South Dakota Administrative Rules › Title 64 - REVENUE › Article 64:06 - Sales tax › Chapter 64:06:01 - Administration of program › Section 64:06:01:58 - Reimbursement for expenditures

Current through Register Vol. 51, page 10, July 15, 2024
Reimbursement for expenditures actually made are not gross receipts
	 when the reimbursement occurs within a relationship where the ownership of the
	 property or service purchased by the person receiving the reimbursement passed
	 directly and immediately upon the purchase to the person who made the
	 reimbursement and the person who made the reimbursement was legally liable for
	 payment for the property or services to the person who sold the property or
	 services.
The reimbursement must be separately stated in the taxpayer's books,
	 records, and billings for auditing purposes.
General Authority:
SDCL
		10-45-47.1(3).
Law Implemented:
SDCL
		10-45-1(10),
		10-45-1.14.
Examples:
(1) An architect is hired to do a study on the feasibility of
		renovating a building in another city. In order to make the study the architect
		purchases a ticket in the architect's own name and flies to the city in which
		the building is located. In the bill the customer is charged for the cost of
		the flight. The amount received from the customer is includable in the
		architect's gross receipts because the customer is not legally liable to pay
		the airline for the flight.
(2) A court reporter is hired to take a deposition in another city.
		In order to take the deposition, the court reporter purchases an airline ticket
		and flies to that city. In the bill, the client is charged for the cost of the
		airline ticket. The amount received from the client for the flight is
		includable in the court reporter's gross receipts because the client was not
		legally liable to the airline for the cost of the ticket.
(3) A seller of real property obtains the abstract for the parcel of
		land from the abstracter in preparation of a title search. A new deed is
		subsequently prepared and returned with the abstract to the abstracter. The
		abstracter updates the abstract and then files the deed in the register of
		deeds' office. The abstracter pays the filing fees. In the abstracter's bill to
		the client, the abstracter separately lists the register of deeds' filing fees.
		Receipt of payment for the filing fees are not includable in the abstracter's
		gross receipts because the client is legally obligated to pay the fee to the
		register of deeds' office.
(4) A client hires a real estate broker to sell the client's house.
		The broker obtains the abstract on the property. In reviewing the abstract, the
		broker finds the real estate taxes for the previous year have not been paid.
		The broker then pays the taxes to clear the title. After a buyer is found, the
		broker prepares a deed and files it in the register of deeds' office. In the
		bill to the client, the broker separately lists the amount due for payment of
		the taxes and for the filing fees paid to the register of deeds' office.
		Payment for the taxes and the filing fees are not includable in the broker's
		gross receipts because the client is legally obligated to pay the taxes and the
		filing fees.