SC Department of Revenue
Use tax due on holiday purchases




Public Affairs Office

Contact: Danny Brazell

Phone: (803) 898-5464



Dec. 9, 2004



Use tax may be due on those online holiday purchases


            Recent surveys show that more and more Americans are taking to the Internet to make their holiday purchases. While making online purchases is fast and convenient, it doesn’t mean your purchase is tax-free.

Those making out-of-state purchases by computer, from catalog sales or television shopping networks may owe South Carolina a “use tax” if their purchase is delivered to South Carolina for use or storage. South Carolina’s use tax rate is 5% of the purchase price plus any county’s local sales tax.

            The use tax, which is another name for the sales tax, is applied to out-of-state purchases when another state’s sales tax is not paid or when the out-of-state retailer does not collect a sales tax for South Carolina. When that happens, it becomes the responsibility of the purchaser to report and pay the use tax to the South Carolina Department of Revenue. If your purchase receipt shows sales or use tax was paid to another state, you are given a credit for the amount of tax paid. However, if that state’s sales and use tax rate is lower than South Carolina’s, you may still owe some use tax to South Carolina.




Page 2   Use tax


The use tax is not a new tax and has been a part of the state’s tax system since the sales tax was imposed by legislation in the 1950s. The use tax prevents local retailers, who must collect the state’s 5% sales tax, from being at a disadvantage to out-of-state retailers who may not be adding a sales tax to the purchase price, as is the case in many online purchases. Every state that has a

sales tax also has a use tax. In South Carolina, all use tax revenue collections, like the state’s sales tax collections, are earmarked for state education initiatives.

            Recent news about a new law passed by Congress preventing states from taxing access to the Internet has caused some confusion regarding the tax on Internet purchases. While the ban prohibits states from taxing certain connections to Internet services, it does not prohibit states from applying the sales and use tax to Internet purchases. 

You can pay the use tax on your holiday purchases by downloading form UT-3 at the Department of Revenue website, Or, you can wait until you file your 2004 state income tax return. Your use tax liability can be reported on Line 23 of the SC1040 long form, or Line 12 of the SC1040A short form. Reporting the tax in this relatively painless way reduces your refund by the amount of use tax you owe, or increases your tax liability by that amount if you owe a balance.  

            Failing to report and pay the state’s use tax can have consequences. If the Department of Revenue discovers you have not reported and paid the tax, penalties and interest could be added to your tax liability. 

For information on reporting the use tax, call the Department of Revenue at (803) 898-5788.






The S.C. Department of Revenue strives to make our website broadly accessible and is continuously working on improvements.
If you have problems accessing this website or suggestions on how to improve the accessibility of this site, please contact

Disclaimer and Copyright Information
Privacy Statement

Home / Contact DOR