Dyed Diesel Clarification for South Dakota

PIERRE, S.D. – The Department of Revenue is issuing guidance, effective today, for consumers and retailers that only agricultural producers with a valid agricultural exemption certificate should fuel with red dyed diesel for on-road use at this time.
This is consistent with other states that have relaxed rules on red dyed diesel. Until further clarification is received from the federal government, non-agriculture users may still owe federal taxes in January. Non-agricultural users still owe other state and local taxes that reduce or eliminate any tax benefits of using red dyed diesel for non-agricultural purposes.
Sellers and purchasers are reminded that dyed diesel remains subject to state sales tax and applicable municipal tax unless the purchase qualifies for an agricultural exemption under South Dakota Codified Law. Sellers are reminded that a properly completed exemption certificate is required to exempt a sale from applicable tax. These exemption certificates must be kept in the seller’s records.
The Governor has directed the SD Highway Patrol to not stop and check any vehicle for a violation. DPS will continue to follow that directive for all traffic because of varying directives from other states and the federal government. However, as previously stated, the state cannot waive taxes set in state law. Sales tax applies to non-agricultural users of dyed diesel.
Anyone using dyed fuel for on-road use is encouraged to maintain accurate fuel‑use records and monitor state‑specific guidance going forward. Now that state guidance is established, only agricultural producers can use dyed diesel tax exempt.