South Dakota Sales Tax Payment Plan & Resolution Checklist

South Dakota Sales Tax Payment Plan & Resolution

Checklist

Understanding Your Sales Tax Obligation

Sales tax in South Dakota represents a state tax that registered businesses collect on retail sales of tangible goods and services. Business owners must register for a sales tax permit, collect sales tax from customers, and remit payments to the South Dakota Department of

Revenue on a regular schedule.

When payments are missed or returns are filed late, the Department of Revenue sends a notice stating the amount owed, the payment deadline, and any penalties or interest that have been assessed. This notice serves as an official demand for payment, signifying an outstanding debt to the state.

Why the State Issues Collection Notices

South Dakota requires timely payment because sales and use tax revenue funds state operations and essential services. When returns are not filed or payments are not received by the deadline, the state's collection system identifies accounts as delinquent.

The Department of Revenue issues formal notices to prompt payment and to provide an opportunity to resolve the debt before further collection steps are taken. Standard administrative procedures govern this process, which does not represent a judgment or legal action at the initial stage.

Consequences of Ignoring a Sales Tax Notice

Failing to address a sales tax notice leads to escalated collection actions by the state. Additional penalty assessments continue to accrue, and interest charges accumulate on the unpaid balance.

Accounts may be referred to the state's collection division or an outside collection agency for further action. Growing balances become more difficult to resolve when correspondence from the Department of Revenue remains unaddressed.

What a Sales Tax Notice Does Not Mean

Receiving a sales tax notice does not trigger criminal charges against you or your business.

Automatic revocation of your tax license does not occur upon issuance of a notice.

You retain the right to negotiate and enter a South Dakota sales tax payment plan even after receiving collection correspondence. Notices serve to inform you of the debt and provide an opportunity to respond before the state pursues more severe enforcement measures.

Steps to Resolve Your Sales Tax Debt

Gather Complete Documentation

Collect all correspondence from the South Dakota Department of Revenue, including the original notice with its reference number and envelope. Locate your business tax license number, registration documents, and bank statements showing sales and use tax collections during the period in question.

Verify the Notice Details

Review the notice carefully to identify the specific tax period covered and the total amount claimed as owed. Note the original due date for the sales tax return, any reference numbers or account numbers listed, and the date the notice was issued.

Contact the Department of Revenue

Reach out to the South Dakota Department of Revenue by calling the toll-free helpline at

1-800-829-9188 or the Pierre office at 605-773-3311. You may also schedule a virtual office visit through the Department’s website at dor.sd.gov.

Have your sales tax permit number or business name ready when you call. Ask to confirm the amount owed, discuss whether payment options are available, and clarify the deadline for responding to the notice.

Compare Your Records to the Notice

Match the tax period on the notice to your own sales tax return records and determine whether you collected state sales tax during that time. Identify whether a sales tax return was filed for that period and verify if a payment was made.

Determine Your Response Strategy

Based on your conversation with the state and your own records, you can pursue full payment, request a payment plan, or challenge the amount owed. Full payment resolves the matter immediately if you can pay the entire balance.

A South Dakota sales tax payment plan allows you to make multiple payments over time if you cannot pay the full amount at once. Ask the Department of Revenue to explain the monthly payment amount, the sales tax rate applied to your account, whether interest and penalties continue to accrue during the plan, and what happens if a payment is missed.

Confirm Payment Plan Terms in Writing

Request written confirmation from the state that includes your sales tax permit number, the total amount owed, the amount of each payment, and the due date for each payment. The agreement should specify payment options, the plan start date, consequences for missing a payment, and contact information for a Department of Revenue representative.

Make Timely Payments

Mark payment due dates on your calendar or business accounting system and make each payment on or before the scheduled date. Use the payment method specified in the agreement and keep proof of each payment.

File Future Returns on Time

Prevent future sales tax debt by understanding your filing schedule, which may be monthly, quarterly, or annually, depending on your business. File your sales tax return even if no sales occurred during the period. Include accurate information about sales and use tax collected at the current sales tax rate applicable to your transactions.

Common Mistakes to Avoid

Missing the deadline to respond to a notice often triggers collection action without further warning. Ignoring follow-up notices signals escalating collection activity that requires immediate attention.

Making partial or inconsistent payments without an agreement may result in incorrect application of funds or continued collection action. Failing to keep payment records prevents you from verifying receipt if a dispute arises later.

Assuming verbal agreements are final creates misunderstandings, so always request written confirmation. Continuing to file returns late or incorrectly generates new notices even after resolving past debt.

Filing Extensions and Interest Rates

South Dakota law allows the Secretary of Revenue to grant extensions of up to five days for filing a return and remittance. For qualified businesses under specific provisions, extensions of up to six months may be granted for remitting the tax.

Past-due use tax and sales tax incur a 1% per-month interest rate, with a minimum of five dollars assessed in the first month. Late filing penalties equal 10% of the tax liability, with a minimum penalty of ten dollars, even if no tax is due.

Special Considerations for Specific Business Types

Businesses operating under the Streamlined Sales Tax system must follow specific reporting requirements when filing returns. Marketplace providers collecting tax on behalf of sellers should verify the status of their exemption certificates with the Department of Revenue.

Out-of-state vendors with economic nexus obligations must obtain proper registration before collecting state sales tax from customers. Private schools and other exempt entities should confirm their exemption certificates remain current to avoid unnecessary assessments. The contractor's excise tax applies to specific construction activities and requires separate reporting from standard sales tax obligations.

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.