Who is required to file a Sales and Use Tax return?
Any person engaged in retail sales in South Carolina (including online sales) are required to obtain a Retail License and to remit sales and use taxes on their sales. A separate Retail License is needed for each retail outlet.
The SCDOR can require an out-of-state retailer to purchase a Retail License and collect the South Carolina Sales and Use Tax if the retailer:
- Has retail locations in South Carolina;
- Maintains an office, warehouse or other place of business in South Carolina;
- Has a salesperson in South Carolina soliciting orders on a regular basis;
- Has an agent located in South Carolina;
- Meets certain
economic thresholds;
- Delivers his/her goods on his/her own trucks and advertises on a regular basis in South Carolina via South Carolina media;
or
- Delivers their goods on their own trucks and advertises on a regular basis in South Carolina via media located outside of South Carolina that has extensive coverage in South Carolina.
NOTE: The above is based on the legal concept of
Nexus - the minimal connection necessary between an out-of-state retailer and the state which allows the state to require the retailer to collect the Sales and Use Tax. What actually constitutes Nexus is determined by the courts and may change from time to time. You are advised to be aware of changes.
A Retail License is not required of the following individuals:
- Persons selling at flea markets or conducting a yard sale no more than once per quarter
- Certain organizations conducting sales at festivals
- Persons furnishing accommodations to transients for one week or less in any calendar quarter
- Certain nonprofit organizations
Any business or nonprofit organization registered with the SCDOR with a purchasers certificate is also required to file and pay Sales and Use Tax on their out-of-state purchases of tangible personal property.
What forms need to be filed for Sales and Use Tax?
The following Sales and Use Tax forms should be used when filing the respective tax:
- Taxpayers who are liable for the state sales and/or Use Tax only may file Form
ST-3.
- Those liable for the maximum tax of ($300) are to file
Form ST-455.
- Those liable for the 7% tax on accommodations (hotels, motels, etc.) are to file
Form ST-388.
- If a local tax is collected in more than one county or municipality,
Form ST-389 (Schedule for Local Taxes) must be completed and attached to Form
ST-3,
ST-388,
ST-455 or whichever is appropriate.
When is the Sales and Use Tax return due?
Any business selling tangible personal property at retail is required to file and remit any sales and/or Use Tax due on or before the twentieth day of the month following the period in which liability for the tax arises. A separate return is due for each location. For example, sales made in May are reportable to the SCDOR by June 20. Any tax due is payable with the return. The same is true for an out-of-state retailer.
Most taxpayers will file their Sales and Use Tax return monthly; however, the following are exceptions:
- Quarterly returns. The SCDOR may allow a taxpayer to file quarterly, instead of monthly; if the taxpayer’s quarterly tax liability is $300 or less.
- Other Filing Periods. The SCDOR may authorize, in addition to monthly or quarterly, other filing periods.
NOTE: A written request must be submitted by the taxpayer for approval and the SCDOR must authorize the request prior to taxpayer changing their filing periods.
What sales, transactions, services or intangibles are subject to the Sales and Use Tax?
The Sales Tax is imposed on the sales at retail of tangible personal property and certain services. Communciations are subject to Sales and Use Tax under Chapter 36 of Title 12 pursuant to South Carolina Code 12-36-910(B)(3) and 12-36-1310(B)(3).
The Use Tax is imposed on the storage, use, or consumption of tangible personal property and certain services when purchased at retail from outside the state for storage, use or consumption in South Carolina. There are also special imposition sections that tax the fair market value of tangible personal property when used, stored or consumed by its manufacturer and a special imposition section that taxes transient construction property brought into South Carolina.
The services and intangibles subject to the Sales and Use Tax are:
- Furnishing of Accommodations (the state rate for this service is 7%)
- Dry Cleaning and Laundering Services
- Electricity
- Communication Services including, but not limited to:
- Telephone services (not specifically exempted under SC Code §
12-36-2120(11)), including telephone services provided via the traditional circuit-committed protocols of the public switched telephone network (PSTN), a wireless transmission system, a voice over Internet protocol ("VoIP"), or any of other method
- Telephone Services
- Automated Answering Services
- Fax transmission services
- Database access transmission services
- Streaming services
- Cloud based services
- Teleconferencing Services
- Paging Services
- Cable Television Services
- Satellite Programming Services and Other Programming Transmission Services (includes, but is not limited to, emergency communication services and television, radio, music or other programming services)
- Fax Transmission Services
- E-Mail Services
- Electronic Filing of Tax Returns when the return is electronically filed by a person who did not prepare the tax return.
- Database Access Transmission Services (On-Line Information Services), such as legal research services, credit reporting/research services, charges to access an individual website (including Application Service Providers), etc. (not including computer database information services provided by a cooperative service when the database information has been assembled by and for the exclusive use of the members of the cooperative services).
- Prepaid Wireless Calling Arrangements (sale or recharge at retail) as defined in SC Code §
12-36-910(B)(5) (For information on prepaid telephone calling cards that do not come within the definition of prepaid wireless calling arrangements, see Revenue Ruling #04-4.)
- 900/976 Telephone Service (the state tax rate on this type of communication service is 11%, not 6%)
Are rentals or leases subject to the Sales and Use Tax?
Yes. Any rental or lease of tangible personal property, or a taxable service, at retail is subject to the tax. The Sales and Use Tax law defines the term “sale” to include rentals, leases, licenses to use, or any other agreement.
Are consignment sales subject to the tax, and who is responsible for consignment Sales Taxes?
Consignment sales are subject to the Sales and Use Tax. The retailer selling the items on consignment is the person responsible for remitting the tax on the consignment sale. For example, if Mr. Smith creates wooden toys and under an agreement with the ABC Crafts Store places his wooden toys in the craft store for sale by the ABC Crafts Store, then ABC Crafts Store is the retailer and responsible for remitting the tax on these sales, even though ABC Crafts Store does not own the wooden toys.
Are delivery charges by whatever name (e.g., freight, shipping, transportation, shipping and handling, etc.) subject to the Sales and Use Tax? Who is responsible for delivery charges?
When a retailer sells tangible personal property at retail and charges the customer a delivery charge for delivery
via the retailer's own trucks, then the delivery charge is considered part of the tax base upon which the tax is calculated and subject to the Sales and Use Tax.
When a retailer sells tangible personal property at retail and charges the customer a delivery charge for delivery
via a common carrier and the delivery terms are FO.B Destination, then the delivery charge is considered part of the tax base upon which the tax is calculated and subject to the Sales and Use Tax.
When a retailer sells tangible personal property at retail and charges the customer a delivery charge for delivery
via a common carrier and the delivery terms are FO.B Shipping Point, then the delivery charge is not considered part of the tax base upon which the tax is calculated and is not subject to the Sales and Use Tax.
When a retailer sells tangible personal property at retail and charges the customer a delivery charge for delivery
via a common carrier and the delivery terms are not specified, then the delivery charge is considered part of the tax base upon which the tax is calculated and subject to the Sales and Use Tax. However, in no event may a seller deduct costs of bringing property to his place of business or costs of delivering property from factory to his customer when such factory-to-customer transportation is paid by the seller either to a transportation company, the manufacturer, or by way of credit to his customer for transportation costs paid by the customer and deducted from seller's invoice.
Note: If the retailer sells tangible personal property at retail and the sale qualifies for an exemption, then the entire tax base upon which the tax is calculated (including any delivery charges associated with the exempt sale) is exempt.
Are late fees subject to the Sales and Use Tax?
When a retailer sells tangible personal property or a taxable service at retail and the customer is charged for a late fee associated with the sale, then the charge is considered part of the tax base upon which the tax is calculated and subject to the Sales and Use Tax, unless the late fee is one charged a customer with respect to a late payment of a bill for electricity or natural gas, or both.
In the case of a late fee charged a customer with respect to a late payment of a bill for electricity or natural gas, or both, the charge for the electricity or natural gas, or both is subject to the tax but the late fee is not subject to the tax.
Note: If the retailer sells tangible personal property or a taxable service at retail and the sale qualifies for an exemption, then the entire tax base upon which the tax is calculated (including any late fee charges associated with the exempt sale) is exempt.
Are installation charges subject to the Sales and Use Tax?
When a retailer sells tangible personal property at retail and the customer is charged an installation fee associated with the sale, the installation charge is not subject to the Sales and Use Tax provided it is separately stated on the bill to the customer and the installation charge is reasonable based on the books and records of the retailer.
If the installation charge is not separately stated on the bill to the customer or the installation charge is not reasonable based on the books and records of the retailer, then the installation charge is considered part of the tax base upon which the tax is calculated and subject to the Sales and Use Tax.
Note: If the retailer sells tangible personal property at retail and the sale qualifies for an exemption, then the entire tax base upon which the tax is calculated (including any installation charge associated with the exempt sale) is exempt.
Are set up charges (e.g., screen printers, personalized items, etc.) subject to the Sales and Use Tax?
When the “true object” of a transaction is the retail sale of tangible personal property or a taxable service and the customer is charged a set-up fee (e.g., screen printers, personalized items, etc.) associated with the sale, then the charge is considered part of the tax base upon which the tax is calculated and subject to the Sales and Use Tax.
Note: If the retailer sells tangible personal property or a taxable service at retail and the sale qualifies for an exemption, then the entire tax base upon which the tax is calculated (including any set up fee associated with the exempt sale) is exempt.
Is the sale of food subject to the Sales and Use Tax?
Yes. The sale of food is subject to the Sales and Use Tax; however, the Sales and Use Tax law provides exemptions for the sale of certain foods, including but not limited to:
- Meals provided to elderly or disabled persons at home by nonprofit organizations.
- Food sold to nonprofit organizations or food sold or donated by the nonprofit organization to another nonprofit organization.
- Meals or foodstuffs prepared or packaged that are sold to public or nonprofit organizations for congregate or in-home service to the homeless or needy or disabled adults over 18 or individuals over 60. This exemption only applies to meals and foodstuffs eligible for purchase under the USDA food stamp program.
- Unprepared food that lawfully may be purchased with United States Department of Agriculture food coupons. This exemption does not apply to local taxes unless the local tax specifically exempts the sale of such food. Important: See SC Regulation 117-337 for details about what sales do or do not qualify for this exemption.
Are sales to the federal government subject to Sales and Use Tax?
Sales to the federal government of tangible personal property or taxable services are not subject to the Sales and Use Tax. Sales to the Supreme Court, counties, municipalities, and other local political subdivisions (e.g. schools, sheriff offices, municipal housing authorities, welfare agencies) of tangible personal property or taxable services are subject to the Sales and Use Tax, unless such sales are otherwise exempt.
To exempt the sales to the federal government, report all sales (including the exempt sales to the federal government) on the worksheet on your return, report and deduct the applicable exclusions and exemptions on the worksheet (including the sales to the federal government), calculate the "net taxable sales" (all sales + all withdrawals for use + all out-of-state purchases subject to the Use Tax - applicable deductions which will include the exempt sales) and remit the tax based upon your net taxable sales.
Note: Your records should document that the sale was to the federal government. In addition, while not required, you may want to ask the federal government to complete and provide you a
Form ST-8 Exemption Certificate.
Are sales by a state agency to another state agency, a county, a municipality or another political subdivision subject to the Sales and Use Tax?
Sales by a state agency to another state agency, a county, a municipality or another political subdivision are subject to the Sales and Use Tax, unless:
- The consideration for the transfer only reimburses the transferring agency for its cost and expenses in conveying the property and the transferring agency has paid tax on the initial purchase of the tangible personal property; or
- The sale is exempt under the Sales and Use Tax law (e.g., textbooks)
Sales by a state agency to another state agency, a county, a municipality or another political subdivision are subject to the Sales and Use Tax, unless:
- The consideration for the transfer only reimburses the transferring agency for its cost and expenses in conveying the property and the transferring agency has paid tax on the initial purchase of the tangible personal property; or
- The sale is exempt under the Sales and Use Tax law (e.g., textbooks)
How does Sales and Use Tax apply to a church or nonprofit organization?
Sales of tangible personal property (including accommodations) by a church or other nonprofit organization are exempt from the Sales and Use Tax. The church may purchase, tax free, any tangible personal property it intends to resell and may sell tax free any such tangible personal property. Sales of tangible personal property by certain other nonprofit organizations that are exempt from property taxes are exempt from the Sales and Use Tax. The following nonprofit organizations exempt from property taxes (the property tax exemption is listed next to the type of nonprofit organization) come within the Sales and Use Tax exemption for "sales by" the nonprofit organization:
- Public libraries and churches (SC Code § 12-37-220(A)(3))
- Charitable trusts and foundations used exclusively for charitable and public purposes (SC Code §12-37-220(A)(4));
- The American Legion, the Veterans of Foreign Wars, the Disabled American Veterans, Fleet Reserve Association, the Marine Corps League or any similar Veterans Organization chartered by the Congress of the United States (SC Code §12-37-220(B)(5));[
- The Young Women's Christian Association, Young Men's Christian Association and the Salvation Army (SC Code §12-37-220(B)(6));
- The Boy Scouts of America and the Girl Scouts of America (SC Code §12-37-220(B)(7));
- The South Carolina Association of Future Farmers of America (SC Code §12-37-220(B)(8));
- Any fraternal society, corporation or association (SC Code §12-37-220(B)(12))
- Any religious, charitable, eleemosynary, educational, or literary society, corporation, or other association (SC Code §12-37-220(B)(16));
- Volunteer Fire Departments and Rescue Squads (SC Code §12-37-220(B)(19));
- All community owned recreation facilities opened to the general public and operated on a nonprofit basis (SC Code §12-37-220(B)(22)); and,
- nonprofit or eleemosynary community theatre companies, symphony orchestras, county and community arts councils and commissions and other such companies, which is used exclusively for the promotion of the arts (SC Code §12-37-220(B)(24)).
An organization whose sales or purchases are exempt as a result of this exemption is also exempt from the Retail License tax. This exemption only applies to sales by organizations which meet three requirements:
- The organization must be eligible for exemption from property tax under one of the property tax code sections.
- The net proceeds from the organization's sales must be used for exempt purposes.
- No benefit from the sales may inure to any individual.
How can a nonprofit organization determine if the “sales by” the nonprofit organization are exempt from the Sales and Use Tax?
The nonprofit organization should complete and file
Form ST-387 Application for Sales Tax Exemption under SC Code §12-36-2120(11)), "Exempt Organizations." The law does not require an organization to obtain an exemption certificate in order to purchase items exempt under this exemption. SCDOR recommends that organizations apply for the exemption certificate to simplify purchases from suppliers of items tax-free for resale.
An organization is considered to be "automatically" qualified for an exemption certificate if it is:
- Selling tangible personal property;
- Exempt from property tax under one of the property tax code sections listed in SC Code §12-36-2120(11); and,
- Exempt from Federal income tax under Internal Revenue Code Section 501(c) (3) or (19). The statute does not require that an organization be exempt from Federal income tax under Internal Revenue Code Section 501(c)(3) or (19); however, the purpose of this provision is to meet the requirement that the organization's net proceeds must be used for an exempt purpose and to ensure that no benefit inures to any individual.
An organization is not qualified for an exemption certificate if it is:
- Only purchasing tangible personal property for its own use or consumption and not for resale; or,
- Exempt from property tax, but under a code section not listed in SC Code §12-36-2120(11).
Note: SC Code §12-37-220 provides specific property tax exemptions for the State of South Carolina, its counties, municipalities, school districts, and other political authorities or subdivisions; private schools, colleges and other institutions of learning; nonprofit hospitals and nonprofit institutions which care for the infirmed, the handicapped, the aged, children or indigent persons; and nonprofit museums. The property tax exemptions for these organizations are not specifically listed in SC Code §12-36-2120(41)), however, some of these organizations may also qualify for a property tax exemption listed in SC Code §12-36-2120(41) . For example, a private school may qualify for the property tax exemption under SC Code §12-37-220(B)(16) (a) established for certain religious, charitable, eleemosynary or educational organizations.
Organizations, other than those in the categories above, may qualify for an exemption certificate, if the following criteria are met:
- The organization must be selling, or will sell, tangible personal property;
- The organization must be a type referred to in SC Code §12-36-2120(41) [i.e., a church, veterans' organization, YMCA, Scouts, etc.]; and,
- Documents provided by the organization must conclusively demonstrate that the net proceeds of the organization are used, or will be used, exclusively for exempt purposes; and, that no benefit inures, or will inure, to any individual.
Are sales by or purchases from an online retailer subject to the Sales and Use Tax?
If my business is out of state, am I required to obtain a Retail License?
The SCDOR can require an out-of-state retailer to purchase a Retail License and collect and remit the South Carolina Sand & Use Tax if the retailer exceeds $100,000 in gross revenue for a calendar year and obtains Economic Nexus. To learn more about requirements of an out of state business please visit our website at:
dor.sc.gov/remotesellers
Am I required to obtain a Retail License if I am making sales at flea markets, festivals, etc.?
Persons selling at flea markets or conducting a yard sale no more than once per quarter are not required to obtain a Retail License.
Depending on the type of event or festival you are attending as a vendor, you may be required to obtain a Retail License and file Sales Tax. Our
Event Guide will walk you through tax and licensing requirements for your next event or festival.
If I am conducting sales online only and do not have a store front location, do I need a retail license?
Yes. You are engaged in the business of selling tangible personal property at retail in South Carolina and must obtain a Retail License and remit the Sales Tax on all orders shipped to a South Carolina address.
What is the Use Tax?
The Use Tax applies to purchases of tangible personal property from out-of-state retailers for use, storage or consumption in South Carolina, and includes purchases from retailers made online (retailers’ websites and retailers’ sales on auction sites), through out-of-state catalog companies, or when visiting another state.
What is the rate for the Use Tax?
The tax rate for the Use Tax is the same as the Sales Tax. This rate is determined by where the tangible personal property will be used, stored or consumed, regardless of where the sale actually takes place. Therefore, the tax rate for the Use Tax will be the 6% state rate plus the applicable local Use Tax rate for the location where the tangible personal property will be used, stored or consumed.
What is the difference between the Sales Tax and the Use Tax?
The Sales Tax is imposed on all retailers within South Carolina and applies to all retail sales of tangible personal property within the state. Retailers making sales of tangible personal property in South Carolina are required to remit the Sales Tax to the SCDOR.
The Use Tax is imposed upon the consumer of tangible personal property that is purchased at retail for use, storage, or consumption in South Carolina. The Use Tax applies to purchases from out-of-state retailers. The Use Tax has been around since 1951 – the same year the Sales Tax law was adopted in South Carolina.
Both the Sales Tax and the Use Tax apply to leases or rentals at retail of tangible personal property (e.g., tuxedos, office equipment, etc.).
It is important to note that either the South Carolina Sales Tax or the South Carolina Use Tax applies to a single transaction, but not both.
Why would an out-of-state retailer charge a purchaser the South Carolina Sales Tax or Use Tax?
An out-of-state retailer must obtain a Retail License and remit either the South Carolina Sales Tax or Use Tax on retail sales shipped into South Carolina if the out-of-state retailer has a physical presence in South Carolina or if they meet certain
economic thresholds.
Examples of physical presence include, but are not limited to: maintaining (temporarily or permanently) an office, warehouse, store, other place of business, or property of any kind in the state; or having (temporarily or permanently) an agent, representative (including delivery personnel and independent contractors acting on behalf of the retailer), salesman, or employee operating within the state.
An out-of-state retailer that is not required to obtain a Retail License and remit the South Carolina sales or Use Tax may, however, voluntarily obtain the Retail License and collect and remit the tax to South Carolina.
If a South Carolina purchaser travels to another state and purchases tangible personal property from a retailer in the other state for use, storage or consumption in South Carolina, does the South Carolina purchaser still owe Use Tax on the purchase if the other state’s Sales Tax was paid to the retailer at the time of purchase?
The South Carolina purchaser would only owe the Use Tax on the difference between the Sales Tax paid in the other state and the Use Tax due in South Carolina. If the state and local sales or Use Tax due and paid in another state is equal to or greater than the state and local Use Tax due in South Carolina, then no Use Tax is due in South Carolina.
Example #1: If a South Carolina purchaser paid $15.00 Sales Tax in the other state and the total state and local Use Tax due in South Carolina was $18.00, then the South Carolina purchaser would be allowed a credit for the $15.00 and would only owe a South Carolina Use Tax of $3.00.
Example #2: If a South Carolina purchaser paid $21.00 Sales Tax in the other state and the total state and local Use Tax due in South Carolina was $18.00, then the South Carolina purchaser would be allowed a credit for the $21.00 and no Use Tax would be due in South Carolina since the $21.00 paid exceeds the $18.00 due in South Carolina. However, the purchaser is not entitled to a refund of the difference between the $21.00 paid in the other state and the $18.00 due in South Carolina.
Note: Each transaction must stand on its own. An "excess" paid to another state on one purchase transaction, as shown in Example #2, cannot be used to offset any South Carolina Use Tax that may be due on another purchase transaction.
How can I report and pay the Use Tax?
If the purchaser is an individual, then this purchaser may:
- Pay the Use Tax online through MyDORWAY.
- Report and remit the Use Tax on the South Carolina Individual Income Tax Return (Form SC 1040 or Form SC 1040A).
- Report and remit the Use Tax on a
Form UT-3. This return can be filed after the purchase or may be filed for a specific period (month, calendar quarter, etc.)
- Report and remit the Use Tax on a vehicle, airplane or boat purchased from an out-of-state retailer (1) by filing a
Form ST-236 or (2) at the time a vehicle, airplane or boat is registered, titled or licensed with the Department of Motor Vehicles, the Department of Aeronautics or the Department of Natural Resources. (Note: Motor vehicles, motorcycles, boats, motors and airplanes purchased from a non-retailer are subject to a separate tax called the "casual excise tax" at the time registered, titled or licensed with one of these agencies. A taxpayer may also report and remit this tax by filing a
Form ST-236 with the SCDOR.) For information on the "casual excise tax," see SC Code §§12-36-1710 through 12-36-1740.
If the purchaser is a business or nonprofit organization that is purchasing the tangible personal property for its own use (and not for resale), then this purchaser may:
- Pay the Use Tax online through
MyDORWAY.
- Report and remit the Use Tax on the Sales and Use Tax return if the purchaser is a licensed South Carolina retailer. The use tax is reported on Line 2 ("Out-of-State Purchases Subject to Use Tax") of the Worksheet (Forms
ST-3,
ST-388, and
ST-403, plus local tax addendum
ST-389 ). Certain nonprofit organizations that sell tangible personal property are not required to be licensed as retailers since their sales are exempt from the Sales Tax under SC Code §12-36-2120(41). These nonprofit organizations should report the Use Tax as discussed below in item "b" through item "d."
- Obtain a purchaser's certificate of registration and report and remit the Use Tax on its Use Tax return if the purchaser is not a licensed South Carolina retailer but is a business or nonprofit organization that regularly purchases tangible personal property for its use from an out-of-state retailer. The Use Tax is reported on Line 2 ("Out-of-State Purchases Subject to Use Tax") of the Worksheet (Forms
ST-3,
ST-388, and
ST-403, plus local tax addendum
ST-389 ). Note: Persons needing to obtain a purchaser's certificate of registration in order to file tax returns and remit the Use Tax on a periodic basis may do so by completing Form SCTC -111 or by contacting the Department's License and Registration Section at 803-898-5000.
- Report and remit the Use Tax on a
Form UT-3 Use Tax return if the purchaser is a business or nonprofit organization that is not a licensed South Carolina retailer and does not regularly purchases tangible personal property for its own use from an out-of-state retailer.
Report and remit the Use Tax on a vehicle, airplane or boat purchased from an out-of-state retailer (1) by filing a
Form ST-236 with SCDOR or (2) at the time a vehicle, airplane or boat is registered, titled or licensed with the Department of Motor Vehicles, the Department of Aeronautics or the Department of Natural Resources. (Note: Motor vehicles, motorcycles, boats, motors and airplanes purchased from a non-retailer are subject to a separate tax called the "casual excise tax" at the time registered, titled or licensed with one of these agencies. A taxpayer may also report and remit this tax by filing a
Form ST-236 with the SCDOR.) For information on the "casual excise tax," see SC Code §§ 12-36-1710 through 12-36-1740.
Do other states charge a Use Tax?
Yes. Every state that imposes a Sales Tax also imposes a Use Tax.
Why am I just now getting a notice from SCDOR for an item I purchased 3-5 years ago?
SCDOR receives information from various sources (other state tax departments, US Customs, etc.) concerning purchases by South Carolina residents usually several years after the purchase date as a result of audits conducted of the seller by the other state or information forwarded to the SCDOR. The SCDOR does make an effort to issue notices as soon as possible after the information is received.
Why am I charged a penalty when no one told me I had to pay the Use Tax when I purchased the merchandise? I thought the seller had to collect the Use Tax? Why do I have to pay penalty and interest when I didn’t know I owed the tax?
The law imposes penalties and interest for failure to pay all taxes administered and collected by the SCDOR. While some sellers are required to remit the Use Tax on behalf of their customers (the requirements depends on the seller’s presence, if any, in South Carolina), the purchaser is ultimately responsible for remitting the Use Tax if the seller does not remit the Use Tax.
If a South Carolina retailer purchases items from out-of-state that the retailer does not intend to resell, does the South Carolina retailer owe the Use Tax on these purchases?
Yes. Since these item are being purchased for use by the retailer and not for resale, then these purchases are subject to the Use Tax, and the South Carolina retailer should remit the Use Tax the Sales and Use Tax return.
What determines if I am a contractor or a retailer?
The determination is essentially based on whether a person is in the business of "making improvements to real property" or is the business of "selling tangible personal property at retail." In South Carolina, the determination as to whether a person is a retailer making sales and installations or a contractor depends on the facts and circumstances. Factors used in making this determination include, but are not limited to: how the person advertises his business (as a retailer or contractor), are retail sales made in which installation is not performed by the seller or on behalf of the seller, does the person have a showroom to display his products and how would this showroom be perceived by the general public, is the person licensed as a contractor under state law, does the person perform labor for a general contractor as a "subcontractor," etc. In addition, the determination as to whether a person is a retailer making sales and installations or a contractor may require a review of the various agreements or contracts between the taxpayer and his customers.
If you have questions as to whether you are a contractor or a retailer for purposes of the Sales and Use Tax, it may be best to contact one of the SCDOR's Taxpayer Service Centers for assistance in making this determination.
As a contractor, do I owe sales or Use Tax on materials for jobsites?
If a person is deemed to be a contractor, then the Sales and Use Tax is due at the time all materials are purchased.
Are construction contractors allowed to have a Retail License for items purchased to use in their construction business?
No. A person whose only business is that of a construction contractor may not obtain a Retail License. Only a person engaged in the business of selling tangible personal property at retail is entitled to a Retail License.
Are sales of farm supplies and machinery to farmers subject to Sales Tax?
Yes, unless the sale falls within one of the exemptions established by the General Assembly for farmers. Sales that meet the requirements in the Sales and Use Tax law for farm machinery are exempt from the Sales and Use Tax.
Starting July 1, 2022, farmers will need a South Carolina Agriculture Tax Exemption (SCATE) card from the South Carolina Department of Agriculture to make exempt purchases. This shifts the liability for the tax to the farmer, so if the farmer uses an item for a non-exempt purpose, they are liable for the tax plus any applicable penalties and interest.
Which local Sales and Use Tax applies when I deliver into another county? Is there a difference if I ship the product or personally deliver it?
Local Sales and Use Tax application is based on the point of delivery. Delivery of tangible personal property occurs when and where title or possession of tangible personal property transfers from the retailer to his customer. The following are guidelines to be used in determining when and where delivery occurs:
- FOB Destination or Similar Terms: Delivery is considered to take place at the purchaser's location or wherever delivered to the purchaser (at the purchaser's direction).
- FOB Shipping Point or Similar Terms: Delivery is considered to take place at the retailer's location. Retailers with multiple retail locations are to maintain their records so as to clearly show which sales are attributable to each location.
- Shipping Terms Are Unspecified: Delivery is considered to take place at the purchaser's location or wherever delivered to the purchaser (at the purchaser's direction).
- Retailer Uses Own Vehicle: If a retailer uses his own vehicle(s) for making deliveries, delivery is considered to take place at the purchaser's location or wherever delivered at the direction of the purchaser. This applies whether the vehicles are owned or leased by the retailer.
- Situations Where Title Transfers, But Not Possession: Delivery is considered to take place at the retailer's location.
For example, a printer may produce business cards for a customer. The cards include all needed information except for the employee name. The printer keeps possession of, but not title to, the cards. At the direction of the customer, the printer will imprint the customer's cards with an employee's name and send the imprinted cards to the customer. - Retailers with multiple retail locations are to maintain their records so as to clearly show which sales are attributable to each location.
NOTE: Retailers reporting sales for purposes of the local option tax must report their sales by county and municipality where delivery occurs. RETAILERS CANNOT RELY ON MAILING ADDRESSES IN REPORTING THE LOCAL OPTION TAX. A MAILING ADDRESS IS NOT AN ACCURATE INDICATION AS TO WHETHER OR NOT A LOCATION IS WITHIN A PARTICULAR MUNICIPALITY OR COUNTY.
Is a retailer required to remit local Sales and Use Tax for every county in which the retailer does business or may the retailer remit only the local Sales and Use Tax for the county in which my retail store is located?
The retailer must remit the local Sales and Use Tax based on the county in which the retailer delivered the product or service.
What qualifies a sale for the unprepared food exemption?
Foods eligible for the unprepared food exemption (SC Code § 12-36-2120(75)) include:
- Any food intended to be eaten at home by people, including snacks, beverages and seasonings;
- Seeds and plants intended to grow food (not birdseed or seeds to grow flowers); and,
- Cold items, which may include salads or sandwiches, intended to be eaten at home by people and that are not considered "prepared meals or food" as discussed below.
Food and other items which are not eligible for the unprepared food exemption (SC Code §12-36-2120(75)) and are, therefore, subject to the full state Sales and Use Tax rate (unless otherwise exempt) include:
- Alcoholic beverages, such as beer, wine, or liquor;
- Hot beverages ready-to-drink such as coffee;
- Tobacco;
- Hot foods ready to eat;
- Foods designed to be heated in the store;
- Hot and cold food to be eaten at a lunch counter, in a dining area or anywhere else in the store or in a nearby area such as a mall food court;
- Vitamins and medicines;
- Pet food;
- Any non-food items such as tissue, soap or other household goods;
- Meals or food shipped or delivered to businesses or institutions (hospitals, prisons, jails, nursing homes, etc.); and,
- Prepared meals or food (See definition in SC Regulation 117-337.2.)
For more information concerning this exemption see SC Regulation 117-337.
What items may be purchased tax free by a retailer?
Items that a retailer will resell may be purchased tax free by the retailer.
What does a retailer need to do when accepting a resale certificate?
The presentation of a resale certificate by a purchaser will relieve the seller of liability for the Sales Tax and switch the liability to the purchaser, provided all of the following conditions are met:
- The resale certificate presented to the seller by the purchaser contains all the information required by the SCDOR and has been fully and properly completed.
- The seller did not fraudulently fail to collect or remit the tax, or both.
- The seller did not solicit a purchaser to participate in an unlawful claim that a sale was for resale.
What information is required when filing a claim for refund? How far back can we file a claim?
A taxpayer who is legally liable for the tax may seek a refund of a state tax by filing a written claim for refund with the SCDOR. A claim for refund should be filed within three years to be timely.
The refund claim must specify:
- The name, address, and telephone number of the taxpayer;
- The appropriate taxpayer identification number or numbers;
- The tax period or date for which the tax was paid;
- The nature and kind of tax paid;
- The amount which the taxpayer claims was erroneously paid;
- A statement of facts supporting the taxpayer's position;
- A statement outlining the reasons for the claim, including law or other authority upon which the taxpayer relies; and
- Other relevant information that the SCDOR may reasonably require.
The statutory provisions concerning a refund claim are SC Code §§ 12-54-85 and 12-60-470.
How do I close a Business Tax account?
To close your Business Tax acount, you have two options:
- Log in to
MyDORWAY, then select the
More tab, and click
Close a Tax Account to get started.
OR
- Indicate your account closure on your final tax return by selecting
Close Account,
Business Permanently Closed,
Final, or something similar.
