Changes to Existing Law

26.1000.19 26.1000.20 101st Legislative Session 239 2026 South Dakota Legislature Senate Bill 239 SENATE STATE AFFAIRS ENGROSSED This bill has been extensively amended (hoghoused) and may no longer be consistent with the original intention of the sponsor. Introduced by: Senator Schoenfish Underscores indicate new language. Overstrikes indicate deleted language. An Act to modify provisions relating to the reinvestment payment program, and 1 relating to the purchasing of goods and services used by projects approved 2 for the reinvestment payment program. 3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 4 Section 1. That § 1-16G-61 1-16G-56 be AMENDED: 5 1-16G-61. Any person 1-16G-56. Terms used in §§ 1-16G-56 to 1-16G-68, inclusive, mean: 6 (1) "Board," the Board of Economic Development; 7 (2) "Commissioner," the commissioner of the Governor's Office of Economic 8 Development; 9 (3) "Completed the project" or "completion of the project," the first date when the 10 project is operational; 11 (4) "Construction date," the first date earth is excavated or a contractor has initiated 12 work for the purpose of constructing a new or expanded facility or the first date 13 new equipment is located on the project site or existing equipment is removed 14 from the project site for the purpose of equipment upgrades, whichever occurs 15 first; 16 (5) "Cryptocurrency," a digital or virtual currency that has timely filed is not issued by any central 17 authority, is designed to function as a medium of exchange, and uses encryption 18 technology to regulate the application described in § 1-16G-6 58 generation of units of currency, to verify fund transfers, 19 and is holding a to prevent counterfeiting; 20 (6) "Data center," any facility established for the purpose of processing, storage, 21 retrieval, or communication of data; 22 (6)(7) "Department," the Department of Revenue; 23 (8) "Direct payment permit," the permit issued by GOED the department pursuant to § 1-16G-60, and has completed 7 the project, shall file an affidavit for reinvestment payment with GOED. 8 The affidavit for reinvestment payment shall must contain the following 9 information: 10 (1) The project owner's name and contact information; 11 (2) The general description of the project; 12 (3) The date of completion of the project; 13 (4) The final project costs; 14 (5) The amount of South Dakota sales tax, use tax, and contractors excise tax paid for 15 the construction of the project; 16 (6) The location of the project; 17 (7) The legal description of the project location; 18 (8) A list of the contractors and subcontractors that performed work on the project; 19 (9) If the reinvestment payment was assigned or transferred, the name and address 20 of the person to whom the reinvestment payment has been assigned or 21 transferred; and 22 (10) Any other information that GOED may require. 23 The affidavit for reinvestment payment shall must be on a form prescribed by the 24 commissioner. The affidavit for reinvestment payment shall must be signed by the project 10-24 46-67; 25 26.1000.19 26.1000.20 2 239 Underscores indicate new language. Overstrikes indicate deleted language. owner and signed under oath before a notary public. No affidavit for reinvestment payment (7)(9) "Equipment upgrades," the installation of new equipment or the replacement or 1 may include more than one project. improvement of existing equipment, which is subject to the sales or use tax 2 Upon approval imposed by GOED of an affidavit submitted under this section by a data 3 center, the gross receipts from any purchase made for the data center are exempt from 4 the provisions of chapters 10-45 and 10-46, and from the or 10-46 or contractor's excise tax imposed by those chapters. chapters 3 10-46A or 10-46B. Equipment upgrades do not include the installation or 4 replacement of consumable, wear, or maintenance items, or the replacement of 5 Section 2. failed equipment or components done on an ad hoc basis; 6 (8)(10) "GOED," the Governor's Office of Economic Development; 7 (9)(11) "New or expanded facility," a new building or structure, or the expansion, 8 renovation, or retrofitting of an existing building or structure, which is subject to 9 the contractor's excise tax imposed by chapters 10-46A or 10-46B; 10 (10)(12) "Person," any individual, firm, copartnership, joint venture, association, 11 cooperative, nonprofit development corporation, limited liability company, limited 12 liability partnership, corporation, estate, trust, business trust, receiver, or any 13 group or combination acting as a unit; 14 (11)(13) "Project," a new or expanded facility with a project cost which exceed twenty 15 million dollars, or equipment upgrades with a project cost which exceed two million 16 dollars. A project includes laboratory and testing facilities, manufacturing facilities, 17 advanced telecommunications capability, data centers, power generation facilities, 18 power transmission facilities, agricultural processing facilities, wind energy 19 facilities, and facilities defined by GOED as targeted industries. A project does not 20 include any building or structure: 21 (a) Used predominantly for the sale of products at retail, other than the sale of 22 electricity at retail, or the provision of advanced telecommunications 23 capability, to individual consumers; 24 (b) Used predominantly for residential housing or transient lodging; 25 (c) Used predominantly to provide health care services; 26 (d) Used predominantly for the transportation or transmission of natural gas, 27 oil, or crude oil by means of a pipeline; or 28 (e) That § 1-16G-62 be AMENDED: 6 1-16G-62. The affidavit for reinvestment payment as required by § 1-16G-61 shall 7 must be filed no later than six months after the completion of the project on or before 8 June thirtieth of each year. If the affidavit for reinvestment payment is not timely filed, 9 subject to ad valorem real property taxation or equivalent taxes 29 measured by gross receipts; 30 (12)(14) "Project cost," the person is ineligible for any future reinvestment payment provided by §§ 1-16G-56 to 10 1-16G-68, inclusive. If the person filing the affidavit for reinvestment payment knowingly 11 makes any material false statement or report in the affidavit for reinvestment payment, 12 the person is ineligible for any future reinvestment payment provided by §§ 1-16G-56 to 13 1-16G-68, inclusive. 14 No project costs that occur after three years from the construction date are eligible 15 to be included in the final project cost determination for any reinvestment payment 16 provided by §§ 1-16G-56 to 1-16G-68, inclusive, unless an extension is granted at the 17 sole discretion of the board, which extension may not extend beyond four years from the 18 construction date. 19 Section 3. That § 1-16G-64 be AMENDED: 20 1-16G-64. There is hereby created the reinvestment payment fund for the 21 purpose of making reinvestment payments pursuant to the provisions of §§ 1-16G-56 to 22 1-16G-68, inclusive, and new frontiers payments pursuant to the provisions of §§ 1-16G-23 73 to 1-16G-84, inclusive. 24 If the board approves a reinvestment payment pursuant to the provisions of §§ 1-25 16G-56 to 1-16G-68, inclusive, the Department of Revenue shall deposit into the fund a 26 portion or all of the sales and use taxes amount paid by the project owner up to in money, credits, 31 property, or other consideration associated with a maximum 27 project including, without 32 limitation, land, labor, materials, furniture, equipment, fees, or fixtures. Project 33 cost does not include any amount paid as part of the reinvestment payment approved by the board. 28 If the board approves a new frontiers payment pursuant to the provisions of §§ 1-29 16G-73 to 1-16G-84, inclusive, the Department of Revenue shall must deposit into the 30 fund a portion or all of the sales and use taxes paid by the program owner up to a 31 maximum amount of the new frontiers payment approved by the board. 32 26.1000.19 expanded facility or 34 26.1000.20 3 239 Underscores indicate new language. Overstrikes indicate deleted language. The funds in equipment upgrades attributable to the reinvestment project fund are continuously appropriated processing, storage, retrieval, or 1 communication of data related to GOED 1 to make reinvestment payments cryptocurrency; 2 (15) "Reinvestment payment permit," the permit issued pursuant to § 1-16G-60; 3 (16) "Secretary," the secretary of the Department of Revenue; 4 (13)(17) "Wind energy facility," any new facility or facility expansion that: 5 (a) Consists of a commonly managed integrated system of towers, wind turbine 6 generators with blades, power collection systems, and electric 7 interconnection systems, that convert wind movement into electricity, and 8 is subject to the tax imposed by §§ 1-16G-56 10-35-18 and 10-35-19; and 9 (b) The construction of which is subject to 1-16G-68, inclusive, and 2 new frontiers payments contractors' excise tax pursuant to §§ 1-16G-73 10 chapter 10-46A or 10-46B; and 11 (14)(18) "Advanced telecommunications capability," without regard to 1-16G-84, inclusive. If any money 3 deposited in the fund transmission 12 media or technology, is high-speed, switched, broadband telecommunications 13 capability that enables users to originate and set aside for receive high-quality voice, data, 14 graphics, and video telecommunications using any technology that provides a specific reinvestment payment or new frontiers 4 payment is in excess 15 minimum actual download speed of the final reinvestment or new frontiers payment, as applicable, or 5 the specific project or program becomes ineligible for the reinvestment or new frontiers 6 payment, as applicable, such the money shall must be deposited into the general fund. 7 Interest earned on money in the fund shall must be deposited into the general fund. 8 at least twenty-five megabits per second and 16 actual upload speed of at least three megabits per second. 17 Section 4. 2. That a NEW SECTION be added to chapter 10-45: 9 There are exempted from 1-16G: 18 If the project cost for a new or expanded facility on or after April 1, 2026, exceeds 19 the amount set pursuant to section 3 of this Act, a person may apply for a reinvestment 20 payment as provided in § 1-16G-57, subject to the following adjustments to the 21 procedures in §§ 1-16G-56 to 1-16G-68, inclusive: 22 (1) The application required in § 1-16G-58 must also include all information required 23 by the department for a direct payment permit. The commissioner shall share the 24 relevant portion of the application with the department on a confidential basis. The 25 department shall review the information as a written application to the secretary 26 for a direct payment permit; 27 (2) Prior to the board’s review of the application, the department must provide the 28 commissioner with a determination of the person’s eligibility for a direct payment 29 permit. The appeal provisions of § 10-46-67 do not apply to an application qualified 30 under this chapter, section. A person who is not eligible for a direct payment permit may 31 not receive a reinvestment payment permit on the terms of this section; 32 (3) Following its review pursuant to § 1-16G-59, the board may, by two-thirds 33 majority, approve a combined reinvestment payment that is equal to or less than 34 26.1000.20 4 239 Underscores indicate new language. Overstrikes indicate deleted language. the South Dakota sales and use tax due on the tax imposed by 10 it, initial project cost of a new or 1 expanded facility, as well as the gross receipts from project costs of any future equipment upgrades in 2 that same facility for a term not to exceed thirty years after the construction date; 3 (4) A reinvestment payment permit issued to a project approved described in this section also 4 operates as a direct payment permit for the project applicant; 5 (5) In addition to the affidavit requirement in § 1-16G-61, the person holding a 6 reinvestment payment permit must also submit an annual affidavit following 7 completion of the project detailing the project cost of any equipment upgrades 8 during that period; 9 (6) The three-year eligibility period for project costs in § 1-16G-62 is extended to four 10 years for the initial project cost of a project qualified under this section. In addition, 11 the project will also have a separate eligibility period for the project cost of any 12 future equipment upgrades running from completion of the project until expiration 13 of the reinvestment payment program 11 permit; 14 (7) A reinvestment payment permit extends to a person’s lessee on the same terms 15 and may also be assigned or transferred, but in each case only if the lessee, 16 assignee, or transferee also holds a direct payment permit; 17 (8) The secretary shall relieve a person holding a direct payment permit of its 18 obligation to accrue and pay the taxes imposed by chapters 10-45 and 10-46, but 19 only to the extent covered by a reinvestment payment permit. The commissioner 20 must subtract any relief granted by the secretary from the reinvestment fund 21 payment to which that person is otherwise entitled under chapter 1-16G. 12 § 1-16G-63; and 22 (9) Except as provided in this section, all other provisions of §§ 1-16G-56 to 1-16G-23 68, inclusive, continue to apply to projects qualified under this section. 24 Section 5. 3. That a NEW SECTION be added to chapter 10-46: 13 There are exempted from 1-16G: 25 The board shall adopt a policy setting the provisions minimum project cost required for a 26 project to qualify for purposes of section 2 of this chapter, Act. The board may adopt a new policy 27 changing the minimum project cost, but may not do so within two years of setting a 28 previous policy. 29 Section 4. That § 1-16G-59 be AMENDED: 30 1-16G-59. The Board of Economic Development shall review an a completed 31 application and make a determination of whether the tax imposed project is approved or disapproved 32 within ninety days of receiving the application. The applicant may, by 14 it, written consent, 33 26.1000.20 5 239 Underscores indicate new language. Overstrikes indicate deleted language. extend the gross receipts from deadline provided in this section. The extension must provide a project approved new deadline 1 for the board’s review and determination. The board shall consider the likelihood that the 2 project would have occurred without the reinvestment payment. The board may approve 3 a reinvestment payment program 15 under chapter 1-16G. 16 Section 6. That § 1-16G-63 be REPEALED. 17 After the timely receipt of a completed affidavit for reinvestment payment, within 18 ninety days GOED shall make payment from the reinvestment fund that is equal to or less than South Dakota sales and use tax paid 4 on the project owner 19 based upon costs. 5 The board shall consider the amount and terms approved by following factors when making that determination: 6 (1) Has the board as county or municipality adopted a reinvestment payment. If 20 GOED requests additional documents or information from formula to reduce property taxation for 7 the project owner, for five years under the ninety 21 day period begins discretionary formula pursuant to run from § 10-6-137; 8 (2) Has the date of receipt of county or municipality approved a tax increment financing district pursuant 9 to chapter 11-9 for the additional documents or 22 information. GOED shall tender area where the reinvestment payment project will be located; 10 (3) Has the municipality approved a municipal sales tax refund pursuant § 10-52-10; 11 (4) Economic activity that may occur in the community, area, and state; and 12 (5) Criteria established by electronic funds transfer. 23 rules promulgated pursuant to § 1-16G-67. 13