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About Sales and Use Tax

 

A General Guide To
South Carolina Sales and Use Tax

updated October 12, 2007

Sales tax is imposed on the sale, rental or lease of goods and certain services in South Carolina. Use tax is imposed on goods and certain services purchased out of state and brought into South Carolina on which no sales tax or not enough sales tax has been paid. The state sales and use tax rate is 6% (5% prior to 6-1-07). Certain counties impose an additional 1% local option sales and use tax and/or a special local sales and use tax. (Throughout this document, to keep it simple, the word sale also implies rentals and leases.)

Note: most tax forms that are referenced in this Guide can be found under SCDOR Current Year Forms and Instructions.

The Retail License

If you start a retail business in South Carolina, you will need a retail license before making any sales. The retail license must be obtained by all retailers, including those making infrequent sales in this state. If you have more than one business outlet, you must have a separate retail license for each location.

If you have no permanent retail location, you can obtain a transient retail license which will allow you to make sales throughout the state, but in only one location at a time.

Apply for the retail license on Form SCTC-111, Business Tax Application. The fee for the permanent retail license or the transient retail license is $50. If an outstanding debt exists for state taxes, the retail license will not be issued until the taxes are paid.

Nonresident Retailers - Nonresident retailers with a physical presence in South Carolina must obtain a retail license to do business in this state. A nonresident retailer is one who does not have a business location in this state, but solicits business from South Carolina residents by means of sales representatives, manufacturers' agents, catalogs, advertising or other means.

Purchaser's Certificate of Registration - A purchaser's certificate of registration is required for someone who does not make retail sales but who purchases tangible personal property from outside this state to store, use or consume in South Carolina. Those licensed as retailers do not need a purchaser's certificate of registration. Apply for the certificate on SCTC-111.

Temporary license - A temporary retail license is available for $50 to transient retailers making sales in this state for no more than 30 consecutive days. The temporary license may be applied for in the same manner as a permanent license, by completing the Form SCTC-111.

Artists and craftsmen - Artists and craftsmen selling at arts and crafts shows and festivals products they have created or assembled may obtain a permanent retail license for $20 by applying on Form 110.

Flea market and yard sales - Persons who make sales at a flea market or at a yard sale no more than once per calendar quarter are not required to obtain a retail license.

Charitable organizations - Most non-profit, charitable organizations that make sales for charitable purposes are exempt from the sales and use tax on their sales and are not required to obtain a retail license. Applications for exemption must be made on ST-387. Purchases made by the organization for its own use are taxable.

Special Events Sales - Retailers making sales at festivals or special events - which include promotional shows, trade shows, fairs or carnivals for which an admission fee is required and last less than 12 consecutive days - are not required to obtain a retail license. Instead, retailers are required to file a special event tax return within five days for sales made at the event.

Purchasing a Business

If you buy a business, all taxes that may be owed by the previous owner transfer to you. The taxes owed are a lien against the business inventory and equipment. You cannot obtain a retail license until the tax is paid.

Moving Your Business

If you move to a new location within the same county, you maintain your same retail license number but you should request an updated license to show your new address. If you move to a new location outside the county, you will be assigned a new retail license number. The $50 license fee is not charged when the business location changes.

Closing Your Business

If you close your business, you should file a final tax return with the Department of Revenue, return your retail license and complete C-278 (Account Closing Form). This will prevent you from getting unnecessary notices and bills for unpaid taxes.

More About Sales Tax

In addition to sales at retail, the sales tax also applies to the fair market value of items purchased by the retailer at wholesale, but used by the retailer for personal use. In addition to applying to items one normally thinks of as taxable - furniture, appliances, clothing, etc. - the sales and use tax also applies to communications like paging services, laundry and dry cleaning services, and electricity. A 10% (11% effective June 1, 2007) sales tax applies to telephone services for 900 and 976 exchanges. An additional 5% sales tax surcharge applies to rental cars, and 3% rental of heavy equipment.

More About Use Tax

Use tax commonly applies to purchases from, but not limited to, mail-order catalogs, television shopping and telephone shopping. Businesses which regularly make non-taxed purchases out of state report and pay the use tax on their monthly sales and use tax return, ST-3. Individuals not in business who make non-taxed purchases out of state should report the use tax on UT-3/UT-3W, SC Use Tax Worksheet. This form is included in the South Carolina individual income tax forms package mailed to taxpayers each year.

Many catalog and mail-order companies already collect South Carolina's sales or use tax when you make a purchase. If the business does not collect the tax at the time of purchase, you are responsible for reporting the purchase and paying the tax yourself. If you make a purchase in another state and pay less than the tax which would be due in South Carolina, you should report and pay the difference on UT-3/UT-3W. A credit is allowed for a Sales or Use Tax due and paid in another state.

Local Sales and Use Taxes

A county may approve one or more of the following local taxes

  • local option,
  • capital projects, such as constructing buildings, roads, bridges, water and/or sewer projects
  • school district,
  • or transportation tax, which provides funding for various transportation projects that involve highways, roads, streets, bridges, mass transit systems, greenbelts, and other transportation-related projects.

These local sales and use tax taxes are imposed in addition to the State sales and use tax. These local taxes are collected and administered by the South Carolina Department of Revenue on the behalf of the counties. Items subject to a maximum sales and use tax (i.e. $300 on motor vehicles) are exempt from the local sales and use taxes.

Voters may approve 1% local option sales and use tax and/or a local tax for capital projects or transportation. The question of implementing a local option, capital project or trasnportation tax is held during the month of November. If approved, the tax becomes effective May 1 following the election.

Elections for the school district local tax may be held at any time and becomes effective on the first day of the third full month after approval.

Local taxes such as capital projects, transportation or school district may be approved for a limited time or until a certain amount of revenue is collected.

An online map is available that shows the local option sales and use tax and other local taxes by county.

Note: the counties collecting the 1% local tax to benefit public schools exempt food items that may be purchased with food stamps from this 1% local tax with the exception of Clarendon County. Effective July 1, 2005, all sales of food which are eligible to be purchased with United States Department of Agriculture food stamps are subject to the Clarendon County's 1% School District tax. However, food items are not exempt from the other local taxes unless otherwise exempt by the Statute.

Businesses with sales or deliveries in the State of South Carolina will use

  • the ST-3 (State Sales and Use Tax Return)
  • or ST-388 (State Sales, Use and Accommodations Tax Returns)
  • or ST-403 (State Sales, Use, and Aviation Gasoline Tax Return)
  • or ST-455 (State Sales, Use, Maximum Tax and Special Filers Tax Return)
  • or ST-501 (State Sales, Use Tax Return for Durable Medical Equipment and Supplies)

 along with the ST-389 (Schedule for Local Taxes) if required to be filed.

The ST-389 is required too if a business:

  • Is located in a county or jurisdiction that imposes a local tax, or
  • Remits another county or jurisdiction local tax or
  • Makes sales of unprepared food

The ST-389 is used to report the location where sales or deliveries are made in a county or jurisdiction. If a business is located in a county or jurisdiction without a local tax and collects no local tax and makes no sales of unprepared foods, the ST-389 is not required to be filed.

Counties and municipalities may impose local hospitality taxes on food, beverages, accommodations and admissions. This form does not address the local taxes on sales that are collected directly by the counties or municipalities (sales of accommodations or prepared meals). These taxes are collected by the local government, not the Department of Revenue. Contact the county where your business is located to determine if you are liable for any of their local hospitality taxes.

The local tax rate information presented here is current at the time of publication.

Tax Rate on Unprepared Food

Effective November 1, 2007, sales of unprepared food items eligible for purchase with United States Department of Agriculture food coupons will be exempt from the State sales and use tax. This exemption does not apply to local sales and use taxes administered and collected by the S. C. Department of Revenue on the behalf of counties and other jurisdictions unless the local tax law specifically exempts sales of such food. To obtain additional information relating to sales of unprepared food, view SC Revenue Ruling #06-5.

Catawba Tribal Sales

The Catawba Tribal Sales Tax was created in accordance with the Catawba Indian Claims Settlement Act. The tax rate is based on the total state and local tax rate for portions of the reservation located in Lancaster or York counties. The tribal sales tax rate is 7% for deliveries anywhere on the reservation. Revenue from the Catawba Tribal Sales Tax is collected by the Department and is placed in a trust fund for the benefit of the tribe and its members. Additional information concerning the Collection and Reporting of Catawba Tribal Sales Tax is available or call the Department at (803) 898-5788.

Accommodations Tax

The rental of transient accommodations is subject to a 2% accommodations tax in addition to the 5% sales tax (and the percentage for local tax, if applicable). If you rent out rooms or spaces at hotels, campsites, boarding houses, etc., you are required to obtain a retail license and pay the sales and accommodations tax.

Room rentals to the same person for at least 90 continuous days are not subject to the tax. If you rent a room in the house in which you live and it has less than six bedrooms, you are exempt from the tax. If you rent transient accommodations for no more than one week each calendar quarter, you are not required to obtain a retail license, but you still must report and pay the tax annually. Additional guest charges such as movie rentals, room service, valet services, etc. are subject to the 6% sales tax. ST-388 is used to report your Sales, Use and Accommodations taxes.

Casual Excise Tax

South Carolina imposes a casual excise tax of 5% on the fair market value of all motor vehicles, motorcycles, boats, motors and airplanes transferred between individuals which are subject to a maximum tax of $300. However, a motor sold alone is subject to an additional 1% state tax plus any applicable local tax rate of the purchase price. Transfers between members of the immediate family are exempt. Licenses for motor vehicles or boats will not be issued without proof of payment of the tax.

Maximum Tax

A maximum sales tax of $300 is imposed on the sale or lease of motor vehicles, boats, aircrafts, motorcycles, certain trailers, recreational vehicles and light construction equipment. For purchases of light construction equipment, the Form ST-405 is to be filled out by the purchaser and given to the retailer to limit the tax amount to three hundred dollars ($300). The $300 limit also applies to the sale of musical instruments and office equipment to religious organizations. Form ST-382 must be completed for these items sold to religious organizations. Retailers who sell items subject to a maximum will be receiving the new ST-455 (State, Sales, Use, Maximum and Special Filers Return) with instructions for the form. The ST-455 is to be used for reporting sales subject to the 1% sales tax rate increase as well as those not subject to the 1% sales tax (Items subject to a maximum tax) rate increase as of June 1, 2007.

Sales to Out-of-State Residents

Sales of new or used motor vehicles and certain trailers are taxed at the rate imposed by the purchaser's state of residence or 5%, whichever is less. The tax cannot exceed South Carolina's $300 maximum tax. When a nonresident will not receive credit for sales tax paid to South Carolina for a motor vehicle or trailer, no sales tax will be charged. ST-385 must be completed on each vehicle sold to a nonresident.

Manufactured Homes

The first 35% of the selling price of a manufactured home is exempt from sales and use tax. After allowing for the exemption and any trade-in, the tax imposed on the sale is $300 plus 2% of the remaining sales price exceeding $6,000. The 2% may be waived if certain energy efficiency levels are met in the mobile home. Furniture and appliances that are not permanently attached and are sold with a mobile home must be listed separately on the bill or invoice and taxed at 6% of the sales price (less any trade-in allowance), plus applicable local taxes.

Exemptions and Exclusions

Generally, all retail sales are subject to the sales and use tax. However, there are a number of sales exempt from the tax, most notably, certain items used in farming and manufacturing, medicines sold by prescription and sales to the federal government.

Items excluded from the sales and use tax primarily include sales of goods for resale. Other excluded items include certain property used in the manufacturing process, materials used to ship manufactured goods for sale and items brought into the state which are for use outside the state. In addition, sales to individuals 85 or older are excluded from 1% of the tax.

Reporting and Paying the Tax

After you receive your retail license or purchaser's certificate of registration, you will receive pre-printed forms for reporting and paying the sales and use tax. Taxes must be reported and paid monthly to the South Carolina Department of Revenue.

Returns and payments are due no later than the 20th of the month following the month in which the sales were made. The tax is remitted for the month the sale was made regardless of whether the tax was collected from the customer in that month.

The law allows for filing on other than a monthly basis with department approval. The return and payment must be made by the 20th of the month following the end of the reporting period. For example, sales made during the quarter January 1 - March 31 must be reported and paid by April 20.

A tax return must be filed even if no sales were made during the reporting period.

Discount for Timely Payment

If returns are filed and the taxes paid in full by the due date, you will be allowed a discount on taxes due. For taxes due of less than $100, you may take a 3% discount of the tax due. For taxes of $100 or more, your discount is 2% of the tax due. The maximum discount allowed during any fiscal year is $3,000 per taxpayer, not per location. Taxpayers who file and pay electronically are allowed a $3,100 maximum discount. Nonresident retailers not required by law to collect South Carolina sales tax, but who voluntarily register to do so, are allowed a maximum discount of $10,000 each fiscal year. In calculating the maximum discount, begin with the June return filed in July and end with the May return filed in June.

Penalties and Interest

If you do not pay taxes when they are due or do not file tax returns, you may be liable for penalties and interest, in addition to the tax which may be due. If you fail to comply with any of the tax rules administered by the Department of Revenue, your retail license may be revoked and you must close your business until all tax liabilities have been paid.

ESales (Internet Filing)

The South Carolina Department of Revenue Electronic Sales Tax System (ESales) is designed to give taxpayers a FAST, FREE and SECURE way to file and pay their sales, use, accommodations, local option and special local taxes via the internet. ESales will allow the filing of the following forms:

  • ST3 - Sales and Use Tax Return
  • ST3EZ - Simplified Sales Tax Return
  • ST388 - Sales, Use, Accommodations and Local Option Tax Return
  • ST389 - Schedule for Local Taxes
  • ST455 - Maximum and Speical Filers Tax Return
  • ST501 - Durable Medical Equipment and Supplies Tax Return

The SC Department of Revenue's ESales System will allow you to make payment by EFW (Electronic Funds Withdrawal/Bank Draft) or credit card (MasterCard and VISA).

For more information, go to Electronic Services | Sales and Use to see more details about ESales. For technical questions call (803) 896-1715.

Business Tax TeleFile Sales

As a South Carolina business owner, you can conveniently file your Sales and/or Withholding tax return by using the Department of Revenue's Business Tax TeleFile System. Business Tax TeleFile is available 24 hours a day / seven days a week. Sales tax filers must have zero gross proceeds of sales, rentals, use tax or withdrawals for own use for the filing period covered.

First time filers are required to register on the system prior to filing their first return. The entire registration and filing process takes less than five minutes for Sales. The procedure is completely paperless with nothing to mail to the Department of Revenue.

To access the Business Tax TeleFile System, dial (803) 898-5918 and follow the instructions. Online information about the Business Tax TeleFile System is also available. If assistance is needed with sales tax related questions, please contact the DOR Sales Tax Help Line at (803) 898-5788. For all TeleFile support issues, please contact the Business Tax TeleFile Help Line at (803) 896-1715 or contact us by e-mail at telefile@sctax.org

Where To Get Help

Delinquent Returns -- (803) 896-1420
Forms -- 1-800-768-3676
      Columbia area -- (803) 898-5320
Publications -- (803) 898-5419
Refunds, Credit Memos  -- (803) 898-5788
Retail License  -- (803) 896-1350
Sales/Use Tax Registration  -- (803) 896-1350
Sales Tax Exemption Certificates  -- (803) 896-1350
Sales Tax General Information  -- (803) 898-5788

Taxpayer Service Centers

Visit the online Taxpayer Service Centers for details of each location around the state.

Tax returns and other correspondence should be mailed to:
SC Department of Revenue, P.O. Box 125, Columbia SC  29214.

More Information

Additional information about sales tax laws, regulations, policy documents and attorney general opinions can be found online at SCTax.org. Also, visit our online quarterly newsletter Revenews or call (803) 898-5419 to be placed on the mailing list for a free printed copy of Revenews.

This Guide is intended to provide basic information about sales and use tax. It is not a substitution for the law. Further, tax laws change rapidly. We would advise you to seek legal advice if there are questions about your tax obligations.



 
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