Tax Law Insights

Following the Supreme Court's landmark decision in South Dakota v. Wayfair, Inc., the Director of the South Carolina Department of Revenue, Hartley Powell, announced that SCDOR will begin requiring remote sellers to collect sales tax. South Carolina law previously authorized imposition of sales and use tax on all retailers, but DOR has not administratively enforced the law because of constitutional nexus restrictions under Quill Corp. v. North Dakota. With the Supreme Court's decision in Wayfair, SCDOR will now administratively apply the same thresholds adopted by the State of South Dakota, and which requires remote sellers with over $100,000 per year in sales, or that engage in 200 or more separate transactions annually, to collect and remit South Carolina sales tax. South Carolina counties and municipalities also may impose local option sales taxes that will need to be collected as well.

Remote sellers should prepare now to collect and pay South Carolina sales tax. South Carolina has not joined the Streamlined Sales and Use Tax Agreement so a business must specifically evaluate the applicability of South Carolina sales tax to its sales. South Carolina has many sales tax exemptions that may apply. Remote sellers should consider whether the exemptions apply, and solicit applicable exemption certificates from their customers in these instances. Additional guidance regarding registration, collecting, filing, and remitting sales tax on a prospective basis will be provided by the South Carolina Department of Revenue in the near future.