STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

December 4, 1974

Robert H. Hayes, M.D.
State Health Officer
South Dakota Department of Health
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 74-49

Sales taxability of property sold to a nursing home

Dear Dr. Hayes:

You have requested my official opinion on the following factual situation:

The June, 1972, flood in the Black Hills area destroyed a portion of Mountain View Nursing Home in Rapid City. The facility was declared eligible for disaster relief (reconstruction) funds by the Office of Emergency Preparedness (OEP) because of its status as a medical facility. Since OEP only may deal through a public body the State Department of Health agreed to act as the fiscal intermediary in order that the nursing home might receive these funds.

During the course of construction, bills were presented to the State Department of Health for payment, and these bills were used by the department as basis for request of funds from OEP. The OEP advanced funds to the department project. During the course of the audit of the first 75f1lo, the state post audit staff and OEP questioned the payment of sales tax on project expenditures.

Concerning this, you have inquired as to whether the payment of the sales tax by the nursing home is an expense of the project. You have stated that the Health Department feels that the payment of sales tax by the nursing home is a legitimate expense of the project since as a nursing home it does not enjoy a tax exempt status.

With this conclusion I agree. The entity in question was approved as a disaster beneficiary under certain categories authorized in the Federal Disaster Assistance Program. Details on these were fully submitted to the Office of Emergency Preparedness, Executive Office of the President by your office and by the Division of Hospital Facilities and the eligibility approved by Region VIII officials on June 16, 1972, and the National Office on July 3, 1972.

Under South Dakota law, gross receipts from the sale of tangible personal property by retailers to certain institutions or entities are tax exempt, these for purposes applicable here are contained in SDCL 10-45-14 and as herein stated only relate to religious educational institutions and nonprofit, charitable hospitals.

It is my opinion, therefore, that since the Bennett Clarkson Mountain View Nursing Home in Rapid City does not come within this exemption statute retailers were legitimately required to pay tax on their gross receipts from sales to such institution and could lawfully pass such tax or the average equivalent on to the purchaser, § 10-45-22; thereby converting the same from a tax into an expense of the project.

Respectfully submitted,

Kermit A. Sande
Attorney General

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