STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL
November 7, 1969
Jon Mattson
State's Attorney, Lawrence County
Deadwood, South Dakota 57732
OFFICIAL OPINION NO. 69-89
Reimbursement to public officials for sales tax paid. SDCL 1967 10-45
Dear Mr. Mattson:
You have inquired as to whether or not county officials who, in the performance of their official duties, are required to pay a South Dakota sales tax on the purchase price of meals and lodging, are entitled to be reimbursed for this tax by the county, or whether the same is exempt under the provisions of SDCL 1967 10-45-2, 7 and likewise the same with regard to the new municipal sales taxes which are being considered in several municipalities.
The South Dakota Retail Sales and Service Tax is a tax upon the privilege of engaging in business as a retailer and is on the retailer's gross receipts. SDCL 1967 10-34-22 allows the retailer to add the tax imposed to the selling price and prohibits the retailer from advertising or holding out to the public, directly or indirectly, that he will absorb this tax or that it will not be considered as an element in the price to the consumer.
SDCL 1967 10-45-10 exempts from the provisions of the retail sales and service tax and from the computation of the amount of the tax imposed by it, “... the gross receipts from sales to the United States, to the State of South Dakota. or to the public or municipal corporations in the State of South Dakota or any relief agency ... " The Supreme Court of this state has held that the South Dakota sales tax is a tax upon the retailer rather than a tax upon the consumer, see State ex rel Sioux Falls Motor Company v. Welch, 65 SD 68, 270 NW 852. In this respect our sales tax differs from that of North Dakota, see Jewell Tea Company v. State Tax Commission, 70 ND 299, 293 NW 386 in which it was held that the North Dakota sales tax was imposed upon the consumer. In this connection also see the case of the Federal Land Bank v. Bismarck Lumber Company, 314 U.S. 95, 86 L. Ed. 65, the Supreme Court of the United States emphasized the fact that the North Dakota sales tax was a tax upon the consumer and under the provisions of Section 6 of Chapter 249 of the North Dakota Session Laws of 1937 the tax constituted a debt from the consumer or user to the retailer until paid. The provisions of this act are entirely different in this respect than the South Dakota Retail Occupational Sales Tax Law. Enforcement in South Dakota is against the retailer and, in fact, the delinquent taxpayer who is the retailer may be enjoined upon the application of the Commissioner of Revenue from engaging or continuing to engage in any occupation or business within the state.
The Supreme Court of the United States has held in several instances that the constitutional immunity of the United States from state taxes is not infringed by the exaction of a state sales tax with which the seller is chargeable but which he is required to collect from the buyer with respect to materials purchased notwithstanding the economic burden of the taxes borne by the user. See State of Alabama v. King & Boozer, 314 U.S. 1, 86 L. Ed. 3; Curry v. U.S., 314 U.S., 14, 86 L. Ed. 9.
In applying this principle of law then to the fact situation you have presented, a sale made to a county official in the form of lodging or a meal and for which he seeks reimbursement on his expense account from the political subdivision or, for that matter, the State of South Dakota does not constitute an exempt sale to the State of South Dakota or its subdivisions even though the officer or employee may be acting within the scope of his employment.
Unless the sale is for the purchase of merchandise, and is paid for by a governmental voucher, such sales are not considered sales to the political subdivision or to the State of South Dakota, and therefore is not an exempt sale. Whether or not the employee shall be reimbursed for such tax is discretionary with the governing body.
In this connection see also 1943-44 AGR 99.
Respectfully submitted,
Gordon Mydland
Attorney General
