Buffalo Chip to stop collecting sales tax

A woman shops at one of the many vendors at Buffalo Chip during the Sturgis Motorcycle Rally. Courtesy photo

BUFFALO CHIP — The town of Buffalo Chip is removing its 2% general sales, service, and use tax, effective July 1.

According to the South Dakota Department of Revenue, municipalities may implement new tax rates or change existing tax rates Jan. 1 or July 1 each year. 

At its March 11 meeting, the three-member Buffalo Chip town board voted unanimously to repeal the 2015 ordinance allowing their collection of sales tax. 

Buffalo Chip Attorney Kent Hagg of Rapid City said this week that not collecting the tax is prudent while the question of Buffalo Chip’s status as a town is debated in court. 

“We’re very confident in our case, and we see this as a precautionary measure,” he said. 

Fourth Circuit Judge Gordon Swanson ruled from the bench in February that the requirement for a municipal incorporation is both 100 residents “and” 30 registered voters.

At the time of the Buffalo Chip incorporation vote, state law said a municipality may not be incorporated unless it contained at least 100 legal residents “or” at least 30 registered voters. The incorporated area of Buffalo Chip did have the 30 registered voters, but not 100 residents.

The town’s 43 registered voters approved the incorporation at an election in May 2015. Soon after, landowners adjacent the campground and the city of Sturgis questioned the campground’s incorporation as a legal municipality.

The Buffalo Chip Town Board voted to appeal Swanson’s ruling to the South Dakota Supreme Court. And, also at its March meeting, they voted to hire the law firm of Richardson, Wyly, Wise, Sauck & Hieb, LLP, of Aberdeen, as additional legal counsel to represent the town in the appeal. 

“Our briefs have been submitted. We’re just waiting on a response,” Hagg said. 

The town has been collecting tax revenues, even as the legal battle over its incorporation continues.

According to state revenue department figures for the fiscal year of 2018, Buffalo Chip owed $68,785 in municipal sales tax on taxable sales of $3,457,227.31.

Those taxable sales included transportation, communications electric, gas and sanitary services, along with wholesale and retail sales and other services.

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