South Carolina Nexus Safe Harbor for Distribution Facilities Expires January 1, 2016

Effective January 1, 2016, South Carolina’s nexus safe harbor for certain distribution facilities expires. South Carolina’s Code Section 12-36-2691, enacted in 2011, provided, subject to certain large capital investment and job creation requirements before January 1, 2013, that owning, leasing or utilizing a distribution facility in South Carolina, including a distribution facility of a third party or an affiliate, is not considered in determining whether the person has a physical presence in South Carolina sufficient to establish nexus with the state for sales and use tax purposes. Code Section 12-36-2691(D) provides that Code Section 12-36-2691 no longer applies as of January 1, 2016. As a result, owning, leasing or utilizing a distribution facility, including a distribution facility of a third party or an affiliate, within South Carolina is considered in determining nexus for South Carolina sales and use tax purposes, effective January 1, 2016. Affected businesses should register as retailers under the South Carolina provisions and begin collecting sales tax on all taxable sales made to customers in South Carolina. (Information Letter 15-19, South Carolina Department of Revenue, December 2, 2015)

Posted on January 25, 2016