Navigating South Dakota State Tax Problems: Solutions and How to Find Help

Dealing with tax debt in South Dakota? Unfiled returns? Facing unwanted collection actions? Undergoing an audit? Then, it's time to get help – use TaxCure to find a South Dakota-based tax pro, or keep reading for an overview of taxes in this state. 

Understanding South Dakota Taxes: What Can You Owe?

Although SoDak doesn't have an individual or corporate income tax, it has sales tax, property tax, and a variety of business taxes. Here are the state's main taxes and rates as of 2025:

• Sales tax – 4.2% state rate, plus up to 2% from local governments, with an average rate of 6.11%. 
• Municipal gross receipts tax – Municipalities may assess a gross receipts tax of 1% on alcoholic beverages, eating establishments, lodging accommodations, admissions to places of amusement, athletic, and cultural events. 
• Property tax – 1 to 3% of the property's market value, with five-year tax abatements available on new structures or additions to existing ones. 
• Use tax – Due from individuals and businesses if they purchase something out of state or in a jurisdiction that's not subject to sales tax.
• Unemployment tax – Employers must pay unemployment tax on the first $15,000 of wages for each employee. For new employers, the rate is 1.75%, but it may be reduced to 1.55% if you maintain a positive account balance. Construction companies have a rate of 6.55% which can drop to 3.55% if the company maintains a positive account balance. The average rate for experienced employers is 1.28%. 
• Contractor excise tax – Contractors must pay an excise tax of 2% of the value of the products used in their project.

There are also industry-specific taxes related to alcohol, amusement machines, bank franchise tax, cigarettes and tobacco, coin-operated washers and dryers, motor fuel, and precious metals.

Does South Dakota have income tax?

No, South Dakota is one of a handful of states that do not have individual income tax. The state does not have corporate income tax either.

Does South Dakota have an estate tax?

No, South Dakota does not have a state-level estate tax. However, residents of this state may be subject to the federal estate tax.

Filing and Paying Taxes in South Dakota

Businesses must file their applicable business tax returns. Individuals must file use returns as applicable. Let's look at the details. 

How do businesses register for a tax account in South Dakota?

Businesses must register for a tax account online with the DOR – you can set up any tax account online. Then, you can either file and pay online or mail in your payments. However, Motor Fuel Ethanol Producer, Importer/Exporter, LNG, and Supplier licenses, and 911 Emergency Surcharge licensees, which must be paid and filed online.

How do you file taxes online?

You can file and pay online by setting up an EPath account. First, you must obtain a tax license – the online application asks about your license numbers. Once you complete the online portion of the application, the state will send you a temporary password within two to five days. Once you have your account, you can add additional licenses if needed.

When are business tax returns due in South Dakota?

Tax returns are due on the 20th of the month, following the period when the taxes were collected. For example, July sales tax returns are due August 20th (or the next business day if that falls on a weekend or holiday). Payments are due on the 25th; however, ACH debits generally must be made a couple of days early to process by the due date, and if you mail in a return, the payment is due on the 20th.

Do remote sellers have to deal with sales tax in South Dakota?

Yes, but only if they have gross sales into the state, exceeding $100,000. This rule is a direct result of the Supreme Court case South Dakota v. Wayfair, which allowed states to require remote sellers to collect and remit sales tax. 

Do marketplace facilitators have to collect sales tax in South Dakota?

Marketplace facilitators must collect and remit sales tax in South Dakota if they meet one of the following criteria:

• Facilitate the sale of at least one marketplace seller that exceeds $100,000 in gross sales or 200 transactions in South Dakota in the previous or current year. 
• Facilitate the sales of two or more marketplace sellers with combined sales or transactions that exceed $100,000 in gross sales or 200 or more separate transactions in the previous or current year. 

What happens if you buy something online that's not subject to sales tax in South Dakota?

Then, you owe use tax. For example, say you purchase something for $100 from a remote seller that doesn't collect sales tax, and you live in Sioux Falls, which has a sales tax rate of 6.2%. Then, you should report the purchase and pay $6.20 in use tax.

How do you file a use tax return in South Dakota?

Individuals can file use tax returns online with the DOR. You generally enter the amount of the purchase, any sales tax paid, and the sales tax rate in your area. For example, if you purchased something for $1000, paid no sales tax, and the rate in your area is 6%, you will owe $60 in use tax.

How does the contractor excise tax work?

Contractors must pay 2% of the revenue they receive from projects as an excise tax. However, they can pass this tax to their customers – to do so, they should include a separate line showing a 2.041% tax. 

For example, say that a contractor charges $9799.98 on a project. Then, they put a charge for 2.041% on the bill, which equates to $200.02, bringing the invoice total to $10,000. Then, the contractor must pay a 2% excise tax on the full $10,000 bill – that means they owe $200 in excise tax. The extra pennies on the client's invoice will be chalked up to rounding differences. 

What If You Don't Pay South Dakota Taxes?

If you don't pay your taxes, the state will assess penalties and interest, and the Department of Revenue can also take measures to collect the debt involuntarily. Here's what to expect.

Late payment penalties

The SD DOR applies a penalty of 10% if a payment is 30 days or more late. For example, your sales tax return payment is due on the 25th of each month (20th if you mail in the payment). If you don't pay it by the 20th of the following month, you'll incur a 10% penalty (minimum of $10). There is also interest at a rate of 1% per month (minimum $5 per month). 

For example, say that you owe $10,000 and pay 60 days late. You will generally incur the late payment penalty of $1000, plus interest of $10 per month. 

Top 100 delinquent list

The DOR publishes a list of the 100 businesses with the highest tax delinquencies – the list gets updated weekly. Before putting your name on the list, the state will send you a notice and give you 90 days to rectify the situation. If you don't respond, they'll move forward with publication. The state also issues tax liens against everyone on the delinquent list. Once you pay, your name will be removed within 10 days. 

Loss of business license

If you don't pay or file your taxes, the SD DOR can rescind your business license. They must notify you by mail, and then, you have 14 days to appeal. If you don't appeal, the decision to take away your license becomes final.

Liens and levies

The state has the right to issue tax liens against businesses and individuals who don't pay their tax. Once a lien has been issued, the DOR has the right to seize any of the taxpayer's property or rights to property. 

Property tax sales

If a property owner fails to pay their property tax, the county has the right to enforce its lien against the owner. In other words, the government can auction off your property if you don't pay your property taxes. 

How long does the SD DOR have to collect unpaid taxes?

The DOR typically has three years to assess additional tax once a return has been filed. 

However, if you file a return and don't pay the tax due, the state has an unlimited amount of time to assess or collect tax against you. There is also no statute of limitations on collection or assessment if you don't file a return, or file a fraudulent return, or if you don't have a license to engage in the activity that leads to the tax. 

Solutions for South Dakota State Tax Problems

If you're dealing with a tax problem in South Dakota, consider contacting a tax professional for guidance or reaching out to the DOR directly to talk about your options. Most of the state's business taxes are trust fund taxes. That refers to taxes collected from another person and then paid to the state – for example, businesses collect sales tax from customers and then send it to the DOR. Because of this, the DOR is often hard to work with. 

However, if you get behind, you may want to consider the following options:

Installment agreement

The DOR does not advertise a payment plan option for taxpayers who get behind. However, they may approve payments on a case by case basis. 

Settlements

The DOR doesn't offer settlements on South Dakota business taxes. However, county commissioners can forgive property taxes on new structures or additions at their discretion. To qualify, the property must be industrial, commercial, or non-residential agriculture valued at over $30,000. 

Penalty abatement

Under South Dakota law, the Department of Revenue can waive penalties if a "reduction or abatement is just and equitable" or if the state neglected its duty by not sending notices or correctly advising the taxpayer about the tax assessment.

Lien release

The State will release a lien if you establish that it was filed in error. Otherwise, the tax lien will be released 30 days after you pay the tax in full.

Voluntary disclosure

The Voluntary Disclosure Program can help you get back into compliance if you have not been paying or filing sales tax. To qualify, you must not already have a sales and use tax account with the DOR, and generally, you must reach out to the state before they contact you. 

You can apply anonymously, and if accepted, you will receive:

• Possible waiver of penalty charges.
• Agreement that the state will not pursue criminal charges.
• 60 days to determine the tax due and make payment. 

If you have already collected (but didn't pay) sales tax, you are not eligible for this program. Once accepted, you must register for a sales tax account and agree to register and file returns correctly moving forward. If you need to apply for a voluntary disclosure in multiple states, South Dakota participates in the multi-state disclosure program.

Contacting the South Dakota Department of Revenue

So, how do you reach the SD DOR if you have questions or want to ask about relief options? Here is their contact information. 

• Main contact number:(605) 773-3311 (Pierre Office)
• General business tax number: (800) 829-9188 
• Email: [email protected]
• Regional offices:
  • Aberdeen: (605) 626-2218
  • Pierre: (605) 773-3311
  • Rapid City: (605) 394-2332
  • Sioux Falls: (605) 367-5800
  • Yankton: (605) 668-293
• Online Portal: SDQUEST (for e-filing and payments):

Why Seek Professional Help for SD Tax Problems?

If you want to protect your business and your finances, you should reach out for professional help. Although the IRS and many other states have a lot of self help options available for taxpayers, the South Dakota Department of Revenue does not. You can call the Department directly to ask for guidance, but remember, they work for the state, not for you. 

When you work with a pro, they have your interests in mind, and they negotiate with the state on your behalf. They can help you navigate the tax law, find resolutions, and protect your business and assets during the process. As needed, they can also assist with future tax planning, audit representation, and any other concerns you're facing. 

Finding a Qualified South Dakota Tax Professional

If you're having problems in South Dakota, you need a pro who has experience in the state – sometimes, that may be someone who's based in South Dakota, while other times, it may be a professional in North Dakota, Iowa, Minnesota, Nebraska, or even Wyoming who works frequently with South Dakota taxes. 

To get help now, use TaxCure to find an experienced pro. When you're dealing with state taxes, it's critical to find someone experienced in your state – the big firms tend to lack state experience. And unfortunately, your regular accountant may not be able to help you if they aren't experienced with resolution work, which is a specific niche of tax services. Don't wait – explore your options and find help today. Or read more about why you should use TaxCure.