S.D. Admin. R. 64:06:03:09

Current through Register Vol. 50, page 162, June 24, 2024

Section 64:06:03:09 - Containers

A container is an article whose major function is as a receptacle or flexible covering for shipment or transportation of goods. Items such as molds, dies, or castings, the chief purpose of which is for use in a manufacturing or fabricating process rather than for shipping or transportation, are not containers.

Containers are taxable as follows:

(1) Containers and similar articles, such as drums, cartons, pallets, and shipping cases, used or consumed by manufacturers, processors, or fabricators are not subject to sales or use tax. A manufacturer, processor, or fabricator is one who produces, whether by hand or machinery, a new or different article or product from raw or prepared materials. To constitute manufacturing, processing, or fabricating, there must be some substantial or significant change in the basic materials;

(2) Sales of certain containers to retailers are exempt from tax. The retailer exemption applies only to paper and plastic bags, wrapping paper, twine, tape, and similar articles which are used to hold other property sold by the retailer which is subject to sales or use tax. The containers must be supplied free as a convenience to the customer;

(3) Gross receipts from sales of containers to retail customers are subject to tax. If title to the container passes to the customer, the receipts are subject to tax even when the receipt is called a deposit. Passage of title to the container is indicated by the following:

(a) Containers are not identified to a particular retailer by a logo, stamp, inventory number, or other means;

(b) The retailer will refund the deposit on any container returned regardless of where the container was obtained;

(c) The retailer makes no effort to identify or keep records on which customers have their containers;

(d) The retailer makes no effort, such as a phone call or letter, to get the container back if it is not returned; and

(e) An invoice, sales slip, or other document may contain language showing passage of title.

S.D. Admin. R. 64:06:03:09

SL 1975, ch 16, § 1; 6 SDR 10, effective 8/5/1979; 9 SDR 28, effective 9/5/1982; 12 SDR 111, effective 1/12/1986; 13 SDR 129, 13 SDR 134, effective 7/1/1987; 19 SDR 42, effective 9/29/1992; 21 SDR 219, effective 7/1/1995.

General Authority: SDCL 10-45-47.1, 10-46-35.1.

Law Implemented: SDCL 10-45-2, 10-45-14.4, 10-45-14.5, 10-46-9.3, 10-46-9.4.