What do you know about South Carolina Sales Tax, or the state for that matter? You might just know more than some of the public officials living there, as we will see in our concluding story. South Carolina is noted for a lot of things:
William Anthony Perry of Aiken, South Carolina, stands 6-foot 2-inches, and weighs 335 pounds, you probably know him by his nickname “Refrigerator”, a former professional football defensive lineman in the NFL for 10 seasons where he became a Superbowl Champion while playing for the Chicago Bears1.
South Carolina is also home to some really great BBQ (and even a lot of BBQ competitions), mainly featuring chopped ‘Pork Butt’ but sometimes ‘whole hogs’. I for one can make a 'pig of myself' eating South Carolina chopped pork.
What I remember best about South Carolina is a fabulous trip to Hilton Head Island where I got to fish for ‘redfish’ in the grass flats of the Okatie River basin. On another trip to a little state called Georgia (just next door), I went trout fishing and because I had crossed over to the ‘other side’ of the Chattooga River I was actually in South Carolina when I caught a brown trout. South Carolina has some great recreational opportunities.
South Carolina is composed of 32,020 square miles (I wonder how many of those are marsh lands and grass flats?), the state says 6% of that total area is water (seems like more to me). The median household income is $39,642 making South Carolina the 37th richest state in the United States.
Sales tax is imposed on the sale of goods and certain services in South Carolina. The statewide sales and use tax rate is six percent (6%). Counties may impose an additional local sales tax if voters in that county approve the tax (later we will look at a story about a county that recently rejected such a tax.) One interesting provision in South Carolina concerns individuals who are eighty-five (85) years of age or older, they are entitled to a 1% state sales tax reduction on items purchased for their personal use.
If you want to buy ‘a refrigerator’, or a BBQ sandwich, or rent a ‘boat’ to fish from, they are all subject to South Carolina Sales Tax collected by the South Carolina Department of Revenue (SCDOR).
On the other hand if you buy that ‘pork butt’ at the grocery store’s meat department, and take it home to ‘smoke it up’ yourself into some great chopped pork, that purchase is exempt from the SCDOR collectors, even though it may still be subject to ‘local sales taxes’ depending on the county you are in. "I would bet that 'the Refrigerator' ate a lot of BBQ when he was growing up."
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series covering sales tax issues associated with each and every state tax jurisdiction in the United States. We will be publishing "Sales Tax Tuesday" every Tuesday over the entire year of 2015. Who knows, by the end of this year there could be sufficient changes to just start the whole series over again with updated information.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
South Carolina Sales Tax Facts2:
- Sales and Use tax is managed by the South Carolina Department of Revenue.
- South Carolina is NOT a member of the SST. Legislation has been passed to enter the SST, but the state has not yet enacted the laws necessary to comply with SST requirements.
- South Carolina has 41 different sales tax jurisdictions. The state rate is 6% and the total rate can range as high as 9% when including local jurisdictions. The average is 7.13% making it the 18th highest average sales tax rate.
- Local taxes can be for imposed for things from general property and capital projects, to transportation, schools, tourism, and even beach preservation.
- Sales tax is sourced at the destination address.
- Some common nexus creating activities are: sales solicitation, contract workers, and preforming services (but not if that service is related to a declared state disaster or emergency during a disaster period).
- There is max tax (maximum of $300 in tax) on most vehicle sales including motor vehicles, boats, airplanes, trailers, recreational vehicles, and self-propelled light construction equipment.
- South Carolina exempts most services, with some exceptions that are related to installation of certain tangible property (carpentry services on tangible personal property are taxable).
- South Carolina exempts taxes on unprepared food, but taxes prepared foods. Coffee is exempt, but certain local jurisdictions tax it, and in fact can also tax unprepared foods when approved by the voters.
- Exemptions certificates are valid for the following business: most agricultural activity, non-profits, and for purposes of resale. There is no expiration for state exemption certificates.
- When initially registering with South Carolina returns are required on a monthly basis and then downgraded to quarterly or annual filing depending on approval by the SCDOR.
- Note on Use tax: South Carolina (like almost every state) requires individuals not in business to reports use tax on their income tax return for out of state purchases they were not charged sales tax.
This past November Greenville County South Carolina 80-thousand voters rejected a 1% sales tax to pay for road improvements within their county, leaving no funding plan to improve the county's transportation infrastructure3. One reason cited by many voters for rejecting the tax was groceries would have been subject to the new tax. County officials later commented that they failed to note that the referendum they submitted to the voters would have taxed unprepared foods bought at grocery stores.
Clearly these residents of Greenville County were more concerned about putting groceries 'tax free' in their "Fridge" then they were providing county officials with new taxes to spend without even knowing what they were taxing.
Let's face it folks, if the 'county officials' who put a referendum before the taxpayers are not even aware of all of the sales tax ramifications of their own legislation how is a poor shop keeper supposed to be aware of all the intricacies of sales tax in a multitude of jurisdictions?
Manual sales and use tax management is prone to error and consumes staff time in pass-through rather than revenue-generating activities. Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity.
1 - Chicago Bears is a registered trademark of the Chicago Bears franchise of the National Football League.
2 - State by State Sales Tax - South Carolina, Patrick Neu, Avalara - February 2, 2015
3 - Facts courtesy of the TRTribue.com, November 5, 2014