South Carolina Finalizes Economic and Marketplace Nexus Ruling

Effective Date: November 1, 2018

Threshold: $100,000

Measurement Date: Previous or current calendar year

Includable Transactions: Gross sales; Marketplace sales included towards the threshold for individual sellers

When You Need to Register Once You Exceed the Threshold: The first day of the second calendar month after economic nexus is established

The South Carolina Department of Revenue will require remote sellers to collect and remit sales if they exceed the state’s economic nexus threshold, effective November 1, 2018. Following a public comment period in August, the Department of Revenue released SC Revenue Ruling #18-14 to provide guidance to retailers without a physical presence in South Carolina. The state previously had a provision that would have allowed the state to require remote sellers without a physical presence to collect but was not enforcing the provision. Following the South Dakota v. Wayfair decision, the state has changed its position and will begin enforcement.

South Carolina defines a remote seller as a seller with no physical presence in the state, such as a marketplace, online, catalog, or mail order retailer. In addition, a remote seller includes any related entity assisting the remote seller in activities like sales, distribution, or payment collection. A related entity, such as a marketplace facilitator, is required to obtain a retail license and collect and remit sales and use tax on the marketplace’s gross proceeds of sales.

A remote seller whose gross revenue from sales of tangible personal property, products transferred electronically, and services delivered into South Carolina exceeds $100,000 in the previous or current calendar has economic nexus with the state. Remote sellers that exceed the threshold are responsible for obtaining a retail license and remitting South Carolina sales and use tax.

Remote sellers that had economic nexus with South Carolina in the 2017 calendar year, or from January 1, 2018 through September 30, 2018 are required remit sales and use tax for all taxable sales into the state on and after November 1, 2018. Sellers that had economic nexus during these time periods must obtain a retail license by November 1, 2018. The Department will not assess tax, penalties, or interest against these sellers for taxable sales that occurs before November 1, 2018.

Remote sellers that establish nexus in South Carolina on or after October 1, 2018, must register and begin collecting and remitting sales and use tax beginning the first day of the second calendar month after economic nexus is established. Tax, penalties, and interest will not be assessed by the Department before the remote seller is required to register and collect tax (the first day of the second calendar month after economic nexus is established).

Remote sellers who do not have economic nexus with South Carolina may voluntarily obtain a retail license and collect and remit sales and use tax at any time.

To obtain a South Carolina retail license, visit Remote sellers using this online portal to register can submit the online application beginning September 28, 2018. For more information, read the Department’s full Revenue Ruling. (Revenue Ruling 18-14, South Carolina Department of Revenue, September 18, 2018)

UPDATE: On April 26, 2019, South Carolina Governor Henry McMaster signed S.B. 214, which clarifies the existing sales tax collection obligations for marketplace facilitators. The legislation amends the definition of retailer to include marketplace facilitators, effective April 26, 2019. “Marketplace facilitator” means any person engaged in the business of facilitating a retail sale of tangible personal property by:

  • Listing or advertising the products of another person in any marketplace where sales at retail occur; and
  • Collecting or processing payments from the purchaser, either directly or indirectly through an agreement or arrangement with a third party.

A marketplace may be physical or electronic and includes, but is not limited to, any space, store, booth, catalog, website, television or radio broadcast, or similar place, medium, or forum. A marketplace facilitator includes any related entities assisting the facilitator in sales, storage, distribution, payment collection, or in any other manner, with respect to the marketplace. If a marketplace facilitator is comprised of multiple entities, the entity that lists or advertises the products sold is the entity responsible for remitting the sales and use tax to the state. This legislation does not impact any periods prior to enactment that are currently being litigated. (S.B. 214, Laws 2019)

Posted on October 29, 2018