South Dakota Supreme Court Expands Use Tax to Stored Out-of-State Materials After Ellingson Ruling

• The South Dakota Supreme Court’s Ellingson Drainage, Inc. v. DOR decision changes use tax rules for materials brought into and stored in South Dakota.
• Previously, contractors only owed use tax when materials were actually used in a project; now, tax is due when materials are stored in the state, regardless of use.
• The Court upheld the constitutionality of the use tax under both the Interstate Commerce Clause and Due Process Clause.
• Businesses must now pay use tax on out-of-state materials as soon as they are stored in South Dakota, increasing tax liability and audit risk.
• Companies should review and update their procurement and storage practices to comply with the new rules.

Source: vatabout.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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