South Carolina Department of Revenue

Post Office Box 125 ? 301 Gervais Street ? Columbia SC 29214

Congratulations on opening your business! Businesses, both large and small, are vital to South Carolina's long-range economic stability. We believe that by helping businesses succeed, we ultimately aid in the state's prosperity.

If you've completed the Business Tax Application, form SCTC-111, you've already taken the first step and you've received your new license either in person or through the mail.

If you personally received your business license from one of our Taxpayer Service Centers, you've already made contact with a great resource ? our staff of professionals. If you have questions or concerns please feel free to contact any of our Taxpayer Service Centers or visit our website at www.sctax.org.

The Department has five Taxpayer Service Centers across the state.  See the Telephone Directory in this publication for the addresses, telephone and fax numbers for each location. We also have staff available at satellite locations at scheduled times.

If you received your license at our Business One Stop (DORBOS) or by mail, this business tax guide is intended to give you as much information as you need. However, please feel free to call any of our Taxpayer Service Centers or our main office in Columbia, should you have additional questions or concerns.

The following are some of the ways you can help us serve you better:

•  Use appropriate forms. You'll be receiving a packet of preprinted forms in the next few weeks. However, until they are received, please get your forms on this website by going to Forms and Instructions.
• Be sure to use your correct South Carolina License and Federal ID numbers. Write them here so you'll have these very important numbers written down in more than one place.

My South Carolina Retail License # My Federal ID #

My South Carolina Business/Corporate Tax # Other #

My South Carolina Withholding #

I MUST File: __ MONTHLY ___ QUARTERLY ____ ANNUALLY

• File your returns even if you have no income to report or owe no tax. Failure to do so may result in an estimated assessment of your tax liability as well as penalties and interest. Zero sales and zero pay withholding can be done by TeleFile.
• Make sure you've signed all forms and attached your checks. Completely and carefully check that you've signed where necessary before mailing your forms.

Did you know you might be able to file electronically?

 There are five programs to help you:

 1.  Business Tax TeleFile for Reporting Zero Sales & Withholding    Taxes

 Sales tax filers who have zero gross proceeds of sales, rentals, use tax, and withdrawals for own use for the filing period, may use our Business Tax TeleFile for Sales & Use Taxes.  Withholding tax filers who have a zero payment amount due with the return for the filing period may also use the Business Tax TeleFile System for Withholding Taxes. 

To start the process, please dial (803) 898-5918 and follow the recorded instructions.  First time users are required to register on the system prior to filling their first return.  The process for Sales Tax filers takes less than 5 minutes to complete.  It takes about 10 minutes to complete the process for Withholding Tax filers.

If assistance is needed with sales tax related questions, you can contact the DOR Sales Tax Help Line at (803) 898-5788.  For assistance with withholding tax related questions, please contact the DOR Withholding Tax Help Line at (803-898-5752. 

 For all TeleFile support issues, you should contact the Business Tax TeleFile Help Line at (803) 898-5111 or contact us by e-mail at www.telefile@sctax.org.

2.    Electronic Funds Transfer

Businesses that have paid $15,000 or more during any one filing period during the past year are required to pay electronically. Taxpayers with less than $15,000 in tax due during a filing period may participate voluntarily with the Electronic Funds Transfer (EFT) Program.  For further information call 1-800-476-0311.

Businesses who participate in the Electronic Funds Transfer will need to use the following codes to identify the type of tax they are filing:

 

TAX TYPE	CODE	TAX TYPE	CODE
911 User's Fee	42714	Electric Power	11701
Admissions	10901	Indigent Care	43105
Alcohol:   Alcohol Case Additional Alcoholic Case Retail Alcoholic Case Wholesale Alcoholic Liquor Excise Alcoholic Liquor Surtax		Motor Fuel:
	11005	Environmental Impact	32312
	11004	Gasoline	32301
	11003	Inspection Fee	32314
	11001	Special Fuels	32101
	11007	Radioactive License Fee	41103
Beer Excise	11202	Tobacco Products:
Bingo	12550	Cigarettes	11401
Commercial Nuclear Waste	11101	Other Tobacco Products	11408
Contingent Nuclear Waste	11103	Wine:
Deed Recording Fees	11603	Wine Additional	110301
Dry Cleaning: Stoddard Solvent Fee Tetra Solvent Fee		Wine Excise	11303
	33518	Withholding	10811
	33516

 

Corporate Taxpayer	Income Code	License Code	Quarterly Estimated Code
Corporation (Domestic or Foreign)	10804	10401	10807
Bank	10101	N/A	10103
Savings & Loan	10201	N/A	10203
Utility	10804	10601	10807

3.    Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI)

 The Department of Revenue has designed an Electronic Filing Program (EFT/EDI) for the transmission of your payment and filing your tax return information for sales, use, accommodations, local option and/or special local taxes.

Businesses that have paid $15,000 or more during any one filing period during the past year may be required to pay electronically. Taxpayers with less than $15,000 in tax due during a filing period may participate voluntarily with the Electronic Funds Transfer (EFT) Program.

If you are interested in filing and paying one tax through EFT/EDI, you must file and pay all of these taxes through EFT/EDI.  For example, you cannot file and pay sales tax through this program and pay local option through a conventional process.

Be aware that you must file both the return and the payment electronically; you cannot choose to do one part electronically and the other in a conventional method.

Electronic payments can be made by using the ACH (Automated Clearing House) debit or credit method.

Advantages of participating in the EDI/EFT program include:

• Eliminates paperwork, no more paper returns and checks
• Reduces return error potential due to no re-keying; no manual intervention
• Accurate timing of payment from your bank account
• Comprehensive audit trail for both the return and the payment

To register, please call 1-800-379-9409 or e-mail BusinessEFT@sctax.org.

4.      Electronic Payment Over the Internet

You may also make WithholdingTax, Corporate Tax Declarations and delinquent payments online by using our ePAY system from our website.  There is no cost to you and no registration is required.  Using the ePAY system, payments are submitted by credit card or by electronic funds withdrawal (bank draft).

5.      Individual Income Tax Electronic Filing

 Using FastFile, South Carolina accepts electronically filed state income tax returns.  Refund and balance due returns are accepted electronically. Refunds may be deposited directly into your bank account.

Sales and Use Tax

The Basics

Sales tax is imposed on the sale of goods and certain services in South Carolina. Sales tax or use tax is imposed on goods and certain services purchased out of state and brought into South Carolina or on which no sales tax has been paid. The statewide sales and use tax rate is 5%. Counties may impose an additional 1% local option sales and use tax and 1% special local taxes if voters in that county approve the tax. Generally, all retail sales of tangible personal property are subject to the state's sales or use tax.

Sales Tax

The sales tax also applies to the fair market value of tangible personal property previously purchased by the retailer at wholesale (for re-sales), but used by the retailer or any other person withdrawing tangible personal property to be used and consumed by them. In addition to applying to items one normally thinks of as tangible personal property - furniture, appliances, clothing, etc. - the sales and use tax also applies to communications like local telephone services, cable television services, satellite programming services, faxing services and paging services, as well as laundry and dry-cleaning services, accommodations and electricity.

A 10% sales tax applies to telephone services to 900 and 976 exchanges. The sales and use taxes imposed extend to gross proceeds accruing or proceeding from the business providing 900/976 telephone service and all revenues derived from this imposed tax must be credited to the general fund of the state.

Use Tax

Anyone who buys tangible personal property from out-of-state and brings it into South Carolina is responsible for paying a use tax at the rate of 5% plus any applicable local taxes on the sales price. Businesses that make non-taxed purchases out of state, report and pay the use tax on their monthly sales and use tax return, State Sales and Use Tax Return, form ST-3.

A taxpayer is liable for the use tax imposed on tangible personal property if, upon payment of the sales and use tax, the personal property is:

• Purchased in another state, upon which a sales or use tax was due and not paid in the other state
• The amount of the sales and use tax due and paid in the other state
• And is allowed as a credit against the use tax due in this state

If the amount of the sales or use tax paid in the other state is less than the amount of use tax imposed, the purchaser will pay the difference. The same rules for sales tax also apply to use tax.

Accommodations Tax

The rental of transient accommodations is subject to a 2% accommodations tax in addition to the 5% sales tax (and the 1% local tax, if applicable). If you rent out rooms or spaces at hotels, campgrounds, boarding houses, etc., the accommodations tax also applies to rentals of your vacation home or second home.

Rentals of the same room to the same person for 90 continuous days are not subject to the tax. If you rent a room in your place of residence and the house has less than six bedrooms, the accommodations tax would not apply. If you rent transient accommodations for no more than one week each calendar quarter, a retail license is not required, but you still must report and pay the accommodations tax annually.  Additional guest charges such as movie rentals, room service, valet services, etc. are subject to the 5% sales tax.

For additional information, go to the South Carolina Department of Revenue website, www.sctax.org and see SC Revenue Ruling 98-21.

Casual Excise Tax

South Carolina imposes a casual excise tax at the rate of 5% for the issuance of every title or other proof of ownership for motor vehicles, motorcycles, boats, motors and airplanes transferred between individuals.

Generally, the maximum casual excise tax is $300 ? for additional information, see SC Revenue Ruling #95-12.

The payment of this tax is a prerequisite to the titling, licensing, or registration for the above-mentioned items. Exempt from this tax are transfers between members of one's immediate family.

$300 Maximum Tax

A maximum sales tax of $300 is imposed on the sale or lease of motor vehicles, boats, aircraft, motorcycles, trailers or semi-trailers pulled by a truck tractor, horse trailers, recreational vehicles and certain self-propelled light construction equipment.

The $300 maximum tax also applies to the sale of musical instruments and office equipment sold to religious organizations. Purchasers must submit a Religious Organization Affidavit for Musical Instruments/Office Equipment, form ST-382 to the seller for items purchased by religious organizations.

Sales of Motor Vehicles to Nonresidents

Sales of new or used motor vehicles, trailers, semi-trailer and pole trailers to residents of another state are taxed at the rate imposed by the purchaser's state of residence. The tax cannot exceed the $300 maximum tax imposed by South Carolina.

For South Carolina sales tax purposes, sales to nonresidents of new or used motor vehicles, trailers, semi-trailers, and pole trailers that are registered and licensed in the purchaser's state of residence, are taxed at the lesser of the:

1. Sales tax which would be imposed on the purchaser's state of residence, or
2. Tax would be imposed under Chapter 36 of the South Carolina Code of Laws

No sales tax is due in South Carolina, however, if a nonresident purchaser cannot receive credit in their resident state for sales tax paid to South Carolina. Vehicle Affidavit for Nonresident, form ST-385 must be completed on each vehicle sold to a nonresident.

Manufactured Housing

The first 35% of the selling price of a new or used manufactured home, after any trade-in (if applicable) is exempt from sales and use tax.

After allowing for the exemption, the maximum tax imposed on the remaining balance and is subject to tax as follows:

• For a non-energy efficient manufactured home, a maximum tax of $300 plus 2% of the remaining sales price exceeding $6000.

• Manufactured homes that meet certain energy efficiency levels may have the 2% waived

Local Option Sales and Use Tax

Twenty-seven counties in South Carolina impose an additional 1% local option sales tax. The combined sales tax rate in these counties is 6%.

The counties with the local option sales and use tax and the effective dates of implementation are:

 

Effective Date	Counties
July 1, 1991	Charleston, Colleton, Jasper, Hampton, McCormick and Marion
May 1, 1992	Abbeville, Allendale, Bamberg, Edgefield, Lancaster, Marlboro and Saluda
May 1, 1994	Chester and Florence
May 1, 1995	Pickens
May 1, 1996	Dillon, Lee and Sumter
May 1, 1997	Berkeley, Chesterfield, Clarendon, Darlington, Kershaw and Williamsburg
May 1, 1998	York
May 1, 1999	Barnwell, Laurens,
April 30, 2000	Chester

Additional counties may approve the local tax at that time through local elections. If voters approve the tax, the tax will become effective in that county on May 1 following the November election date. Items limited to the $300 maximum sales and use tax are not subject to the local tax.

 Special Local Sales Taxes

 Voters may approve through a county referendum the following taxes:

- 1% local sales and use tax to be used for transportation needs such as roads and bridges. This tax may be imposed in addition to the local option sales and use tax.(Effective: June 13, 1997)

- 1% local sales and use tax to fund specific capital projects such as roads, bridges, public facilities, recreation facilities, and water and sewer projects. This tax may be imposed in addition to the local option sales and use tax but may not be imposed along with any other local sales tax. This referendum may first be held in November 1998. The Department of Revenue will collect this tax. (Effective: July 1, 1997)

The following counties impose the special local 1% sales and use tax for capital projects: Aiken, Allendale, Newberry, Orangeburg and York.

Effective May 1, 2000, Chester County no longer imposes the 1% Capital Projects Tax.  Jasper County discontinued the 1% Capital Projects tax effective December 1, 2002.

-1% local sales and use tax for schools. The state legislature has only approved the school tax to be voted upon in Berkeley, Cherokee, Colleton and Union counties.  Currently, only voters in Cherokee and Chesterfield counties have approved the       tax. The tax is used for school construction and improvements. (See South Carolina Revenue Ruling #96-9 for more information on the Cherokee County local tax.)

-  Chesterfield County imposed a 1% School District Tax effective September 1, 2001.   Jasper County imposed a 1% School District Tax effective December 1, 2002

 Food is exempt from the school district tax but not the capital projects tax.

Exemptions and Exclusions

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

Exclusions

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 that are for use outside the state.

Sales to individuals 85 years of age and older are exempt from 1% of the state sales tax on the purchase of items for their personal use.

Exemptions

Business Exemptions

The following items are exempt from sales and use tax:

• Cooperative direct mail promotion advertising materials delivered by means of an interstate carrier, a mailing house or a United States Post Office to residents of this South Carolina from locations both inside and outside the state
• Machines used in research and development. (Effective for tax years beginning after June 30, 2001)
• Coal, coke, fuel for manufacturers, transportation companies, electric power companies, processors
• Long-distance telephone calls, access charges and charges for telegraph messages, transactions at automatic teller machines
• Fuel for ships on high seas
• Wrapping paper, containers, etc. used incident to sale and delivery of tangible personal property
• Motor fuel taxed under motor fuel tax law
• Machines used to manufacture, process, recycle, compound, mine or quarry tangible personal property for sale, prevent and abate pollution
• Electricity used to manufacture, process, mine, or quarry tangible personal property for sale or used by cotton gins to manufacture tangible personal property for sale
• Railcars
• Certain vessels and barges
• Laundry supplies and machinery (services are taxed under the law)
• Vacation timeshare leasing plans
• Partial exemption for modular homes
• Movies sold or rented to movie theaters (movie theaters are subject to the admissions tax)
• Tangible personal property delivered outside of the state by South Carolina retailers
• Petroleum asphalt products transported and used outside South Carolina
• Shipping containers used by international shipping lines under contract with the South Carolina State Ports Authority
• Generally, the sale of all depreciable assets as a result of a sale of the entire business
• Supplies, equipment, machinery for use in filming/producing motion pictures
• Material handling systems and equipment used in the operation of a distribution facility or a manufacturing facility
• Parts and supplies used in the business of repairing or reconditioning aircraft owned by or leased to the federal government or commercial air carriers. (This exemption does not extend to tools and other equipment not attached to or that becomes part of the aircraft)
• Audio-visual masters, sales price defined, sales tax exemption, waivers

The following when used by a qualified recycling facility:

1. Recycling property
2. Electricity, natural gas, fuels, gasses, fluids and lubricants
3. Ingredients or component parts of manufactured products
4. Property used for the handling or transfer of post consumer waste or manufactured products, or in or for the manufacturing process; and
5. Machinery and equipment foundations

Government Exemptions

• Transactions prohibited from being taxed by federal or state law or the federal or state constitutions
• Sales to the federal government
• Materials necessary to assemble missiles used by the U.S. Armed Forces
• Sales of motor vehicles and motorcycles to nonresident military personnel
• Sales by the State General Services Division to other state agencies if the tax was paid on the purchase by General Services
• Parts and supplies used to repair or recondition aircraft owned by or leased to the federal government
• Sales to government contractors or someone with a written contract with the federal government

Educational or School Related Exemptions

• Exhibition rentals for museums (for charitable, eleemosynary and government museums ? use tax only)
• Textbooks, books, magazines, periodicals, newspapers and access to on-line information for use in a course of study or for students' use in the school library, sold to public and private schools and colleges and public libraries
• These items may be in printed form or alternative forms such as audio tapes, videotapes, microfilm, or CD-ROM information
• Newspapers
• Meals sold to students in schools (not for profit)
• Television, radio and cable TV supplies, equipment, machinery and electricity
• Zoo plants and animals

Agricultural Exemptions

• Livestock
• Feed used to produce or maintain livestock
• Insecticides, chemicals, fertilizers, soil conditioners, seeds, seedlings, or nursery stock used in the production of farm products
• Containers and labels used in preparing agricultural products for sale; turpentine gum, gum resin, and gum spirit of turpentine
• Farm machinery
• Fuel used to cure agricultural products
• Farm products sold in their original state of production when sold by producer
• Electricity and gas used in the production of livestock and milk
• Electricity to irrigate crops
• Building materials, supplies, fixtures and equipment used to construct commercial housing of poultry or livestock

General Exemptions

• Newspapers, newsprint paper and the South Carolina Department of Agriculture's Market Bulletin
• Toll charges, telegraph messages and access charges (long distance)
• Vacation timeshares
• Electricity, natural gas, etc. used for residential purposes
• Hearing aids
• Festival concession sales by organizations devoted exclusively to public and charitable purposes
• Sales by certain nonprofit organizations
• Plants and animals sold to publicly supported zoos
• Medicines and prosthetic devices sold by prescription and medicines used in the treatment of cancer and other related diseases
• War memorials and monuments honoring U.S. armed services and affixed to public property
• Meals sold by certain nonprofit organizations to the elderly and disabled
• Food for the homeless or needy sold to certain nonprofit organizations or food that is subsequently sold or donated by the nonprofit organization to another nonprofit organization
• Certain trash bags required to be used
• Under a governmental solid waste disposal plan
• Free samples of prescription medicines distributed by the medicine manufacturer and medicines donated by the manufacturer to a college or university for research or treating indigent patients
• Goods sold to nonprofit hospitals that primarily treat children at no cost to the patient

After you receive your retail license or purchaser's certificate of registration, you will receive preprinted forms for reporting and paying the sales and use tax.

Please use these forms?it makes crediting your account much easier.

Returns and payments are due no later than the 20th of the month following the month in which the sales were made.

For example:

You have $2000 worth of sales in the month of January. The sales tax return for the month of January is due February 1 and must be filed no later than February 20.  The return must be postmarked on or before February 20 to be considered timely filed.

The tax is remitted for the month the sale was made regardless of whether the tax was collected from the customer in that month. Depending on the amount of tax paid, the Department of Revenue may authorize certain businesses to pay quarterly, seasonally or annually, rather than monthly.

Reporting and Paying the Tax Electronically

As a South Carolina business owner, you can conveniently file your Sales tax return by using the Business Tax TeleFile System. Business Tax TeleFile is available twenty-four hours a day / seven days a week.  To qualify to file a Business Tax TeleFile sales return, you must have zero gross proceeds of sales, rentals, use tax or withdrawals for the filing period covered.

As a first time user you're required to register on the Business Tax TeleFile System before filing. Registration can be handled directly on the system during the initial telephone call.  The registration and filing process takes less than five minutes. Subsequent filings take less than three minutes. 

The procedure is completely paperless; mailing additional documentation to the Department of Revenue is not required. You need to keep a copy of your report for your files, however.

To use the Business Tax TeleFile System, dial (803) 898-5918 and follow the instructions.  If additional assistance is needed, you can contact the Business Tax TeleFile coordinator in Columbia at (803) 898-5783.

 The Department of Revenue has designed an Electronic Filing Program (EFT/EDI) for the transmission of your payment and filing your tax return information for sales, use, accommodations, local option and/or special local taxes.

 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 less than $100, you may take a 3% discount of the tax. For taxes of $100 or more, your discount is 2% of the tax.

The maximum discount allowed per taxpayer (all locations included) during the state's fiscal year (July 1 - June 30) is $3,000.   The statute was amended (effective July 1, 2002) to increase that discount to a maximum of $3,100 if the retailer files his sales and use tax returns electronically.

Nonresident retailers not required by law to collect South Carolina sales or use 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.

Cash Deposit or Bond

Transient retailers who have no permanent business location from which retail sales are made may make a sufficient cash deposit or bond with the Department of Revenue to cover at least their annual sales tax liability.

This cash deposit or bond must be made before receiving a retail license.

Sales Tax Holiday

If your business sells clothing, footwear and/or educational supplies, South Carolina's sales tax exemption may impact your business. The three-day sales tax exemption occurs from 12:01a.m. on the first Friday in August and ends at midnight the following Sunday.

The following items are sales tax exempt during this period:

• Clothing
• Clothing accessories including, but not limited to:
• Hats
• Scarves
• Hosiery
• Handbags
• Footwear
• School supplies including, but not limited to:
• Pens
• Pencils
• Paper
• Binders
• Notebooks
• Books
• Book bags
• Lunch boxes
• Calculators

Sales of the following items are NOT sales tax exempt during this period:

• Jewelry
• Cosmetics
• Eye wear
• Wallets
• Watches
• Furniture
• Sales or lease of an item for use in a trade or a business

E-mail Information

Do you want to receive E-mail notices of newsletters or hot topics related to Sales and Use Tax? To use our E-Mail notification service, sign up for our Sales and Use Tax Listserv at www.sctax.org

What Happens If You Don't File a Return?

Penalties and Interest are imposed if you don't file.

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.

Selected Forms to Use

There are a number of Sales and Use Tax forms to use based on the types of taxes you collect and where you are located.

ST-3 State Sales and Use Tax Return
ST-8 Single Sale Certificate
ST-8-A Resale Certificate
ST-10 Application for Certificate
ST-382 Religious Organization Affidavit for Musical Instruments/Office Equipment
ST-385 Vehicle Affidavit for Nonresident
ST-387 Application for Sales Tax Exemption Under Code Section 12-36-2120(41), "Exempt Organizations"
ST-388 State Sales, Use and Accommodations Tax Return
ST-389 Schedule for Local Option Sales and Use Tax Return
ST-403 State Sales, Use and Aviation Gasoline Tax Return
ST-407 Food Tax Schedule

For the most up-to-date forms, visit the South Carolina Department of Revenue website at www.sctax.org and go to the Forms and Instructions button.

Withholding

Payroll Taxes

If you'll be employing others to work in your business, you'll need to withhold payroll taxes for both the federal government, FICA and the State of South Carolina.

South Carolina requires withholding from:

• Wages
• Prizes
• Royalties
• Winnings
• Nonresident contractors (contracts exceeding $10,000.00)
• Rental payments made to nonresidents who own five or more residential units or one or more commercial properties in South Carolina
• Net proceeds going to nonresident sellers of real estate and associated tangible personal property located in South Carolina.

You must apply for a South Carolina Withholding number in order to establish an account in which to deposit your payments.  This can be done online at our website, www.sctax.org  or by completing the Business Tax Application, form SCTC-111.  The number entitles you to be a withholding agent . The withholding number is permanent and will not be issued to any other business or person. Should the form of ownership of the business entity change, such as conversion from a partnership to a corporation, a new withholding number must be obtained. The withholding number will appear on all reports, returns, and correspondence concerning the withholding agent and the account

How to Figure Withholding Payments

A federal form W-4, Withholding Exemption Certificate, should be on file for each employee to determine the amount of income tax to withhold from an employee's wages.  South Carolina has adopted the use of the federal form W-4. We do not have a separate state W-4 form.  It is not required that an employee file a separate form W-4 for state purposes, unless the employee claims a smaller number of exemptions from those claimed for federal purposes. Use the federal form W-4 and indicate on the face of the form that it is "For State Purposes." An employee is not allowed to claim a greater number of exemptions for state purposes than the exemptions claimed for federal purposes. Copies of W-4 forms are available on our website, /, or from the Internal Revenue Service and are to be maintained in the employer's records.

Use the withholding tables in your booklet to determine the amount of tax to withhold depending on the employee's salary, number of exemptions and frequency of payment (daily, weekly, biweekly, semimonthly or monthly).

All South Carolina withholding agents are required to withhold tax from employees' wages at the same time employees are paid (based on the date of the paycheck). The state withholding tax dollar limit that determines when a deposit or payment is to be made (except for nonresident withholding agents) is determined by your federal deposit requirement (i.e., monthly, weekly or daily).

Making Withholding Payments

Withholding agents will receive a withholding package annually from the Department of Revenue with forms for filing and remitting the taxes. Each return in the package will be preprinted with the name and withholding number assigned to the withholding agent.

Also included in this package are preprinted coupons for you to use to deposit withholding taxes at your bank, if applicable. Use of these preprinted forms will help assure your return and payments are processed timely and efficiently.  All preprinted Withholding Tax Payment Coupons (form WH-1601) must be deposited at one's bank at the same time that federal withholding tax and FICA are deposited.

South Carolina resident withholding agents must deposit state withheld taxes with their local banks.

All payments made without a preprinted payment form (WH-1601) must be mailed to the address on the form.

 Electronic Payment Over the Internet

Reconciliation Returns

There are two (2) types of reconciliation returns:

1. Quarterly (WH-1605)
2. Fourth quarter/annual (WH-1606)

All withholding agents are required to file a quarterly reconciliation of tax withheld during the quarter (form WH-1605).  A fourth quarter/annual reconciliation return (form WH-1606) must be used to reconcile the withholding account for the fourth quarter and year and transmit state copies of W-2 forms. Quarterly payers will remit fourth quarter tax due with form WH-1606.

A federal Withholding Tax Statement, form W-2 must be furnished to each employee before January 31 following the close of the calendar year or on the last day of employment.

The form W-2 must include the following information:

• Name and address of the withholding agent
• State and federal identification number of the withholding agent
• Name and address of the employee
• Social Security number of the employee
• Total amount of wages or payments
• Total amount of tax withheld

Copy one of the W-2 form must accompany WH-1606 form, the Fourth Quarter/Annual Reconciliation of Income Tax Withheld return, and sent to the South Carolina Department of Revenue by February 28 (or February 29 in leap years).

 W-2 Notes

 W-2 Wage and Tax Statement forms have multiple copies.  They are:

• Copy A for Social Security Administration. Send the entire page with form W-3 to the Social Security Administration (SSA); photocopies are not acceptable.¹
• Copy one for the state, city or local tax department
• Copy B to be filed with the employee's federal tax return. This information is being furnished to the Internal Revenue Service.
• Copy C is for the employee's records
• Copy D is for the employer
• Copy two is for the employee's state, city or local income tax return.

 Specific information needed to complete the W-2 form is given in a separate Internal Revenue Service booklet entitled "2001 Instructions for Forms W-2 and W-3."Because the Social Security Administration processes paper forms by machine, you cannot file with the SSA forms W-2 and W-3 that print from the IRS website (www.irs.org).

 Due Dates for W-2's

 Furnish copies B, C and 2 to the employee generally by January 31. (File copy A with the SSA generally by February 28, 2003.  Send all copies A with Transmittal of Wage and Tax Statements, form W-3. If you file electronically (not by magnetic media), the due date is March 31, 2003.)   These dates change each year so be sure you read the instructions carefully!

Nonresident Withholding Agents

Nonresident withholding agents may mail their payments and coupons to:

 :SC Department of Revenue
  Withholding
  301 Gervais Street
  Columbia, SC 29214-0004

The postmark date will determine timely filing.  You may also make withholding payments online by using our ePAY system from our website.  There is no cost to you and no registration is required.  Using the ePAY system, payments are submitted by credit card or by electronic funds withdrawal (bank draft).

A nonresident withholding agent whose accumulated South Carolina withheld tax is less than $500 during a calendar quarter must remit tax withheld to the Department of Revenue by the last day of the month following the quarter in which the tax was withheld.

For example: If the accumulated amount withheld is $500 or more by the end of a month, the tax withheld must be remitted by the 15th day of the following month.

For example: If the accumulated amount withheld is less than $500 in any month, the amount can be rolled forward to the next month within the same quarter.

Nonresident withholding agents withholding $15,000 or more per quarter are required to pay taxes through electronic funds transfer (see Electronic Funds Transfer EFT above).

Selected Forms to Use

WH 1601 Withholding Tax Payment Coupon
WH 1603 Withholding Tables
WH 1603F Computer Formula
WH 1605 Quarterly Withholding Tax Return (Quarters 1, 2 and 3)
WH 1605A Amended Quarterly Tax Return
WH 1606 Fourth Quarter/Annual Reconciliation of Income Tax Withheld
WH 1606A Amended Fourth Quarter/Annual Reconciliation of Income
Tax Withheld
WH 1612 Transmitter Report and Summary of Magnetic Media Form
W-2Wage and Tax Statement (federal form)
Form W-4 Withholding Exemption Certificate (federal form)
Form 105 Information Guide - South Carolina Withholding Tax
SCTC-111 Business Tax Application

For the most up-to-date forms, visit the South Carolina Department of Revenue website at www.sctax.org and go to the Forms and Instructions button.

Other South Carolina Taxes You May Need to File

Unemployment Insurance Contributions

Employers of one or more workers must pay a tax on wages paid to employees for purposes of providing unemployment compensation.

This tax is administered and collected by the South Carolina Employment Security Commission.

South Carolina Employment Security Commission
1550 Gadsden Street
Post Office Box 995
Attn: UI Technical Services
Columbia, SC 29202
Telephone: (803)737-3075

Workers' Compensation

Employers with four or more employees must purchase insurance or qualify as a self-insurer by meeting certain requirements in accordance with the rules and regulations of the South Carolina Workers' Compensation Commission. Workers' Compensation provides benefits to employees who have sustained a job-related injury or illness. The Workers' Compensation Commission collects premiums.

South Carolina Workers' Compensation Commission
1612 Marion Street
Post Office Box 1715
Columbia SC 29202
Telephone: (803) 737-5700

What Happens If You Don't File a Return?

Penalties and interest are added if you don't file a return.

Property Tax

Property tax is generally administered and collected by local governments. Real property is subject to property taxes. Personal property is used in business and certain personal property is used for personal purposes such as motor vehicles, boats and airplanes are subject to property taxes.

Property taxes are generally assessed and collected by local governments, but the Department of Revenue assesses and collects some property taxes and oversees all property tax assessments to ensure equitable and uniform assessment throughout the state. Businesses must report business personal property taxes to the Department of Revenue. There is no state or local tax on intangible personal property or inventories.

How the Tax is Figured

Each class of property is assessed at a ratio unique to that type of property. The assessment ratio is applied to the market value of the property to determine the assessed value of the property. Each county, municipality or other taxing entity then applies its millage rate to the assessed value to determine the tax due. A mill is a unit of monetary value, equal to one-tenth of a cent, or one-thousandth of a dollar (.001).

For example, if the millage rate is 200 mills and the assessed value of the property is $1,000, the tax on that property is $200.

Real and personal property of manufacturers, utilities, railroads, carlines and airlines and business personal property of merchants is assessed by the Department of Revenue. The county assessor assesses all other real property.

The county auditor assesses all other personal property.

A state property tax is levied on private carlines and airlines based on the average statewide millage rate.

Assessment Ratios

The following assessment ratios are applied to the value of the property to determine the assessed value for purposes of taxation:

• Manufacturing Property - 10.5% of fair market value
• Utility Property - 10.5% of fair market value
• Railroads, Private Carlines, Airlines and Pipelines - 9.5% of fair market value
• Primary Residences - 4.0% of fair market value
• Agricultural Property (privately owned) 4.0% of use value
• Agricultural Property (corporate owned) 6.0% of use value
• Other real estate - 6.0% of fair market value
• Personal property - 10.5% of income tax depreciated value

Business Personal Property

All businesses assessed by the Department of Revenue are required to file a business personal property return with the Department of Revenue annually. All furniture, fixtures and equipment are to be reported at acquisition cost with a deduction allowed for depreciation.

The return is due on the last day of the fourth month following the close of the tax year. No extension of time for filing will be granted.

Exemptions

South Carolina law provides for a number of property tax exemptions. To obtain an exemption, application must be made to the Department of Revenue on Application for Exemption, form PT-401.

The properties listed below are exempt from property tax:

Exemptions as they relate to institutions of learning

All property of:

· Schools
· Colleges and other institutions of learningexcept where the profits of the institutions are applied to private use

The property of all charitable institutions

In the nature of hospitals, institutions caring for:

• The infirmed
• The disabled
• The aged
• Children
• Indigent persons except where the profits of the institutions are applied to private use

The property of all:

• Libraries
• Churches
• Parsonages
• Burial grounds
  • all property which extends beyond the premises actually occupied by the church if no profit or benefit from any operation flows through to any private stockholder or individual or no income producing ventures are located on the property

Exemptions as they relate to certain individuals

• The dwelling house and up to one acre of surrounding land is exempt for:
• Veteran who is permanently and totally disabled from a service-connected disability and the surviving spouse
• The surviving spouse of military personnel or a law enforcement officer killed in the line of duty

Two motor vehicles for which special license tags have been issued are exempt if owned by a prisoner of war:

• World War I
• World War II
• Korean Conflict
• Vietnam Conflict
• A permanent and totally disabled veteran
• Recipients of the Medal of Honor
• Persons required to use wheelchairs

Exemptions as they relate to organizations

Nonprofit organizations involved in the following:

• Water supply
• Sewage disposal
• A combination of both water supply and sewage disposal
• American Legion
• Veterans of Foreign Wars
• Spanish-American War Veterans
• Disabled American Veterans
• Fle