South Dakota Payroll Tax Default Prevention Checklist
Understanding South Dakota Unemployment Tax
Requirements
South Dakota does not impose state income tax withholding on employee wages. Employers in
South Dakota manage two distinct payroll tax obligations that operate independently.
Federal payroll taxes, including income tax withholding, Social Security, and Medicare, are paid directly to the Internal Revenue Service through the EFTPS website or other approved federal payment methods. The only state-level payroll tax in South Dakota is the reemployment assistance tax, which functions as unemployment insurance and is administered by the South
Dakota Department of Labor and Regulation.
What the Reemployment Assistance Tax Means
Reemployment assistance tax funds South Dakota’s unemployment compensation program for workers who lose their jobs through no fault of their own. Employers pay this tax based on gross wages up to the taxable wage base, which remains at $15,000 per employee for 2025.
Why the State Requires Quarterly Reporting
State law requires all employers to report wages paid to employees so the Department of Labor and Regulation can establish benefit eligibility for unemployed workers. When employers fail to file quarterly wage reports or pay reemployment assistance tax on time, the agency initiates collection procedures to protect the unemployment insurance trust fund.
Your quarterly contribution rate depends on your experience rating, which reflects the amount of unemployment benefits charged to your account relative to the taxable wages you reported.
New non-construction employers pay a 1.20 percent tax rate in their first year, while new construction employers pay 6.00 percent during that initial period.
Collection Actions for Unpaid Taxes
The Department of Labor and Regulation assesses penalties and interest on late or unpaid reemployment assistance tax amounts. State law treats penalties and interest the same as taxes for collection and enforcement purposes, including liens and distress warrants.
Step-by-Step Compliance Process
Gather Required Documentation
Locate all payroll records showing dates of employment, employee names, social security numbers, and gross wages paid for each quarter in question. Find copies of any Form 21 quarterly wage reports you previously filed with the Department of Labor and Regulation, along with payment records showing submission dates and amounts.
Contact the Correct State Agency
Call the South Dakota Department of Labor and Regulation Reemployment Assistance Tax Unit at 605-626-2312 to confirm which quarters are unreported or unpaid. Request a detailed account statement showing your filing history, payment history, assessed penalties, and current balance.
Ask the representative to explain your current contribution rate and how your experience rating affects future tax obligations. Document the name and contact information of the representative who provides account information.
File Missing Quarterly Wage Reports
Access the online portal at the South Dakota Department of Labor and Regulation website to file
Form 21 electronically for each missing quarter. Enter employee social security numbers, full
names, and gross wages paid during each quarter that requires reporting.
Pay Outstanding Tax Amounts
Determine the total unpaid reemployment assistance tax by reviewing your account statement from the Tax Unit. Contact the agency at 605-626-2312 to confirm the exact amount due, including principal tax, penalties, and interest.
Submit payment by electronic funds transfer through the online portal, mail a check to the
Aberdeen office, or use other payment methods the agency accepts. Include your unemployment insurance account number and the specific quarters being paid on all payment documentation.
Preventing Future Compliance Issues
Set calendar reminders for quarterly filing deadlines on April 30, July 31, October 31, and
January 31 each year. File Form 21 by each deadline, even when you paid no wages during the quarter, to avoid late-filing penalties.
Federal Payroll Tax Considerations
Federal payroll taxes operate separately from the South Dakota reemployment assistance tax and are sent directly to the Internal Revenue Service. Employers must withhold federal income tax based on employee W-4 forms and IRS withholding tables.
FICA taxes cover Social Security and Medicare contributions that employers withhold from employee wages and match with employer contributions. The IRS can assess the Trust Fund
Recovery Penalty against responsible persons who willfully fail to collect or pay over these federal trust fund taxes.
Common Questions About South Dakota Unemployment
Tax
Employers must file quarterly wage reports even for periods with zero wages because the
Department of Labor and Regulation needs confirmation that no payroll activity occurred.
Penalties apply to zero-wage reports filed after the quarterly deadlines have passed.
The Reemployment Assistance Tax Unit accepts payment plans for employers who cannot pay the full amount immediately, though interest typically continues accruing on unpaid balances during the repayment period. Keep detailed records of all correspondence, filed reports, and payments to document your compliance efforts.
Understanding Your Tax Rate
Your contribution rate depends on your account’s experience rating, which the Department of
Labor and Regulation calculates annually based on unemployment benefits charged against your account. New employers receive assigned rates during their first three years of operation before qualifying for experience-rated contribution rates.
The agency mails contribution rate notices each October showing the rate that applies to your account for the upcoming calendar year. Review this notice carefully and contact the
Reemployment Assistance Tax Unit immediately if you believe your assigned rate contains errors.
Reconstructing Missing Payroll Records
Gather bank statements showing payroll transactions, employee W-2 forms from the tax year in question, and accounting software records, if available. Use these documents to calculate total gross wages paid during each quarter that requires reporting.
Contact the Reemployment Assistance Tax Unit if you cannot reconstruct complete wage data to discuss available options for filing estimated reports. The agency may work with employers who demonstrate good-faith efforts to comply despite incomplete records.
Employer Reporting Responsibilities
Report all employees working in South Dakota to the Reemployment Assistance Tax Unit, regardless of whether they work full-time or part-time. Submit new hire information to the South
Dakota New Hire Reporting Program within 20 days of each employee’s start date.
File quarterly wage reports showing each employee’s social security number, full name, and gross wages paid during the quarter. Calculate your tax payment by applying your assigned contribution rate to taxable wages up to the annual wage base limit.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.
We help with
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
20+ years experience • Same-day reviews available
