Tax Law Insights

South Carolina imposes a sales tax on the retail sale of tangible personal property in the state. South Carolina also charges a separate and related "use tax" on retail purchases of tangible personal property outside of South Carolina, which is then brought into South Carolina for "use, storage, or consumption". Many South Carolinians may be aware of our state's sales tax, but are unaware, or simply do not understand, the state's companion "use tax". The South Carolina Department of Revenue, in SC Revenue Ruling #18-9, issued June 1, 2018 (and effective July 1, 2018), has now provided guidance in this area. In this new ruling, SCDOR seeks to answer questions about our state's sales and use taxes and how they relate.

Under South Carolina law, the state's sales tax is imposed on the retailer when the retailer sells tangible personal property in the state. The retailer can charge the tax to the customer/consumer, and then it is the retailer's responsibility to pay the tax to the state. For the use tax, however, and where someone may purchase goods or other items of tangible personal property out-of-state at retail, and then brings these same items into South Carolina generally for use and consumption here, it is then the purchaser who must pay a "use" tax (in the same amount as the sales tax) to the state. If the purchaser paid sales or use tax on the purchase of the goods in another state, however, South Carolina will give the purchaser a credit against the South Carolina use tax liability.

SC Revenue Ruling #18-9 is structured in a "Question and Answer" format with 18 separate questions about South Carolina's sales and use taxes, and with related answers provided by DOR. The ruling also contains some additional "General information and Tips about the Use Tax" at the end.

The ruling addresses questions and issues about South Carolina sales and use taxes generally, including tax rates, filing and payment requirements, discounts and certain exemptions, the Department's position on internet purchases, the time period within which DOR can assess use taxes against someone, and, importantly, the similarities and differences between the two taxes.

South Carolina individuals and businesses should consult South Carolina law (our statutes) concerning any question they may have about our sales and use taxes. SC Revenue Ruling #18-9 does provide guidance in this area now, and which answers questions particularly from those individuals and businesses who may not know our state has a "use tax" or who may not understand its basic requirements.