Embraced by Southern warmth, South Carolina, with its historical grace, is a tapestry of more than just scenic shores. Key to thriving here in business is grasping “what is sales tax in South Carolina” – as distinctive as a sweetgrass basket. Let’s unpack this, navigating its nuances like a journey through the marshy Lowcountry.
This guide breaks down everything you need to know about South Carolina’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle South Carolina’s sales tax with confidence and ease.
Sales Tax Nexus in South Carolina
When a business creates either a physical or economic nexus, it is required to collect sales tax in South Carolina.
Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in South Carolina include:
- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus or Click-through Nexus: A business has nexus in South Carolina if it works with a company in the state that sells goods or services. This connection happens if: (i) the South Carolina company sells similar items and shares brand names, trademarks, or logos with the business, or (ii) the business relies on the South Carolina partner for handling returns, taking orders, customer support, or distributing ads.
- Presence at Trade Show: In South Carolina, events are classified as either Special Events (like fairs or festivals with admission fees) or Retail Events. Vendors selling at Special Events more than once in 24 months need a South Carolina Retail License. Those selling only once within 24 months don’t need the license but must submit the Special Event Return (FC-1) and Affidavit (FS-152)
- When a business uses its own vehicles, employs representatives, or uses methods other than common carriers or the US Postal Service for in-state delivery.
To stay informed about the current criteria for establishing a physical sales tax nexus in South Carolina, take a look at the official regulations available right here!
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.
Beginning November 1, 2018, the threshold for economic nexus in South Carolina is $100,000 in gross revenue in the previous or current calendar year’s sales.
While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing economic sales tax nexus. To access a comprehensive list of these rules, please refer to the
governing laws for economic sales tax nexus requirements in South Carolina.
South Carolina Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in South Carolina.
Tangible Products
Almost all goods are taxable in South Carolina, including:
- Cosmetics
- Electronics
- Clothing
- Furniture
- Jewelry
- Home Goods
The goods that are exempt from sales tax are:
- Groceries – Sales of unprepared food that can be bought with USDA food coupons are not subject to state sales tax. But, this doesn’t always apply to local taxes unless local laws exempt these sales.
- Prescription Medications – SC Revenue Ruling #11-3 exempt from sales and use tax medications for preventing respiratory syncytial virus, treating rheumatoid arthritis, cancer, lymphoma, leukemia, and items dispensed by a licensed pharmacist for intravenous drug administration. Other exempt goods under the ruling include prosthetic devices, diabetic supplies, and other medical supplies.
- Feminine Hygiene Products (i.e. pads, tampons, and menstrual cups), Diapers, and Toilet Papers
- School and Library Books – Printed Form or Alternative Forms
- Agricultural Supplies: Seeds, fertilizers, and machinery used directly in farming are exempt.
Services
In South Carolina, the majority of service-based transactions, such as professional services, advertising, and employment services, are not subject to sales tax.
However, there are specific situations where certain services are taxable. For instance, taxable services are:
Software-As-A-Service (SaaS)/Digital Products
SaaS is
taxable in the state of South Carolina.
Digital products (i.e., ebooks, downloadable video content, mobile apps) are
not taxable.
Shipping/Handling
Shipping and handling charges in the state of South Carolina are
taxable. Sales tax is exempt if shipping charges are incurred after the title has passed to the buyer.
Sales Tax Permits and Licenses in South Carolina
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in South Carolina, the next important step is getting your South Carolina Retail License, also known as a sales tax permit.
Seller’s Permit
You can register for a South Carolina Retail License online at South Carolina’s My DORWAY Service.
Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:
- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale or the expected date to start dates)
Registration fee
There is a $50 fee to register for a retail license.
Renewal
In South Carolina, you don’t have to renew your retail license.
Resale Certificate
A
resale certificate is a document that allows businesses to buy products without paying sales tax on them, as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale.
In South Carolina, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items.
You can fill out the ST-8A Resale Certificate provided by South Carolina after you receive your sales tax permit. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.
Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. However, South Carolina is not a party to this program, meaning it does not follow the uniform rules and definitions established by SST but has its own sales tax regulations.
Check with the South Carolina Department of Revenue for the most current information on South Carolina’s participation in the Streamlined Sales Tax initiative.
Calculating and Collecting Sales Tax in South Carolina
Sales Tax Computation
In South Carolina, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Use TaxHero’s South Carolina Sales Tax Calculator to compute for sales tax.
Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in South Carolina and sells to a customer in Charleston, SC, with a ZIP code of 29401. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
 |
SALES TAX FORMULA |
RATE |
| State: |
South Carolina |
6.00% |
| County: |
Charleston |
0.00% |
| District: |
First District |
2.00% |
| City: |
Charleston |
1.00% |
| Combined Sales Tax Rate = |
9.00% |
|
Origin-based vs. Destination-based
When making in-state sales, it is important to determine if you are located in an origin-based or destination-based state to figure out what rate to charge for sales tax.
South Carolina is a destination-based state, meaning sales tax is determined based on the buyer’s location. That means for a South Carolina-based seller, sales tax is generally based on the location of the buyer when selling within the state.
For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Ohio to a customer in Charleston, South Carolina, where you have nexus, you’d apply Charleston’s sales tax rate to that sale.
To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.
Filing and Remitting Sales Tax Returns in South Carolina
The next step after collection is filing and remitting your South Carolina sales tax returns. Filing and remittance can vary in frequency, typically monthly, quarterly, or annually.
It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with South Carolina’s sales tax regulations.
Due Dates
In South Carolina, the due date falls on the
20th day of the following month. For instance, sales tax collected in January is due by February 20th for monthly filers.
However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 20th deadline falls on a holiday or weekend, you’ll have until May 21st, the following business day, to submit.
Filing Sales Tax Returns
To file your sales tax return for South Carolina, a few options are available:
- File online through MyDORWAY.
- Mail your Schedule of Local Taxes (ST-389) with the State Sales & Use Tax Return (ST-3) to SCDOR, PO Box 100193, Columbia, SC 29202 for balances due, or PO Box 125, Columbia, SC 29214-0101 for zero due, if your tax liability is under $15,000.
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly.
If your total state and local taxes due is less than $100.00, calculate 3%. If this amount is $100.00 or more, calculate 2% of the Total State and Local Taxes due amount.
Keep in mind, the maximum discount you can receive from this calculation is limited to $3,000 for each fiscal year. The fiscal year in this context runs from June of one year through May of the following year, and the corresponding returns are filed from July through June.
Sales Tax Holiday
Currently, for 2024, the planned sales tax holidays in South Carolina are:
- Sales Tax-Free Weekend (August 2, 2024): During the annual Tax-Free Weekend, you can buy certain items without paying the state’s 6% sales tax or local taxes. These items include clothing, shoes, school supplies, backpacks, and computers. This tax exemption applies to both in-store and online purchases as long as the item qualifies.
South Carolina Sales Tax Penalties
Like in most states, sales tax is a big part of how South Carolina generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state.
Here are the specific penalties for non-compliance with sales tax regulations in South Carolina:
- If you don’t file a sales tax return in South Carolina and you’re registered to collect sales tax, you face a 5% fine of the tax due for being up to one month late.
- Each additional month you’re late increases the fine by 5%, with a maximum penalty of 25%.
- Filing the return on time but paying late results in a 0.5% penalty of the unpaid tax for each month the payment is late.
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