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Tax Law

South Dakota House of Representatives’ Taxation Committee Strikes Advertising Tax Provision from HB 1284

During a hearing held on February 20, 2020, the South Dakota House of Representatives’ Taxation Committee approved an amendment to House Bill 1284, striking the proposed elimination of the sales tax exemption for advertising services. The bill’s sponsor, Representative Finck (Republican), introduced the amendment himself. He clarified that he did not intend to tax all advertising services. Rather, he thinks that there are certain services being misconstrued as “advertising” that should be subject to sales tax (such as website creation). He expressed his hope that this issue would be addressed in further discussions. Members of the Taxation Committee noted that a tax on advertising and business inputs would cause economic distortion, raise production costs, and place businesses at a competitive disadvantage. The bill, as amended, is now headed to the House of Representatives’ Transportation Committee for further discussion on its remaining provisions, which would create a road improvement priority fund.