South Dakota Department of Revenue Professional, Dependable, - - PDF document

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South Dakota Department of Revenue Professional, Dependable, - - PDF document

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DoR Presentation to Tax Committees Thursday, January 22, 2015 10:24 AM South Dakota Department of Revenue Professional, Dependable, Accauntable . .. in parmerslzip with Sauth Dakota 1 Department Organizational Chart Professional, Dependable,

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SLIDE 1

DoR Presentation to Tax Committees

Thursday, January 22, 2015 10:24 AM

South Dakota Department of Revenue

Professional, Dependable, Accauntable ... in parmerslzip with Sauth Dakota 1

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SLIDE 2

Department Organizational Chart

Professional, Dependable, Accoumable ... i11 parmership with South Dakota

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SLIDE 3

FY2014 Collections by Type of Tax

Type of Tax FY2014 Collections

Sales & Use Tax Contractors' Excise Tax Tourism Tax Fuel Excise Tax Vehicle Excise Tax Special Taxes Video Lottery Deadwood Gaming

$833,618,413 $90,409,495 $10,671,323 $156,736,026 $77,353,826 $112,707,544 $91,941,457 $8,885,345

Professional, Dependable, Accountable ... in partnership with South Dakota

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SLIDE 4

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SLIDE 5

History of South Dakota Taxes

1905 Inheritance Tax 2000 Last M91or Change. Voters repealed the tax. 1913

License Fees, Non.Commercial

2013 Last Major Chongo: Fees incrooscd on non-eornmerciol. non-commcrci gross

weight, n,,aoallonal and 1rall01. molorhome.

  • mctoroycles. and dcolor pla1cs. The increase in non-comm«ciol gross weight fee
  • c/Jedu!e ..t• tho curmtl fee• ot 60% of the commercial !iceri•• fee•.

1923 Motor Fuel 2009 La1t Major Change: Changed how tax is applied to blended hlels (gasohol). ax a .pplied to ethyl alcohol at S.08 per galon and tax on gasoline at S22 per II" lor. 1923 Cigarettes 2007 Last Majer Change: Vctor1 approved i croas.mg tho tax from $.53 lo Sl.53 por pack

  • f 20 and $.67 lo S

U2 per pack of 25.

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License Fees, Comm ere ial

2011 Last M3JC)I' Change· The 10% license fee reduction lo< ccmmereoal vehicles W3$ ct>anged to opply to vellicle, 10 yeo~ old or mont. 1935 Alcohol Beverage 201 1 Last M3JC)I' Chonge: An on-off •ole molt beverage v.ith South Dakolll lorm v. neo lloenoe w

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added wall • fee cl $325 Also O<)ded wa, • hunling preoerve ficen,e wilh a lee cf $500. 1939 Bank Franchise 2000 last ~1aj0f Change: lovi,•ered the nel a,c;:ome levels on whda the bank franchise w l,ba

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d. 1939 Use Tax 2006 lo<I Moj0< Chango: Moved Iha tox on l'1rm equipment ~om the salas w chapter (10-45) ID its <>•n excise tox chapler (11l-46E) and Increased Iha rote ftom 3'!. IO 4%. Also exempted lrom soles tax tho rcpair1 and mainiononcc on !arm oquiPmanl 1941 Special Fuel 1999 la•t

~1aj0< Change: Tax increaoec on April 1 ~cm S.18 to S.22 per gallon.

1965 ln1ers1ate Fuels 1995 Last Major Change: Allowo<hlalo lo ontormlo "',jroomcnls lor tho col cllon of I\Jel

tax on int· ers.tate mo or earners.

1977

Energy Mineral

No major clJango• made since implemonta ·oo 1979 Contractors' EJ<cise Tax 1995 L

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t Major Chang•: lncre

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&d Iha tax rat<I a, utility ool'lll'Oct, from 1.5% to 2"'.

1935 Sales Tax 1988 Tank lnspecUon Fee

2006 La,t Major Change· ldo•ed

e tax on lann equipment from the ,are, t,n ct>apte, (10-45) to its own ••ci<a tax chapt•r (10-46E) and lna••••d Iha rat• from 3%

to 4%. Also exeffl)tod from sa tiJx tho repairs and maintenanco on farm equipment.

1935 Mineral EJ<traction 1995 1994 Last ~ lafcr Change: Changed hem g,css yield and net income to gross production ($4 par ouice of savoted gold) and 10'11, net I coma. 1937 Mo1or Vehicle Registration 1998 1993 Last L 1ajor Change: lncrea

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d from S 01 per gallon to S 02 per gallon on all p•trol•um produdS lntroducod Into lh" stat<I. Other Tobacco Products Tax 2007 LaSI Majo, Change: Vo!er• aPP<cved incteaslng hem 10% to 35% the tax inpcsed

  • n the wholesale pun:hooa price ol alhar robacoo prodU<n.

Alcohol Beverage: Cider

2012 ast Major Change. A thorized mlted special plal,,.. for Silver S1ar Medal

  • 1998. Cider was add•d as a

ealegory at a rat<I of S.28 perg on. Orsbnguished Service Cross. ••Y Cross, Force Cross, Dis ngu hed Flying Cross, Btonze Star Medal \\Ith Val0< Device. or th• Bron,e Stu Medal r~l•nto. Also

  • uthorlzod tho av !ability cf llmitcd speci plotc,s to mll tary ociiva duty mom.bcr<.

Allowed ror per>onollled llcaMe plot,,.. lo be iosued wl!h a olngle nLmGral olh•r 1han Iha numbor ono or two. 2002 Tourism Tax 2013 Lasl M•J0< Change: 1 5% tax rate sun<at removed

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PRI1 WARY FUNCTIONS

  • Administer sales tax and use tax, contractors' excise

tax, municipal tax, tourism tax, as well as tax collection agreements with South Dakota Indian Tribes.

Currently have Tax Collection Agreements with 8/9 SD Tribes

  • Issue licenses to new taxpayers, provide instruction

and education on taxes, perform business reviews, collect delinquent taxes.

License vendors and collect taxes at special events - Sturgis Rally, State Fair, etc.

Professional, Dependable, Accountable ... in parmership with South Dakota

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10 Year History of Sales and Use Tax Revenue

$900 5.82% $800 $700 $600

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$400 $300 $200 $100

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FY2005 f'!2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

Professional, Dependable, Accountable ... inpartnership with South Dakota ;

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SLIDE 8

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Sign up for our

E-Newsletter!

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Taxes I Motor Vehicles I Gaming I Lottery I Education I Forms I Publications I Office of the Secretary Contact Us I

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How Do I...?

File my taxes online? Get a personalized license plate? Find property assessment Information? How do I pay Use Tax? How do I register my boat?

Learn About

Collectlon Allowance Municipal Tax Changes License Requirements Property & Sales Tax Relief Programs Department of Revenue Brochure Sturgis Rally Tax Facts

Recent News: E-Services

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July E-New 20·

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Professional, Dependable, Accountable ... in partnership with South Dakota

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PRIMARY FUNCTIONS

  • Administer motor vehicle titling, licensing and registration for

all private, commercial and prorate (interstate trucking) vehicles.

  • Ensure 3°/o motor vehicle excise tax is properly assessed

and collected.

  • Ensure motor fuel taxes are properly assessed and

collected on all fuel sales.

Professional, Dependable, Accouniable ... in parmerslzip with South Dakota

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120,000,000 100,000,000

65,589,110

40,000,000 20,000,000

FY 2010

License Fee Collection

5 Year History

FY2011 FY2012

FY 2013

Professional, Dependable, Accountable ... in partnership with South Dakota

103,314,926

FY2014

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Collection of Motor Vehicle Excise Tax

$90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000

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$71,891,556 $55,754,190

FY2010 FY2011 FY2012 FY2013

Professional, Dependable, Accoumab/e ... inpartnership with Sautl1 Dakota

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FY2014 1.l

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Total Collection of Motor Fuel Tax

Each fuel type is taxed at a different rate as per SDCL (1 0-47B-4) Current tax rates and fees are as follows: Gasoline - .22 Diesel - .22 Ethyl & Methyl Alcohol - .08 Aviation Gasoline - .06 Jet Fuel - .04 Special Fuel - .22 Liquid Petroleum Gasoline - .20 Compressed Natural Gas - .10 Biodiesel and Biodiesel Blends - .20 Tank Inspection fees - .02

Gross Fuel Revenues (2005 - 2014)

165 ~----------------- 161.9 160 +----------------

  • 156.7

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.,- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Professional, Dependable, Accoumab/e ... inpartnership with Sautl1 Dakota

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Division of Motor Vehicles Initiatives

2016 License Plate Reissue

  • Expanded services on new customer portal - MySDCars.sd.gov
  • View and update personal information
  • Renew vehicle registrations and order plates
  • Print report of sale and seller's permit
  • Receive OMV correspondence electronically
  • Plate on Demand
  • Works in conjunction with new customer portal.
  • On demand plates are not made until the order is placed.
  • Cost savings and less waste of stockpile inventory
  • Vehicle registration and plates are renewed via the customer portal or

self service terminals and mailed directly to the customer's home.

  • New license plate design

Professional, Dependable, Accountable ... in partnership with South Dakota

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SLIDE 15

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PRIMARY FUNCTIONS

  • Assist local government units in making property tax

assessments that are fair and in compliance with state law.

  • Responsible for overseeing the property assessment and

tax laws of South Dakota.

  • Responsible for licensing certain industries and collecting a

multitude of state taxes including:

>" Bank Franchise Tax

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Cigarette Excise Tax I Other Tobacco Products Tax

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Beer, Wine, and Distilled Spirits Tax Severance Tax

Professional, Dependable, Accouniable ... in parmerslzip with South Dakota 1~

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Valuation by Class

(all figures equalized to 85°/0)

For Taxes % of %of %of % of Payable in Agricultural Total Owner-Occupied Total Commercial Total Utilities Total TOTAL 2008 17,688,985,934 34.23 20,353,223,881 39.39 12,504,672,828 24.20 1,124,579,669 2.18 51,671,462,309 2009 19,058,117,169 34.49 21,687,103,039 39.25 13,334,072,762 24.13 1,169,829,792 2.12 55,249,122,762 2010 19,690,137,457 34.11 22,768,420,477 39.44 14,051,480,469 24.34 1,222,801,442 2.12 57,732,839,845 2011 19,691,529,066 33.38 23,726,031,354 40.22 14,345,035,001 24.32 1,222,426,811 2.07 58,985,022,232 2012 21,198,601,461 34.84 24,168,972,982 39.72 14,186,603,573 23.32 1,289,522, 163 2.12 60,84,3,700, 179 2013 23,009,157,595 36.52 24,187,671,139 38.39 14,543,781,399 23.09 1,258,762,412 2.00 62,999,372,545 2014 26,152,823,040 38.81 25,026,080,805 37.14 14,919,046,958 22.14 1,285,494,413 1.91 67,383,445,216 2015 31 471 871 046 26 568 999 684 35.03 21.65 1,376 178,334 1.82 75 835 635 495

Professional, Dependable, Accountable ... in partnership with South Dakota 16

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Property Taxes: Who Pays?

Year Taxes are % Of Owner- % Of % Of % Of Special % Of Payable Agricultural Total

  • ccupied

Total Commercial Total utilities Total Assessments Total TOTAL 2008

219,709,028 24.87 348,147,127 39.41 277,552,244 31.42 22,957,006 2.60 15,057,1 52 1.70 883,422,556 2009 231,587,046 24 .81 368,765,290 39.51 292,805,927 31.37 23,025,217 2.47 17,091,242 1.83 933,274,722 2010 239,627,362 24.50 388,867,662 39.76 307,499,562 31.44 23,463,130 2.40 18,467,990 1.89 977,925,706 2011 240,496,832 23 .97 403,337,138 40.21 312,194,141 31.12 22,646,984 2.26 24,485,447 2.44 1,003,160,542 2012 252,715,223 24.50 414,066,249 40.14 321,656,276 31.18 24,275,738 2.35 18,8 19,754 1.83 1,031,533,239 2013 269,377,688 25.14 424,725,465 39.64 331, 147,206 30.91 26,337,906 2.46 19,768,706 1.83 1,071,356,971 2014 286 1 77,332 25.45 444,727,084 39.55 346,978,590 30.86 27,320,189 2.43 19,323,088 1.72 1,124 526,283

Professional, Dependable, Accountable ... in partnership wilh South Dakota 17

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PRIMARY FUNCTIONS

Conduct audits of sales, use, contractors' excise, motor fuel, and severance taxes to ensure compliance.

  • Provide on-site taxpayer education as part of the

audit function.

  • In FY2014, completed audits on 2,120

businesses, and assessed a total of $20,949,966.

Professional, Dependable, Accouniable ... i11 partnership with South Dakota 18

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Department

Audit Selection Methods

Leads 1099-K Past Productive Audits Points Systems Analytics Midwest Border States Business Size

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Description

Invoices found in other audits, the news, building permits, and construction contracts. This selection method identifies taxpayers with known issues instead of assumed issues detected using other selection methods. The IRS shares information with us about a business's credit card sales. This data is compared to a taxpayer's reporting to identify discrepancies. Taxpayers with a large audit assessment who do not correct their reporting habits are typically identified for a follow up audit of the tax periods immediately succeeding the first audit. Each taxpayer license has points assigned to it based on activities indicating risk. The higher total number of points, the more likely there are issues with the license. Analytics are used to identify anomalies within an individual taxpayer's reporting. If a taxpayer's reporting has an unexpected change, they may be audited. The division receives quarterly reports from neighboring states of audits with assessments greater than $25,000. If a taxpayer is thought to have a similar issue within our state, that license will be audited. The department routinely audits the 350 largest taxpayers in the state.

Professional, Dependable, Accouniable ...

i11 partnership wirh South Dakota

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80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00%

10.00% 0.00%

FY14 Total Taxpayers vs. Audits Conducted

0 .47% 1.77% 0.21 .0.06

Refund Unlicensed

73.45%

L ess t an s100,ooo Sl00,000 to St.000,000

  • Taxpayers

a Audits

Sl,000,000 or More

Professional, Dependable, Accountable ... in partnership with South Dakota 20

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SLIDE 21

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PRIMARY FUNCTIONS

  • Legal Services is comprised of two parts: Legal

staff and the Investigative Services Bureau (ISB).

  • The legal staff is responsible for providing legal

advice and representation to the department.

  • The ISB investigates violations of and ensures

compliance with any statutes which the Secretary is given the power to enforce.

Professional, Dependable, Accouniable ... i11 partnership with South Dakota

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PRIMARY FUNCTIONS

  • Market instant tickets, lotto games, and regulate video

lottery to raise revenues for state programs and initiatives.

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610 Lottery Retailers 1,395 Video Lottery establishments

  • Oversee the SD Lottery Commission (7 members) to help

establish policy for lottery operations statewide .

Professional, Dependable, Accouniable ... in parmerslzip with South Dakota

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$17,500,000 s11.ooo,ooo $16,500,000 $16,000,000 $15,500,000 $15,000,000

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$14,500,000 $14,000,000 $13,500,000

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July

Video Lottery Net Machine Income

August September October November December January February March

  • - FY2013 -- FY2014 --FY2015

Professional, Dependable, Accountable ... in parmerslzip with South Dakota

April May

June

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WHERE THE MONEY GOES

  • Scratch Tickets: All net proceeds go to the General Fund.
  • Lotto Tickets: The first $1.4 million goes to the General
  • Fund. Any additional net proceeds are transferred to the

Capital Construction Fund .

  • Video Lottery: Net machine income (cash in minus prizes
  • ut) is split 50/50 between the state and private machine
  • wners. Of the state's share, 49.5°/o goes to the Property

Tax Reduction Fund and .5% is used by the Lottery for

  • peration costs

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Professional, Dependable, Accouniable ... in parmerslzip with South Dakota

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SLIDE 25

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PRIMARY FUNCTIONS

  • Regulate the gaming industry in Deadwood, pari-

mutuel horse racing, and pari-mutuel wagering. Administer tribal gaming compacts.

Currently have tribal gaming compacts with 8/9 SD Tribes

Oversee the SD Commission on Gaming (5 members) to help establish rules for Deadwood gaming

  • perations.

Professional, Dependable, Accouniable ... in parmership with South Dakota

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$14,000,000.00 $12,000,000.00

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$10,000,000.00 $8,000,000.00 $6,000,000.00 $4,000,000.00 $2,000,000.00

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Casino Revenue

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FY 2013

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Professional, Dependable, Accouniable ... in parmerslzip with South Dakota

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SLIDE 27

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Questions?

Professional, Dependable, Accountable ... in partnership with South Dakota 27