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New Ruling: “All air transportation services are not subject to South Dakota sales or use tax.”

The South Dakota Department of Revenue recently issued a release stating that “all air transportation services are not subject to South Dakota sales or use tax” after June 9, 2014.  Find the release here: http://sdrevenue.blogspot.com/2014/06/all-air-transportation-services-are-not.html. In essence, the South Dakota Department of Revenue will now construe the Federal Anti-Head Tax Act to exempt air transportation services that are charged to customers in different statements, while still imposing taxes for other services provided during a flight.  

For instance, if an air ambulance company charges the cost of the flight and the cost of the health services provided in the same statement, the entire transaction is subject to sales tax.  If however, the air ambulance company charges the health services and the flight in a different statement, the health services are subject to tax, but the flight charges are exempt.  The following services could take advantage of this release:

  • Aerial sightseeing services, such as airplane, helicopter, balloon, or dirigible rides.
  • Air transportation services.
  • Air ambulance services.
  • Any air transportation services in Federal Airways.

Air services companies are advised to charge flight services separately from other services provided to their customers, in order to reduce the total cost charged to customers and become more competitive in the market place.  Spencer Fane would be glad to assist you in trying to minimize taxes to the greatest extent possible, while also being compliant with applicable laws and regulations.