Sales and use taxes
What goods are subject to sales and use tax in your state (at both state and local level)?
South Carolina imposes sales and use taxes on retail sales of tangible personal property. ‘Tangible personal property’ means any personal property that may be seen, weighed, measured, felt, touched, or that is any manner perceptible to the senses. It also includes specified taxable services and intangibles, including communications, laundry and related services, and furnishing of accommodations and sales of electricity.
South Carolina’s sales tax is a vendor tax imposed on retailers that make retail sales within the state. The sales tax is based on the retailer’s gross proceeds of sales. The state’s use tax is a vendee tax imposed on purchasers for the use, storage, or consumption of tangible property in South Carolina. The use tax is based on the sales price of the property.
South Carolina law also provides counties and municipalities with limited authority to impose local sales and use taxes for various purposes. Generally, local sales and use taxes will apply to any sales and purchases that are subject to South Carolina’s state sales and use taxes, though some variation regarding exemptions exists.
What is the state sales tax rate?
The state sales and use tax rate is 6%. Sales of accommodations are subject to a 7% tax rate.
What is the range of local sales tax rates levied in your state?
South Carolina law allows the imposition of various types of local sales and use tax, including:
- local option (1%);
- capital projects (1%);
- transportation (1%);
- education capital improvements (1%); and
- school district taxes (1%).
Counties may impose one or several local sales and use taxes; however, the maximum local tax rate allowed by South Carolina law at any given time is 3%. The South Carolina Department of Revenue frequently issues updated guidance providing information on which jurisdictions impose various local sales and use taxes.
What goods are exempt from sales and use tax?
South Carolina law contains a number of exclusions and exemptions from the sales and use tax. While a transaction must squarely fall within the requirements of an exclusion in order for sales and use tax not to apply, exclusions are liberally construed in favor of the taxpayer. Some of the state’s more common exclusions include:
- sales of property to a licensed retailer or wholesaler for resale;
- sales of property to a manufacturer or compounder as an ingredient or component part of a product manufactured or compounded for sale;
- sales of property used directly in manufacturing, compounding, or processing tangible personal property into products for sale; and
- sales of materials used incident to the sale and delivery of tangible personal property or used by a manufacturer in the shipping of tangible personal property.
Exemptions are strictly construed against the taxpayer. South Carolina provides for numerous exemptions from sales and use taxes, which generally can be divided into the following categories:
- government-related exemptions (e.g., sales to the federal government);
- business-related exemptions (e.g., sales of machines used in manufacturing);
- agricultural exemptions (e.g., sales of feed used to produce or maintain livestock);
- educational exemptions(e.g., sales of textbooks for use in a school or public library);
- general public good exemptions (e.g., sales by non-profit organizations); and
- alternative energy exemptions (e.g., sales of hydrogen fuel cell equipment).
Are any services taxed?
South Carolina imposes sales and use taxes on certain services including:
- certain communications;
- laundry and dry cleaning;
- electricity; and
- furnishing of accommodations.
What filing requirements and procedures apply?
The Department of Revenue is responsible for administering and collecting state and local sales and use taxes. Any retailer responsible for collecting and remitting sales tax must obtain a retail license from the Department of Revenue for each retail sales location. Generally, a retailer is required to file the sales tax return, Form ST-3 (Form ST-388 for accommodations tax), and remit sales taxes on a monthly basis, though certain qualifying taxpayers may file and remit payment on a 28-day, quarterly, annual, or seasonal basis. Retailers that collect and remit the tax on a timely basis can receive a 2% or 3% discount on state sales taxes, not to exceed $3,000. Use taxes are generally reported by individuals on their South Carolina individual income tax return for the entire year; however, certain business taxpayers are required to report and remit use taxes on a monthly basis using Form UT-3.
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