Short-Term Occupancy Rentals: Licensing and Sales Tax ERIC GLASGOW | REVENUE AGENT, SD DEPT OF REVENUE, RAPID CITY With individuals feeling the relief from COVID restrictions, more and more are traveling this great state in search of a little rest and relaxation. These travels used to mean a stay in a hotel. However, many private individuals are now opening their homes to travelers to make a little extra money. A multitude of online platforms, such as Airbnb, VRBO, HomeAway, FlipKey, and Tripping.com, serve as an online marketplace for lodging and vacation rentals. By using online booking websites, travelers can plan and
execute an entire vacation plan. Due to the increase in lodging rental options, questions arise regarding the tax responsibility of private individuals renting out their homes. South Dakota sales tax applies to all lodging rentals that are less than 28 consecutive days. Some online platforms are licensed by the Department of Revenue to collect and remit South Dakota sales tax on behalf of hosts. The host must still have a sales tax license issued by the Department of Revenue. If the online platform is not licensed to collect South Dakota sales tax, the host must report and remit the tax. Hosts may also use methods other than online platforms to rent their homes, in these instances the host is also responsible for the sales tax on these transactions. The Department of Revenue collects the South Dakota state sales tax, municipal sales tax, municipal gross receipts tax, and state tourism tax that applies to lodging rentals. The municipal sales tax and municipal gross receipts tax due is based on where the lodging facility is located. Business Improvement District (BID) taxes are not collected by the Department of Revenue.
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Vacation rentals may also need to be licensed with the South Dakota Department of Health. Property owners can contact the Office of Health Protection at 605-7734945 to request information about a lodging license. We encourage any local government to contact the Department of Revenue at 1-800-829-9188 to ensure homeowners and rental companies are properly licensed. Keeping the lines of communication open between local governments and the Department of Revenue is a key component in ensuring fair and equal treatment for all lodging rentals. ■
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