SOUTH CAROLINA DEPARTMENT OF REVENUE
Public Affairs Office Phone (803) 898-5464
Danny Brazell, Assist. Pubic Affairs Director Fax (803) 898-5446
FOR IMMEDIATE RELEASE
April 14, 2000
Use tax due on out-of-state, Internet and catalog purchases
Contrary to popular opinion, catalog and Internet sales are subject
to sales and use tax. Making a purchase outside of South Carolinas borders, whether
done physically or electronically, may not exempt you from paying the states sales
Merchandise bought outside of South Carolina for use or storage in
this state is subject to the "use" tax if an equal amount of sales tax was not
paid to another state at the time of purchase. This applies to catalog and Internet
purchases as well.
The use tax, first cousin to the states sales tax, has been
around since the sales tax was adopted in 1951. However, it remains one of the
states most under-reported taxes. The South Carolina Department of Revenue estimates
that the state loses $40 million annually from unreported use tax. The revenue loss is
critical because all of the use tax, like the sales tax, is earmarked for South
Carolinas education programs. The statewide use tax is 5%, but residents in counties
with a local option or one of the special local taxes may have to pay an additional 1% or
2% use tax.
The Department of Revenue has stepped up its use tax education
initiative for several reasons. With the boom in catalog and Internet sales, many
electronic shoppers are unaware they may have a tax obligation when they make purchases
over the Internet if the tax is not collected by the retailer at the time of the sale.
South Carolina retailers also have encouraged the agency to enhance its collection of the
use tax to eliminate the unfair advantage out-of-statemerchants have over the states
retailers who must collect the sales tax.
"By not collecting the use tax, these merchants have a 5% edge
on our local businesses," said South Carolina Department of Revenue Director
Elizabeth Carpentier. "We dont think thats fair and neither do the South
Carolina businesses who have contacted us encouraging our enforcement of the use
Many out-of-state retailers have taken advantage of the Department
of Revenues voluntary registration program. These companies collect the tax at the
time of sale. South Carolina also participates in a program with 11 other Southeastern
states to exchange sales information for collecting the use tax.
The information exchanged between the states may mean South Carolina
shoppers who did not pay a sales or use tax on out-of-state purchases could receive a bill
from the Department of Revenue. On large item purchases the tax obligation could be
Residents can report the use tax by downloading form UT-3 from the
Department of Revenue website at www.sctax.org or by using the form included in the back
of the 1999 income tax workbook. Ms. Carpentier notes that although the form includes a
worksheet to help taxpayers compute the tax information, it is not necessary to disclose
the date of purchase, a description of the property purchased or the individual purchase
amounts on the return. Only the total of the purchase prices is necessary.
The Department of Revenue also is developing plans to include a line
on future state income tax returns to make it easier to report the use tax.