South Carolina Sales Tax Rate Rules Penalties Filing

When managing sales tax in South Carolina, businesses need to be aware of the key rates, exemptions, and filing requirements. Whether you’re starting a new business or have been operating for years, understanding these tax rules is crucial to staying compliant and avoiding penalties.

In this guide, we’ll cover everything you need about South Carolina sales tax, including applicable rates, taxable items, and exemptions. Let’s simplify the process so you can focus on confidently growing your business.

What Is the Sales Tax Rate in South Carolina?

In South Carolina, the statewide sales tax rate is 6%. Additionally, local jurisdictions within the state can impose local sales taxes, increasing the total sales tax rate depending on the location. For example, some counties may have local tax rates ranging from 1% to 3%.

In summary:

• State Sales Tax Rate: 6%
• Local Sales Tax Rate: Varies (1% to 3% depending on the jurisdiction)
• Maximum Combined Sales Tax Rate: 9% (state rate + local rates)

For example:

• Columbia has a total sales tax rate of 8% (6% state + 2% local).
• Charleston has a total sales tax rate of 9% (6% state + 3% local).

Understanding these local variations is crucial for businesses operating in South Carolina. Charging the correct sales tax based on the customer’s location can help you avoid penalties related to miscalculations. Stay updated on the latest tax rates, and use the South Carolina Sales Tax Calculator to ensure accuracy.

South Carolina Sales and Use Tax Overview

As a business owner in South Carolina, it is crucial to collect and remit state taxes when selling taxable goods and services. The South Carolina Department of Revenue (SCDOR) is responsible for administering sales and use tax in the state.

Sales tax applies to the sale of tangible personal property and certain services, while use tax is imposed on items outside South Carolina where sales tax was not collected at the time of purchase.

Taxable and Exempt Items

The following goods and services are taxable in South Carolina:

• Most Physical Goods: This includes clothing, electronics, furniture, and appliances.
• Specific Services: Taxable services include telecommunications, digital products (e.g., Software as a Service or SaaS), and repairs.

Sales tax exemptions in South Carolina apply to several categories, including:

• Groceries: Food for home consumption is generally exempt from sales tax.
• Prescription Drugs: Medications prescribed by a licensed practitioner are exempt.
• Medical Devices: Certain medical equipment is exempt.
• Farm Equipment: Equipment used in agricultural production may qualify for an exemption.
• Sales to Nonresidents: Purchases made by individuals outside South Carolina may be exempt.
• Newspapers and Certain Publications: Newspapers and other eligible publications may be exempt.

Click here for a complete list of tax-exempt items and specific conditions.

When Do Businesses Need to Collect Sales Tax in South Carolina?

Businesses must collect South Carolina sales tax when establishing a nexus in the state. Sales tax nexus refers to a connection or presence that triggers the obligation to collect and remit sales tax. South Carolina recognizes two primary nexus types: physical nexus and economic nexus.

1. South Carolina Physical Nexus

A business has a physical nexus in South Carolina if it meets any of the following criteria:

• Operates a brick-and-mortar store, office, or warehouse in South Carolina.
• Has employees, agents, or independent contractors working in South Carolina.
• Stores inventory within South Carolina, including through third-party fulfillment centers.
• Participates in trade shows or sales events in South Carolina.
• Provides delivery services using company-owned vehicles to transport goods to South Carolina customers.

2. South Carolina Economic Nexus

Even if a business does not have a physical presence in South Carolina, it is still required to collect sales tax if it meets the state’s economic nexus threshold:

• Gross revenue exceeding $100,000 from sales into South Carolina during the previous or current calendar year.
• 200 or more separate transactions involving taxable sales into South Carolina.

Failure to comply with South Carolina’s sales tax laws can result in penalties and interest charges. To ensure compliance, businesses should refer to the South Carolina Department of Revenue’s guidelines.

Failure to Collect South Carolina Sales Tax

Failing to collect and remit South Carolina sales tax can have significant financial and legal consequences for businesses. The South Carolina Department of Revenue (SCDOR) enforces sales tax penalties and interest charges for non-compliance. Here’s what you need to know:

1. Penalties for Late Payment and Filing

• Late Payment Penalty: If sales tax is not paid by the due date, 5% of the unpaid tax is applied for each month (or fraction thereof), and the payment is late, up to a maximum of 25%.
• Failure to File Penalty: If a business does not file its sales tax return on time, it incurs a penalty of 5% per month, also capped at 25% of the total unpaid tax.

2. Interest Charges

Interest on unpaid South Carolina sales tax is assessed at a rate set by the SCDOR based on the federal short-term rate plus 3%. This interest accrues daily, increasing the total amount owed over time.

3. Underpayment Penalties

If a business underreports its South Carolina sales tax, it may face a penalty of 10% of the underpaid amount. Additional penalties may apply if the underpayment exceeds 10% of the total tax liability or $500 (whichever is greater).

4. Criminal Penalties for Tax Evasion

Failure to collect or remit South Carolina sales tax is tax fraud. Penalties for severe violations can include fines of up to $10,000 and potential imprisonment.

To avoid costly penalties, streamline your South Carolina sales tax compliance with Commenda. From automated tax calculations to effortless filing, Commenda ensures accuracy and keeps your business tax-ready.

South Carolina Sales Tax for Out-of-State Sellers and Amazon FBA Program Sellers

Out-of-state businesses selling to South Carolina residents must comply with South Carolina’s economic nexus rules. Remote sellers, including those using the Fulfillment by Amazon (FBA) program, must collect sales tax if they meet specific criteria set by the state.

For FBA sellers, tracking where your inventory is stored is crucial. You can use the Inventory Event Detail Report available in Amazon Seller Central to check if your inventory is stored in South Carolina. If your inventory is located in South Carolina, this triggers an economic nexus, and you are obligated to collect sales tax on sales made to South Carolina customers.

The South Carolina economic nexus threshold is $100,000 in gross sales or 200 separate transactions in the previous or current calendar year. Once a seller exceeds this threshold, they must register for a South Carolina sales tax permit and begin collecting sales tax from customers on the first day of the month following the threshold exceedance.

For additional guidance on South Carolina sales tax obligations or help navigating the registration process, it is highly recommended to consult a tax professional.

Registering for a South Carolina Seller’s Permit

To collect and remit sales tax in South Carolina, businesses must first register for a South Carolina Seller’s Permit with the South Carolina Department of Revenue (SCDOR). This process is essential for companies that meet the criteria for collecting sales tax and ensures compliance with state tax laws.

Here’s a step-by-step guide to the registration process:

1. Online Registration: Businesses can easily register for a Seller’s Permit through the SCDOR’s online portal. The process is quick and allows for permit issuance without needing in-person visits.
2. Required Information: To complete your registration, you’ll need to provide essential business information such as:

• Business name, address, and contact details
• Federal Employer Identification Number (EIN)
• Business structure (e.g., LLC, Corporation)
• Estimated monthly or yearly sales
• Bank details for remittance purposes

3. Approval and Permit Issuance: Once you submit your registration, the SCDOR will review your information. If approved, your South Carolina Seller’s Permit will be issued, allowing you to collect and remit sales tax within the state legally.
4. Renewal and Updates: Seller’s Permits typically don’t need to be renewed annually, but businesses must update their information with the SCDOR if there are changes in business structure, address, or ownership.

Registering for a Seller’s Permit is a simple yet vital step to ensure your business complies with South Carolina’s sales tax regulations.

How to Collect Sales Tax in South Carolina

To collect sales tax in South Carolina, businesses must follow a few essential steps to ensure accuracy and compliance. Here’s what you need to do:

1. Register for a Seller’s Permit: The first step is registering with the South Carolina Department of Revenue (SCDOR) for a seller’s permit. This is required for all businesses collecting sales tax on taxable goods and services.
2. Determine the Correct Sales Tax Rate: South Carolina has a state sales tax rate of 6%. However, some local jurisdictions may apply additional taxes. It is essential to check the local sales tax rate for your business location using the South Carolina Sales Tax Rate Lookup tool to ensure you’re charging the correct rate.
3. Collect Sales Tax from Customers: Once you’ve determined the appropriate sales tax rate, you must charge sales tax on taxable goods and services. Sales tax should be added to the selling price of taxable items, including shipping costs.
4. Issue Receipts with Sales Tax Details: Every time you make a sale, issue a receipt or invoice showing the amount of sales tax collected. This information will be essential when filing your sales tax returns.
5. Keep Records: Maintain detailed sales records, including tax-exempt transactions and sales tax collected. Proper documentation is essential for filing returns and will be helpful in case of an audit.
6. Remit Sales Tax to the State: Customer sales tax must be remitted to the South Carolina Department of Revenue (SCDOR) based on your assigned filing frequency—monthly, quarterly, or annually.

Following these steps will ensure your business complies with South Carolina’s sales tax laws, helping you avoid penalties or interest charges.

Tax-Exempt Customers in South Carolina

Specific customers and transactions are exempt from sales tax in South Carolina. Some examples include:

• Government Entities: Purchases made by federal, state, and local government agencies are exempt from sales tax in South Carolina.
• Nonprofit Organizations: Recognized 501(c)(3) nonprofit organizations with an exemption certificate do not have to pay sales tax on their purchases.
• Resale Purchases: If your business buys items for resale, those purchases are exempt from sales tax. Be sure to provide a resale certificate to claim this exemption.
• Agricultural Equipment: Equipment and machinery used directly in farming or ranching may be exempt from sales tax.
• Specific Medical Equipment: Some medical equipment healthcare providers use for patient care may be exempt from sales tax.

To grant these exemptions, businesses must obtain a completed sales tax exemption certificate from the buyer. This certificate must indicate the reason for the exemption and the buyer’s details. Keep these certificates for record-keeping and audit purposes to ensure compliance with South Carolina sales tax regulations.

Filing Sales Tax Returns in South Carolina

South Carolina businesses must file sales tax returns regularly to comply with state tax regulations. Here’s what you need to know about filing frequency, the steps involved in the filing process, and how to pay your sales tax.

Filing Frequency

The following table outlines the filing frequency for South Carolina sales tax returns, including the description and due date for each type:

Filing Steps

To file your sales tax returns in South Carolina, follow these simple steps:

1. Log in to the South Carolina Department of Revenue (SCDOR) e-Filing System: Access your account through the SCDOR website and log in to your taxpayer account.
2. Complete Your Return: Enter your total sales, taxable sales, and the sales tax collected for the period. Make sure to include any sales tax exemptions that apply.
3. Review Your Information: Carefully review all data entered to ensure it’s accurate. Incorrect reporting could lead to penalties or audits.
4. Submit Your Return: After verifying the information, submit your return electronically.
5. Pay Any Due Taxes: If any balance is due, proceed with payment via the available payment methods (discussed below).
6. Keep Records: Maintain copies of your filed returns and payment confirmations for your records and future reference during audits.

How to Pay Your South Carolina Sales Tax

South Carolina offers several convenient payment methods for businesses to remit their sales tax:

• Electronic Funds Transfer (EFT): EFT is the most common method for larger businesses to transfer funds directly from their bank account to the state’s treasury.
• E-Check: Pay your sales tax directly from your checking account using an e-check, providing your account and routing numbers.
• Credit or Debit Card: You can use a credit or debit card to pay your sales tax, though service fees may apply depending on the payment processor.
• ACH Credit: ACH Credit allows businesses to initiate a direct bank transfer from their bank to the SCDOR’s account, ensuring timely payment.

By following these filing steps and using one of the payment options, you can ensure compliance with South Carolina sales tax laws and avoid penalties.

Using Sales Tax Automation Tools

Managing South Carolina sales tax can be complex for businesses, especially when juggling filing deadlines, varying tax rates, and compliance requirements. Keeping up with these demands can quickly become overwhelming, leaving business owners vulnerable to errors and penalties. This is where automation tools like Commenda step in to streamline the process.

Commenda is designed to simplify sales tax calculations, reporting, and filing for businesses operating in South Carolina. By integrating seamlessly with your sales systems, Commenda ensures accurate tax rate applications, proper handling of exemptions, and timely filing of tax returns. This automation saves businesses valuable time and reduces the risk of costly mistakes, allowing you to focus on growing your business while staying fully compliant with South Carolina sales tax regulations.

South Carolina Sales Tax Compliance Checklist

To stay compliant with South Carolina sales tax regulations, businesses should follow this compliance checklist:

1. Determine Nexus – Assess whether your business has a physical or economic nexus in South Carolina.
2. Register for a South Carolina Retail License – Apply for a sales tax license through the South Carolina Department of Revenue (SCDOR) before collecting sales tax.
3. Collect the Correct Sales Tax Rate – Charge the appropriate South Carolina state sales tax rate (6%) plus any applicable local tax rates.
4. Track Exempt Sales – Maintain valid resale and exemption certificates for tax-exempt transactions.
5. File and Remit Taxes on Time – Submit monthly, quarterly, or annual sales tax returns based on your tax liability and filing frequency assigned by the SCDOR.
6. Maintain Accurate Records – Keep detailed records of all transactions, including sales, exemptions, and tax collected, for at least five years for audit purposes.

By following this checklist, businesses can ensure compliance with South Carolina sales tax laws and avoid potential penalties or audits.

How Should I Prepare for South Carolina Sales Tax Audits and Appeals?

Preparing for a South Carolina sales tax audit requires meticulous record-keeping and a thorough understanding of tax compliance. Here’s how you can be ready:

Understand What Triggers an Audit

Certain factors may increase your chances of a sales tax audit in South Carolina, including:

• Discrepancies between reported sales and tax remitted.
• Frequent late filings or missed payments.
• Large volumes of exempt sales without proper documentation.
• Random state audits to ensure compliance.

Maintain Proper Documentation

To minimize audit risks, keep detailed sales tax records for at least five years, including:

• Sales invoices and receipts.
• Valid tax-exempt certificates for eligible buyers.
• Filed tax returns and remittance records.
• Bank statements and business expense records.

Be Prepared for the Audit Process

If selected for an audit, expect the South Carolina Department of Revenue (SCDOR) to review:

• Your sales tax returns and payment history.
• Documentation supporting tax-exempt transactions.
• Records of out-of-state and online sales.
• Respond promptly to audit requests and ensure all documents are well-organized and easily accessible.

Understanding the Appeals Process

If you disagree with the audit findings, you have the right to appeal:

• Request an informal conference with the SCDOR to present your case and provide supporting evidence.
• If unresolved, file a formal appeal with the South Carolina Administrative Law Court within 30 days of the final assessment.
• If necessary, escalate the case to the South Carolina Court of Appeals or Supreme Court for further review.

By staying organized and proactive, businesses can confidently navigate South Carolina sales tax audits and appeals.

South Carolina Sales Tax Rates by City

South Carolina has a base state sales tax rate of 6%, and local jurisdictions may add additional taxes. The total sales tax rate is the sum of the state and local rates. Below is a table listing 10 cities in South Carolina with their total sales tax rates.

If you’re ready to streamline your sales tax management and eliminate the headaches of manual processes, Commenda is the solution you can trust. From calculating the correct tax rates to filing returns on time, Commenda empowers businesses to focus on growth while fully complying with state and local tax regulations. Book a free demo today to learn more and take the first step toward stress-free sales tax compliance.

‍

FAQs

What triggers the South Carolina sales tax nexus?

What should I include in my South Carolina sales tax compliance checklist?

How do I register for a South Carolina retail license?

What is South Carolina’s economic nexus rule for remote sellers?

What happens if I don’t collect sales tax in South Carolina?

Are there special taxes, excise charges, or local add-ons I need to consider?

Do I need a South Carolina retail license if I’m only a wholesaler?

Do I need a South Carolina retail license if I only sell temporarily in the state?

What is the penalty for filing and/or paying South Carolina sales tax late?

Is software-as-a-service (SaaS) taxable in South Carolina?