81st Legislative Session _ 2006

Committee: Senate Taxation
Friday, January 27, 2006

                                            P - Present
                                            E - Excused
                                            A - Absent

Roll Call
P    Duenwald
P    Hansen (Tom)
P    Hundstad
P    Kelly
P    Kooistra
P    Nesselhuf
P    Peterson (Jim)
P    Lintz, Vice-Chair
P    Knudson, Chair

OTHERS PRESENT: See Original Minutes

The meeting was called to order by Vice-Chair Lintz.

MOTION:     TO APPROVE THE MINUTES OF WEDNESDAY, JANUARY 25

Moved by:    Kelly
Second by:    Hundstad
Action:    Prevailed by voice vote.

         SB 121: provide for the assessment of severed mineral interests and to provide additional funding for the general fund of counties and school districts.

Presented by:    Senator Eric Bogue

MOTION:     DEFER SB 121 UNTIL A FUTURE MEETING

Moved by:    Duenwald
Second by:    Hansen (Tom)
Action:    Prevailed by voice vote.


         SB 189: provide for a property tax reduction for certain firefighters.

Presented by:    Senator Eric Bogue

MOTION:     DEFER SB 189 UNTIL A FUTURE MEETING

Moved by:    Hundstad
Second by:    Hansen (Tom)
Action:    Prevailed by voice vote.

         SB 50: make certain members of limited liability companies and partnerships personally responsible for certain tax debts.

Presented by:    Jack Magee, Department of Revenue and Regulation
Proponents:    Jim Hood, SD Retailers Assn.

MOTION:     AMEND SB 50

50fb
     On the printed bill, delete everything after the enacting clause and insert:

"      Section 1. That § 10-33A-17 be amended to read as follows:

     10-33A-17.   Any person who:

             (1)      Makes any false or fraudulent return in attempting to defeat or evade the telecommunications gross receipts tax is guilty of a Class 6 felony;
             (2)      Fails to pay the telecommunications gross receipts tax due under this chapter within sixty days from the date the tax becomes due is guilty of a Class 1 misdemeanor;
             (3)      Fails to keep the records required by this chapter or refuses to exhibit these records to the department for the purpose of examination is guilty of a Class 1 misdemeanor;
             (4)      Fails to file a return required by this chapter within sixty days from the date the return is due is guilty of a Class 1 misdemeanor;
             (5)      Engages in business as a telecommunications company under this chapter without obtaining a telecommunications gross receipts tax license is guilty of a Class 1 misdemeanor;
             (6)      Engages in business as a telecommunications company under this chapter after the company's telecommunications gross receipts tax license has been revoked or canceled by the secretary is guilty of a Class 6 felony;
             (7)      Willfully violates any rule of the secretary for the administration and enforcement of the provisions of this chapter is guilty of a Class 1 misdemeanor;
             (8)      Violates either subdivision (2) or subdivision (4) of this section two or more times in any twelve-month period is guilty of a Class 6 felony; or
             (9)      Engages in business as a telecommunications company under this chapter without obtaining a telecommunications gross receipts tax license after having been notified in writing by the secretary that the telecommunications company is subject to the provisions of this chapter is guilty of a Class 6 felony. However, it is not a violation of this subdivision if the telecommunications company providing any telecommunications service files an application for a telecommunications gross receipts tax license and meets all lawful prerequisites for obtaining such license within three days from receipt of written notice from the secretary.

     For purposes of this section, the term, telecommunications company, includes corporate officers having control, supervision of, or charged with the responsibility for making tax returns or payments pursuant to this chapter. For purposes of this section, the term, person, includes an officer, member, member-manager, partner, general partner, or limited partner of an entity organized pursuant to Title 47 or 48 who has control or supervision of, or is charged with the responsibility for, making tax returns or payments pursuant to this chapter.

     Section 2. That § 10-33A-18 be repealed.

     10-33A-18.   If a corporation subject to the gross receipts tax under this chapter fails for any reason to file the required returns or to pay the tax due, any of its officers having control, or supervision of, or charged with the responsibility for making such returns and payments are personally liable for such failure. The dissolution of a corporation does not discharge an officer's liability for a prior failure of the corporation to make a return or remit the tax due. The sum due for such a liability may be assessed and collected as provided by law.

     If any responsible corporate officer elects not to be personally liable for the failure to file the required returns or to pay the tax due, the corporation shall provide the department with a surety bond or certificate of deposit as security for payment of any tax that may become due. The bond or certificate of deposit provided for in this section shall be in an amount equal to the estimated annual gross receipts multiplied by the applicable sales or gross receipts tax rate. This section does not apply to elected or appointed officials of a municipality if they are bonded pursuant to §§ 9-14-6 and 9-14- 6.1.

     Section 3. That § 10-45-48.1 be amended to read as follows:

     10-45-48.1.   Any person who:

             (1)      Makes any false or fraudulent return in attempting to defeat or evade the tax imposed by this chapter is guilty of a Class 6 felony;
             (2)      Fails to pay tax due under this chapter within sixty days from the date the tax becomes due is guilty of a Class 1 misdemeanor;
             (3)      Fails to keep the records and books required by § 10-45-45 or refuses to exhibit these records to the secretary of revenue and regulation or his agents for the purpose of examination is guilty of a Class 1 misdemeanor;
             (4)      Fails to file a return required by this chapter within sixty days from the date the return is due is guilty of a Class 1 misdemeanor;
             (5)      Engages in business as a retailer under this chapter without obtaining a sales tax license is guilty of a Class 1 misdemeanor;
             (6)      Engages in business as a retailer under this chapter after his sales tax license has been revoked by the secretary of revenue and regulation is guilty of a Class 6 felony;
             (7)      Willfully violates any rule of the secretary of revenue and regulation for the administration and enforcement of the provisions of this chapter is guilty of a Class 1 misdemeanor;
             (8)      Violates either subdivision (2) or subdivision (4) two or more times in any twelve-month period is guilty of a Class 6 felony;
             (9)      Engages in business as a retailer under this chapter without obtaining a sales tax license after having been notified in writing by the secretary of revenue and regulation that the person is a retailer subject to the provisions of the sales and use tax laws is guilty of a Class 6 felony. It is not a violation of this subdivision if the person engaging in business as a retailer files an application for a sales tax license and meets all lawful prerequisites for obtaining such license within three days from receipt of written notice from the secretary.

     For purposes of this section, the term, person, includes corporate officers having control, supervision of or charged with the responsibility for making tax returns or payments pursuant to § 10-45-55. For purposes of this section, the term, person, includes an officer, member, member- manager, partner, general partner, or limited partner of an entity organized pursuant to Title 47 or 48 who has control or supervision of, or is charged with the responsibility for, making tax returns or payments pursuant to this chapter.

     Section 4. That § 10-45-55 be repealed.

     10-45-55.   If a corporation subject to tax under this chapter fails for any reason to file the required returns or to pay the tax due, any of its officers having control, or supervision of, or charged with the responsibility for making such returns and payments shall be personally liable for such failure. The dissolution of a corporation shall not discharge an officer's liability for a prior failure of the corporation to make a return or remit the tax due. The sum due for such a liability may be assessed and collected as provided by law.

     If the corporate officers elect not to be personally liable for the failure to file the required returns or to pay the tax due, the corporation shall provide the Department of Revenue and Regulation with a surety bond or certificate of deposit as security for payment of any tax that may become due. The bond or certificate of deposit provided for in this section shall be in an amount equal to the estimated annual gross receipts multiplied by the applicable sales or excise tax rate. This section does not apply to elected or appointed officials of a municipality if they are bonded pursuant to §§ 9-14-6 and 9-14- 6.1.

     Section 5. That § 10-46-47.1 be repealed.

     10-46-47.1.   If a corporation subject to tax under this chapter fails for any reason to file the required returns or to pay the tax due, any of its officers having control, or supervision of, or charged with the responsibility for making such returns and payments shall be personally liable for such failure. The dissolution of a corporation shall not discharge an officer's liability for a prior failure of the corporation to make a return or remit the tax due. The sum due for such a liability may be assessed and collected as provided by law.

     If the corporate officers elect not to be personally liable for the failure to file the required returns or to pay the tax due, the corporation shall provide the Department of Revenue and Regulation with a surety bond or certificate of deposit as security for payment of any tax that may become due. The bond or certificate of deposit provided for in this section shall be in an amount equal to the estimated annual gross receipts multiplied by the applicable sales or excise tax rate. This section does not apply to elected or appointed officials if they are bonded pursuant to §§ 9-14-6 and 9-14-6.1.

     Section 6. That § 10-46A-13 be repealed.

     10-46A-13.   If a corporation subject to tax under this chapter fails for any reason to file the required returns or to pay the tax due, any of its officers having control, or supervision of, or charged with the responsibility for making such returns and payments shall be personally liable for such failure. The dissolution of a corporation shall not discharge an officer's liability for a prior failure of the corporation to make a return or remit the tax due. The sum due for such a liability may be assessed and collected as provided by law.

     If the corporate officers elect not to be personally liable for the failure to file the required returns or to pay the tax due, the corporation shall provide the Department of Revenue and Regulation with a surety bond or certificate of deposit as security for payment of any tax that may become due. The bond or certificate of deposit provided for in this section shall be in an amount equal to the estimated annual gross receipts multiplied by the applicable sales or excise tax rate. This section does not apply to elected or appointed officials of a municipality if they are bonded pursuant to §§ 9-14-6 and 9-14- 6.1.

     Section 7. That § 10-46A-13.1 be amended to read as follows:

     10-46A-13.1.   Any person who:


             (1)      Makes any false or fraudulent return in attempting to defeat or evade the tax imposed by this chapter is guilty of a Class 6 felony;
             (2)      Fails to pay tax due under this chapter within sixty days from the date the tax becomes due is guilty of a Class 1 misdemeanor;
             (3)      Fails to keep the records and books required by § 10-45-45 or refuses to exhibit these records to the secretary of revenue and regulation or his agents for the purpose of examination is guilty of a Class 1 misdemeanor;
             (4)      Fails to file a return required by this chapter within sixty days from the date the return is due is guilty of a Class 1 misdemeanor;
             (5)      Engages in business under this chapter without obtaining a contractor's excise tax license is guilty of a Class 1 misdemeanor;
             (6)      Engages in business under this chapter after his contractor's excise tax license has been revoked by the secretary of revenue and regulation is guilty of a Class 6 felony;
             (7)      Violates either subdivision (2) or subdivision (4) of this section two or more times in any twelve-month period is guilty of a Class 6 felony;
             (8)      Engages in business under this chapter without obtaining a contractor's excise tax license after having been notified in writing by the secretary of revenue and regulation that the person is a contractor subject to the provisions of the contractors' excise tax laws is guilty of a Class 6 felony. It is not a violation of this subdivision if the person engaging in business files an application for a contractor's excise tax license and meets all lawful prerequisites for obtaining such license within three days from receipt of written notice from the secretary.

     For purposes of this section, the term, person, includes corporate officers having control, supervision of or charged with the responsibility for making tax returns or payments pursuant to § 10-46A-13. For purposes of this section, the term, person, includes an officer, member, member- manager, partner, general partner, or limited partner of an entity organized pursuant to Title 47 or 48 who has control or supervision of, or is charged with the responsibility for, making tax returns or payments pursuant to this chapter.

     Section 8. That § 10-46B-11 be repealed.

     10-46B-11.   If a corporation subject to tax under this chapter fails for any reason to file the required returns or to pay the tax due, any of its officers having control, or supervision of, or charged with the responsibility for making such returns and payments shall be personally liable for such failure. The dissolution of a corporation shall not discharge an officer's liability for a prior failure of the corporation to make a return or remit the tax due. The sum due for such a liability may be assessed and collected as provided by law.

     If the corporate officers elect not to be personally liable for the failure to file the required returns or to pay the tax due, the corporation shall provide the Department of Revenue and Regulation with a surety bond or certificate of deposit as security for payment of any tax that may become due. The bond or certificate of deposit provided for in this section shall be in an amount equal to the estimated annual gross receipts multiplied by the applicable sales or excise tax rate. This section does not apply to elected or appointed officials of a municipality if they are bonded pursuant to §§ 9-14-6 and 9-14- 6.1.

     Section 9. That § 10-46B-11.1 be amended to read as follows:

     10-46B-11.1.   Any person who:

             (1)      Makes any false or fraudulent return in attempting to defeat or evade the tax imposed by this chapter is guilty of a Class 6 felony;
             (2)      Fails to pay tax due under this chapter within sixty days from the date the tax becomes due is guilty of a Class 1 misdemeanor;
             (3)      Fails to keep the records and books required by § 10-45-45 or refuses to exhibit these records to the secretary of revenue and regulation or his agents for the purpose of examination is guilty of a Class 1 misdemeanor;
             (4)      Fails to file a return required by this chapter within sixty days from the date the return is due is guilty of a Class 1 misdemeanor;
             (5)      Engages in business under this chapter without obtaining a contractor's excise tax license is guilty of a Class 1 misdemeanor;
             (6)      Engages in business under this chapter after his contractor's excise tax license has been revoked by the secretary of revenue and regulation is guilty of a Class 6 felony;
             (7)      Violates either subdivision (2) or subdivision (4) two or more times in any twelve-month period is guilty of a Class 6 felony;
             (8)      Engages in business under this chapter without obtaining a contractor's excise tax license after having been notified in writing by the secretary of revenue and regulation that the person is a contractor subject to the provisions of the contractors' excise tax laws is guilty of a Class 6 felony. It is not a violation of this subdivision if the person engaging in business files an application for a contractor's excise tax license and meets all lawful prerequisites for obtaining such license within three days from receipt of written notice from the secretary.

     For purposes of this section, the term, person, includes corporate officers having control, supervision of or charged with the responsibility for making tax returns or payments pursuant to § 10-46B-11. For purposes of this section, the term, person, includes an officer, member, member- manager, partner, general partner, or limited partner of an entity organized pursuant to Title 47 or 48 who has control or supervision of, or is charged with the responsibility for, making tax returns or payments pursuant to this chapter.

     Section 10. That § 10-47B-41 be repealed.

     10-47B-41.   A corporation subject to the taxes imposed by this chapter and its corporate officers are jointly and severally liable for the filing of reports or returns and the payment of tax, penalty, and interest due. The dissolution of a corporation does not discharge an officer's liability for a prior failure of the corporation to make a return or remit the tax due. An officer subject to personal liability is not discharged from that liability upon vacating the office. An officer may be discharged from future liability upon notifying the secretary in writing. The sum due for such a liability may be assessed and collected as provided by law.

     Section 11. That chapter 10-59 be amended by adding thereto a NEW SECTION to read as follows:

     If an entity organized pursuant to Title 47 or 48 fails for any reason to file the required returns or to pay the tax due, any person having control, or supervision of, or charged with the responsibility for making such returns and payments shall be personally liable for such failure. The dissolution of an entity organized pursuant to Title 47 or 48 does not discharge a person's liability for a prior failure of the entity to make a return or remit the tax due. The sum due for the liability may be assessed and collected as provided by law.

     If a person who has control or supervision of, or is charged with the responsibility for making returns and payments of an entity organized pursuant to Title 47 or 48 elects not to be personally liable for the failure to file the required returns or to pay the tax due, the entity shall provide the department with a surety bond or certificate of deposit as security for payment of any tax that may become due. The bond or certificate of deposit provided for in this section shall be in an amount equal to the estimated annual gross receipts multiplied by the applicable sales or excise tax rate. This section does not apply to an elected or appointed official of a municipality if the official is bonded pursuant to § §  9-14-6 and 9-14-6.1.

     For purposes of this section, the term, person, includes an officer, member, member-manager, partner, general partner, or limited partner of an entity organized pursuant to Title 47 or 48 who has control or supervision of, or is charged with the responsibility for, making tax returns or payments pursuant to this chapter.

     Section 12. That § 10-59-1 be amended to read as follows:

     10-59-1.   The provisions of this chapter apply to any taxes or fees or persons subject to taxes or fees imposed by, and to any civil or criminal investigation authorized by, chapters 10-33A, 10-39, 10-39A, 10-39B, 10-43, 10-45, 10-45D, 10-46, 10-46A, 10-46B, 10-46C, 10-47B, 10-52, 10-52A, 32-3, 32-3A, 32-5, 32-5B, 32-6B, 32-9, 32-10, and 34A-13 and §§ 22-25-48, 49-31-51, 50-4-13 to 50-4-17, inclusive, and the provisions of chapter 10-45B. "


Moved by:    Hundstad
Second by:    Duenwald

Action:    Prevailed by roll call vote.(5-3-1-0)

Voting Yes:    Duenwald, Hansen (Tom), Hundstad, Peterson (Jim), Lintz

Voting No:    Kelly, Kooistra, Nesselhuf

Excused:    Knudson

Vice-Chair Lintz turned the gavel over to Chair Knudson.

MOTION:     DO PASS SB 50 AS AMENDED

Moved by:    Hundstad
Second by:    Duenwald
Action:    Prevailed by roll call vote.(7-1-1-0)

Voting Yes:    Duenwald, Hansen (Tom), Hundstad, Kelly, Peterson (Jim), Lintz, Knudson

Voting No:    Kooistra

Excused:    Nesselhuf

         SB 173: exempt kerosene from sales and use taxes.

Presented by:    Senator Frank Kloucek
Opponents:    Jane Page, SD Dept. of Revenue and Regulation
        Dawna Leitzke, South Dakota Petroleum Marketers

MOTION:     TO TABLE SB 173

Moved by:    Hansen (Tom)
Second by:    Kelly
Action:    Prevailed by roll call vote.(5-3-1-0)

Voting Yes:    Duenwald, Hansen (Tom), Kelly, Lintz, Knudson

Voting No:    Hundstad, Kooistra, Peterson (Jim)

Excused:    Nesselhuf

         HB 1008: permit the immediate reclassification of nonagricultural acreage property under certain circumstances.

Presented by:    Senator Jim Hundstad
Proponents:    Michael Kenyon, Department of Revenue and Regulation
        Mary Worlie, SD Assn. of Assessing Officers
        Representative Dale Hargens

MOTION:     DO PASS HB 1008

Moved by:    Hansen (Tom)
Second by:    Duenwald
Action:    Prevailed by roll call vote.(9-0-0-0)

Voting Yes:    Duenwald, Hansen (Tom), Hundstad, Kelly, Kooistra, Nesselhuf, Peterson (Jim), Lintz, Knudson

MOTION:     PLACE HB 1008 ON CONSENT CALENDAR

Moved by:    Peterson (Jim)
Second by:    Hansen (Tom)
Action:    Prevailed by voice vote.

         HB 1048: revise the reporting and remittance requirements for certain state taxes and to declare an emergency.

Presented by:    Jack Magee, Department of Revenue and Regulation (handout #1)

Gary Viken, Secretary of the Department of Revenue and Regulation, answered questions from the committee.

MOTION:     DO PASS HB 1048

Moved by:    Kelly
Second by:    Hansen (Tom)
Action:    Prevailed by roll call vote.(8-0-1-0)

Voting Yes:    Duenwald, Hansen (Tom), Hundstad, Kelly, Nesselhuf, Peterson (Jim), Lintz, Knudson

Excused:    Kooistra
         SB 96: exempt religious organizations from sales and use taxes.

Secretary Viken explained to the committee how the current system taxes purchases and sales made by religious organizations and how the Department of Revenue and Regulation works with those organizations. (handout #2)

Presented by:    Senator Ben Nesselhuf

MOTION:     DEFER SB 96 TO THE 36TH LEGISLATIVE DAY

Moved by:    Nesselhuf
Second by:    Duenwald
Action:    Prevailed by roll call vote.(8-0-1-0)

Voting Yes:    Duenwald, Hansen (Tom), Hundstad, Kelly, Nesselhuf, Peterson (Jim), Lintz, Knudson

Excused:    Kooistra

MOTION:     ADJOURN

Moved by:    Lintz
Second by:    Nesselhuf
Action:    Prevailed by voice vote.

Cindy Tryon

____________________________

Committee Secretary
Dave Knudson, Chair

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