is made.
Cash basis taxpayers pay the tax in effect at the time payment is received.