ARSD § 64:06:03:35 — Premiums and gifts

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64:06:03:35. Premiums and gifts. Donors of tangible
personal property or any product transferred electronically known as premiums
or gifts are regarded as the consumers of the premiums or gifts, and they must
pay sales tax when such items are purchased or use tax when the items are
removed from stock or purchased exempt from sales tax. Gross receipts from the
sale of goods which are to be given away for advertising purposes are taxable.
If goods purchased by a retailer for the purpose of resale are subsequently
given away for advertising purposes, the retailer must include, under value of
merchandise taken from stock for the retailer's own and family use and use of
the retailer's employees, the cost of the goods to the retailer and must pay
use tax on the cost of the goods. Those goods given without charge to an
institution, organization, or group exempt from this tax are not taxable.
Purchasers of property which is to be
awarded as prizes, the winning of which depends upon chance or skill, are
regarded as the consumers of the property, and the tax applies to gross
receipts from the sale of the property to the purchasers.
The operator of a game of skill or a
game of chance is the consumer of the property used in connection with such
operations, and the tax applies to gross receipts from sales of tangible
personal property and any product transferred electronically to the operator.