Do you need to collect and remit sales tax in South Carolina?
If you’re a retailer in South Carolina or a remote seller exceeding specific thresholds, it’s essential to know the state’s sales tax regulations. You’ll need to register for a retail license and collect and remit sales and use tax on applicable transactions. However, some businesses are exempt, such as:
- Occasional sellers at flea markets or yard sales (no more than once per quarter)
- Certain organizations participating in festivals
- Specific nonprofit organizations
South Carolina also has non-taxable items, including:
- Food sold to nonprofit organizations and meals provided to elderly or disabled persons by nonprofits
- Unprepared food purchased with Department of Agriculture food coupons
- Sales to federal government entities
- Most groceries (excluding hot, ready-to-eat foods)
More details about what is and is not taxable in South Carolina can be found on their sales tax FAQ page.
Do you have sales tax nexus in South Carolina?
Sales tax nexus refers to the connection between a seller and a state that requires the seller to collect and remit sales tax on sales made within that state. There are two types of nexus: physical and economic. Understanding their differences is crucial for every business to ensure compliance with South Carolina’s sales tax laws and avoid penalties.
Physical sales tax nexus in South Carolina
Do you have a tangible presence in South Carolina? If so, you likely have physical nexus. Businesses in South Carolina establish physical nexus through various structures and practices, such as:
- Operating an office, distribution center, sales outlet, warehouse, or any other place of business within the state
- Employing agents working in South Carolina, regardless of whether the business or agent has a permanent or temporary presence
Economic sales tax nexus in South Carolina
Economic nexus is established when a seller, (who has no physical presence), surpasses a specific revenue threshold. In South Carolina, the economic threshold is:
- Over $100,000 in sales within the state during the current or previous calendar year.
If you don’t exceed this threshold, you’re not required to collect and remit sales tax. In fact, charging sales tax without a retail license in South Carolina is illegal.
Keep in mind that the sales threshold encompasses all sales attributed to South Carolina, including transactions conducted via a marketplace facilitator or any other website or source.
Are marketplace facilitators required to collect and remit sales tax in South Carolina?
In South Carolina, marketplace facilitators are required to collect and remit sales tax if their total sales in the state exceed $100,000 during the current or previous calendar year. This applies to all sales, taxable or not, if they’re sourced to South Carolina. These laws were enacted to ease the sales tax burden on remote sellers and level the playing field for sales tax collection.
If you are using a marketplace facilitator, you don’t have to worry about South Carolina sales tax on sales made through the marketplace. However, it is important to ensure that the facilitator is managing your sales taxes. You can do this by requesting documentation of their South Carolina retail license, which will be invaluable proof for audits or communication with the state.
What platforms are marketplace facilitators?
What is a marketplace facilitator?
A marketplace facilitator, sometimes referred to as a Multivendor Marketplace Platform (MMP), is an online platform that allows customers to purchase goods or services from various vendors in one convenient location. These platforms can benefit businesses by increasing product visibility and attracting a larger customer base. Additionally, marketplace facilitators often have the legal responsibility to collect and remit sales tax on behalf of sellers, which can help ease the sales tax burden for businesses.
Filing South Carolina Sales Tax
Are you doing business in South Carolina and have nexus with the state? If so, your first step is to obtain a retail license. The most efficient way to do this is by completing the Business Tax Registration online at MyDORWAY. You’ll need to provide essential business information, such as a valid ID (SSN, ITIN, or FEIN), addresses, business structure, and owner and office details. The Business Tax Application lets you apply for a South Carolina retail license, with a $50 non-refundable fee. But don’t worry, your license remains valid as long as you’re in business!
Once you’ve got your retail license, it’s time to start collecting sales tax. South Carolina uses a destination-based sales tax system, meaning you’ll collect sales tax based on the delivery location of the taxable item. With a state sales tax rate of 6%, each taxable transaction requires this percentage plus any applicable local taxes. Check out this document for a comprehensive breakdown of local sales and use tax rates.
Upon obtaining your retail license, you’ll be assigned a sales tax filing frequency (more on this later). Most taxpayers file and remit monthly. After collecting sales tax for your assigned period, file your sales tax return—MyDORWAY makes electronic filing a breeze, especially for local rates. South Carolina also accepts paper filing with form ST-3.
Keep the following best practices in mind:
- Retain all sales tax records for at least four years after filing your last return.
- Keep customer sales tax separate from business income.
- Don’t spend collected sales tax on anything other than filing remittance.
- Always file your sales tax returns, even if you have no tax due or gross receipts to report.
Let us file for you!
If you’re looking for help with a myriad of sales tax obligations, that’s why we’re here! We are a one-stop-shop for comprehensive sales tax services! Our range of services includes nexus determination, business registration, compliance reviews, audit assistance, and—of course—filing sales and use tax returns. If you don’t see what you need, just let us know and we’ll create a customized solution just for you. Visit our services page to learn more!
When are sales tax returns due in South Carolina?
Upon registration, South Carolina assigns a filing frequency to each taxpayer based on their tax liability. While most taxpayers are assigned a monthly filing frequency, there are a few exceptions. For a comprehensive overview of South Carolina’s sales tax filing frequencies and due dates, look at this helpful graphic.