Opinion ID: 2041947
Heading Depth: 2
Heading Rank: 2

Heading: Sales of Molds to Produce to outof-state customers are sold at retail and subject to sales tax.

Text: The Secretary determined that the molds to produce, sold by Royal to its outof-state customers and used by Royal in the manufacture of plastic part pieces, are sold at retail in South Dakota and are subject to sales tax. The circuit court affirmed this conclusion stating that the sales take place in South Dakota; therefore, it reasoned the gross receipts are subject to sales tax without exclusion of fabrication costs. It determined that the sales of these molds are not exempt from taxation because there is no immediate physical delivery of the mold to a point outside the state pursuant to a contractual obligation. We agree. Gross receipts from the sale of tangible personal property in South Dakota are not subject to sales tax, if the seller has an obligation under the sales agreement to deliver the tangible personal property out of state and the property will not be returned to this state. ARSD 64:06:01:24. In the present case, the sales of molds to produce take place in South Dakota. Royal is not contractually obligated to immediately deliver the molds to the out-of-state customer. Therefore, the gross receipts from the sale of the molds to produce are subject to sales tax without exclusion of fabrication costs.