Tax Law Insights

The South Carolina Department of Revenue (DOR) issued a draft Revenue Ruling to provide guidelines to counties who are considering imposing, or are currently imposing, a transportation tax. Comments on the draft Revenue Ruling can be submitted until April 12, 2022, and a conference, if requested, will be held on April 19, 2022 at 11:00 am at DOR’s main office in Columbia.

The draft Revenue Ruling follows the South Carolina Supreme Court decision in Richland County and the Central Midlands Regional Transit Authority v. S.C. Department of Revenue, 811 S.E.2d 758 (2018) which ...

South Carolina businesses have historically been subject to business license taxes on their gross income that vary widely from jurisdiction to jurisdiction. The South Carolina Business License Tax Standardization Act (the “Act”) was enacted in 2020, but the effective date was generally delayed until January 1, 2022. The Act should greatly simplify the previous complex and burdensome state business license tax regime. The Act creates uniformity by establishing a formal appeals process for taxpayers, setting one standard 12-month filing period (May 1st to April 30th ...

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (“ARPA”).  The ARPA mandated several important changes for both employers and employees.  One of these is potentially significant for both: full subsidies for employer-paid COBRA premiums.  The ARPA requires employers to provide temporary, fully subsidized COBRA continuation coverage premiums for certain individuals for up to six months.  Employers will be able to recover the subsidized premiums by claiming a tax credit.

The benefits provided to employers and employees are available to COBRA ...

Prior to the passage of The American Rescue Plan Act of 2021 on March 11, 2021 (the “Rescue Act”) the employee retention credit, as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the “Relief Act”), was set to expire for wages paid after June 30, 2021.  The Rescue Act extends the employee retention credit to qualifying wages paid through December 31, 2021.  Consequently, qualifying employers may be eligible to claim an additional $14,000 of credits per employee in 2021.

A summary of the employee retention credit as amended by the Relief Act is available here.

The Tax Cuts and Jobs Act of 2017 (TCJA) imposed a $10,000 cap on the federal deduction for state and local taxes for tax years 2018-2025.  While corporations are not subject to the cap, business owners who pay state and local income tax on pass-through income are subject to the cap.

On November 9, 2019 the IRS released Notice 2020-75 indicating it would issue regulations to clarify that state and local taxes paid by a partnership or corporation would be deductible by the partnership or S corporation when they compute their pass-through income.  This guidance paves the way for states to enact ...

The Employee Retention Credit, as originally enacted on March 27, 2020 by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021.  The Taxpayer Certainty and Disaster Tax Relief Act (Relief Act), enacted on December 27, 2020 amended and extended the Employee Retention Credit.  On March 1, 2021, the IRS released Notice 2021-20 to provide guidance on the original Employee Retention Credit, as ...

Congress passed the Consolidated Appropriations Act, 2021 (the Act) on December 21, 2020.  The Act, which is 5,593 pages, contains a number of stimulus measures designed to address the economic impact of the coronavirus crisis.  While the bill has not become law as of the date of this blog, it is expected to be signed by the President quickly and then become law.  Key provisions of the Act include:

• Under the CARES Act, expenses paid with Paycheck Protection Program (PPP) proceeds could not be deducted if the PPP loan was forgiven. The Act now permits taxpayers to deduct expenses paid with PPP ...

Each municipality and county in South Carolina (a taxing jurisdiction) is authorized to impose a business license tax based on the gross income of a business that operates within its borders.  Businesses operating in South Carolina have been faced with registration requirements, filing deadlines, and rate classes that vary by taxing jurisdiction.  The South Carolina Business License Tax Standardization Act (the Act) was signed into law by the Governor on September 30, 2020, and seeks to simplify the burdens of complying with business license tax requirements. The majority of the ...

South Carolina enacted a state low income housing tax credit on May 14, 2020.  An overview of the credit, which mirrors the federal credit, can be found here.

The South Carolina State Housing Finance and Development Authority (SC Housing) is required to issue an eligibility statement in order for a project to receive the state LIHTC.  The eligibility statement also specifies the amount of the state LIHTC a project will receive.  SC Housing has now issued a policy document to set forth the procedures to obtain an eligibility statement, which can be found here.

The SC Housing policy sets forth ...

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provides individuals with a stimulus payment of $1,200 per adult, plus $500 for each qualifying child age 16 and under (subject to phase-outs for higher income individuals).  The stimulus payment provided by the CARES Act is structured as a refundable federal income tax credit.

South Carolina does not allow individuals to deduct federal income taxes in arriving at South Carolina taxable income.  Consequently, federal tax credits generally have no impact on an individual’s South Carolina income tax ...

On May 15, 2020 the Small Business Administration (SBA) released a Paycheck Protection Program Loan Forgiveness Application with related instructions.  The application and instructions help answer some of the questions surrounding a business’s eligibility for forgiveness (see our prior blog for an overview of forgiveness issues).  A detailed overview of the application and instructions is available here.  Some of the key issues addressed in the application and instructions include:

• The 8 week covered period during which qualifying expenses are measured begins on the date a ...

The South Carolina General Assembly passed the Workforce and Senior Affordable Housing Act on May 12, 2020, and the Act was signed into law by the Governor on May 14, 2020.  The Act is effective for qualified projects placed in service after January 1, 2020 and before December 31, 2030.

The Act provides a state tax credit against income taxes, bank taxes, corporate license fees, and insurance premium taxes in an amount equal to the federal low income housing tax credit allowed with respect to a qualified project.  The broad array of creditable taxes should make the credits attractive to ...

One of the key benefits of a Paycheck Protection Program (PPP) loan is the ability to have all or a portion of the loan forgiven.  The amount of a PPP loan that will be forgiven is based initially on the qualifying costs an employer incurs during the 8 week period following loan funding (at least 75% of which must be used for payroll costs to qualify for 100% loan forgiveness).  The initial forgiveness amount is then subject to reduction under a headcount test and a salary test.  The headcount test and salary test reductions, however, do not apply in certain instances when headcount and salary are ...

One of the provisions included in the Coronavirus, Aid, Relief and Economic Security Act (CARES Act) allows an employer and self-employed individuals to defer the payment of the employer’s share of social security taxes (not Medicare taxes) or the corresponding portion of self-employment taxes.  The option is available for payments that would otherwise be required to be made between March 27, 2020 and December 31, 2020.  No special election is required and deferred amounts will be reported on a forthcoming revised Form 941 (future guidance will address how to report deferrals for ...

In the late hours of March 25, 2020, the United States Senate met to vote on a third “Coronavirus” bill to provide relief to the American people.  The Senate ultimately passed H.R. 748—the Coronavirus Aid, Relief, and Economic Security Act or “CARES Act.”  Two days later, the House followed suit and sent the bill the President for his approval.  The Act contains many stimulus provisions, even some that affect recently-amended Internal Revenue Code (“Code”) sections.  This post covers an important amendment to Section 172, which governs the use of “net operating ...

On March 27, 2020 the the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act or Act), H.R. 748, became law.  The Act provides eligible employers a tax credit against employment taxes equal to 50% of qualified wages.  The credit is determined quarterly and effectively capped at $5,000 per eligible employee.

Eligible employers include any employer that was carrying on a trade or business in 2020 whose operations were impacted by the Coronavirus crisis.  Two tests are used to determine whether a business was impacted by the Coronavirus.  The tests are applied quarterly.  The ...

The COVID-19 or Coronavirus has disrupted demand in many industries and is wreaking havoc on budgets and cash flow projections.  On March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act or Act), H.R. 748, became law.  The CARES Act seeks to incentivize employers to retain their employees and to provide enhanced unemployment benefits for employees who are not retained.  The CARES Act contains a number of tax related provisions to assist employers.

Paycheck Protection Program

The Act establishes a forgivable loan program (the Paycheck Protection Program ...

On March 18, 2020 President Trump signed the Families First Coronavirus Response Act  (Act) to provide relief to employees and small and midsize businesses.  The Act is effective until December 31, 2020.  The Act requires covered employers, except those with fewer than 50 employees who receive an exemption,[1] to provide the following:

• Two weeks (up to 80 hours) of paid sick time at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or ...

The South Carolina Department of Revenue (DOR) has issued a proposed Revenue Ruling which will have a significant impact on South Carolina tobacco retailers, if finalized in its present form.  The proposed Revenue Ruling, to be effective on January 1, 2020, addresses tobacco manufacturer rebates and refunds to retailers, and which DOR characterizes as “buydowns” and “promotional payments”- i.e. sales volume discounts.  The proposed Revenue Ruling determines that these payments to retailers are subject to sales tax.

Tobacco manufacturers have provided their retailers ...

South Carolina imposes sales tax on retail sales of tangible personal property.  South Carolina generally does not impose a sales tax on intangible property, however, certain intangible property is deemed to be tangible personal property that is subject to sales tax.  Deemed tangible personal property includes charges for communications.  South Carolina defines charges for communications to include the proceeds accruing from the charges for the ways or means for the transmission of the voice or messages.  The South Carolina Department of Revenue (DOR) takes the position charges ...

South Carolina state tax liens were previously recorded each county’s register of deeds, register of mesne conveyance, or clerk of court (i.e. in the same place where real property records are recorded).  In March 2019 the South Carolina General Assembly passed a law authorizing the South Carolina Department of Revenue (SCDOR or DOR) to implement a statewide system of filing and indexing liens.

SCDOR has now created a statewide lien recording system, which is accessible online.  As of November 1, 2019, SCDOR will no longer file tax liens, satisfactions, or expungements with county ...

Spouses who file a joint income tax return are both jointly and severally liable for the taxes associated with the return, both federally and at the state level.  If the joint tax liability is not paid, or additional tax is assessed through an audit, the Internal Revenue Service (IRS) and state taxing authority (the South Carolina Department of Revenue in the case of South Carolina) will pursue both spouses in an effort to collect the tax.  One spouse may have believed that the other spouse had paid the taxes, or that all income and deductions were properly reported, only to find out a few years ...

In South Carolina, a maximum  or “capped” sales tax of $500 ($300 for sales on or before June 30, 2017)  is imposed on the sale of motor vehicles and certain other vehicles.  Under the facts of a recent South Carolina Administrative Law Court (ALC) decision, a South Carolina motor sports dealer sold all-terrain vehicles (ATVs) and side-by-side vehicles (UTVs) and paid the maximum tax on these sales.  The South Carolina Department of Revenue (DOR) audited the dealer and determined the maximum tax did not apply to these ATV/UTV sales because they were not qualifying motor vehicles in ...

On March 27, 2019, the Senate Finance Committee launched an investigation into the abuse of syndicated conservation easement transactions.  The transactions being investigated involve promoters selling interests in tracts of land to taxpayers looking for large tax deductions.  The taxpayers get allegedly inflated appraisals of those tracts of land and grant conservation easements on that land.  The resulting charitable deductions are then split among the taxpayers.

Fourteen separate letters were sent to individuals who appear to be associated with the promotion of syndicated ...

The Bipartisan Budget Act of 2015 enacted sweeping changes to the federal audit regime for entities taxed as partnerships.  The new audit rules became effective for tax years beginning on or after January 1, 2018.

For tax years beginning before January 1, 2018, partnerships are audited using one of three different procedures (unless the partnership makes an affirmative election to be governed by the new partnership audit rules effective for tax years beginning before January 1, 2018).  These procedures are:

a. Partnerships with 10 or fewer partners: The Internal Revenue Service ...

South Carolina imposes a number of civil tax penalties that are similar to those imposed under the Internal Revenue Code (the “Code”).  South Carolina’s civil tax penalties, while similar in some respects, are not the same as the Code’s civil penalties.    The following is a summary of South Carolina’s civil tax penalties:

1. Failure to file (late filing) – 5% of the amount due is levied per month or fraction thereof, up to 25%.

2. Failure to pay (late payment) – 0.5% of the amount due is levied per month or fraction thereof, up to 25%

3. Negligence or disregard – 5% of the ...

The Tax Court recently issued a full T.C. opinion which will impact a tremendous number of conservation easement donations.  In Pine Mountain Preserve, LLLP v. Commissioner, 151 T.C. 4 (2018) the Tax Court found a reservation of rights to construct certain improvement within a floating building envelope resulted in a conservation easement failing to constitute a qualified real property interest granted in perpetuity.  As a result, no deduction was allowed for the grant of the conservation easement.

Taxpayers have commonly reserved the right to construct improvements within a ...

The Policy Division of the South Carolina Department of Revenue has issued a final revenue ruling, SC Revenue Ruling #18-14, addressing retailers without a physical presence in South Carolina. The ruling comes on the heels of the United States Supreme Court decision in South Dakota v. Wayfair, Inc., 585 U.S. ___, 138 S. Ct. 2080 (2018), which found that retailers without a physical presence in a state can be required to collect and remit sales and use tax. The Department of Revenue has also posted a series of frequently asked questions to its website.

Prior to issuing SC Revenue Ruling ...

The Policy Division of the South Carolina Department of Revenue has issued a draft revenue ruling addressing retailers without a physical presence in South Carolina. Comments on the draft ruling are due by August 27, 2018, and a conference, if requested, will be held on August 29, 2018 at 10:00 am. Under the draft revenue ruling, South Carolina will require "remote sellers" who have "economic nexus" to collect and remit South Carolina sales and use tax on a prospective basis beginning October 1, 2018.

A remote seller is a retailer with no physical presence in South Carolina (e.g ...

South Carolina counties and municipalities are authorized to impose business license taxes on the "gross income" of a business. On August 8, 2018 the South Carolina Supreme Court issued a major decision, Todd Olds v. City of Goose Creek, construing what constitutes gross income under a municipal business license ordinance.

In the case, a licensed realtor was in the business of flipping houses. He obtained a business license from the City of Goose Creek (the "City") and reported the gain he recognized on his flips as his gross income for business license purposes. The City determined ...

Following the Supreme Court's landmark decision in South Dakota v. Wayfair, Inc., the Director of the South Carolina Department of Revenue, Hartley Powell, announced that SCDOR will begin requiring remote sellers to collect sales tax. South Carolina law previously authorized imposition of sales and use tax on all retailers, but DOR has not administratively enforced the law because of constitutional nexus restrictions under Quill Corp. v. North Dakota. With the Supreme Court's decision in Wayfair, SCDOR will now administratively apply the same thresholds adopted by the State of ...

The Supreme Court issued its opinion in South Dakota v. Wayfair, Inc. on June 21, 2018. The closely followed case involved a South Dakota law that required certain out-of-state sellers who sold more than $100,000 of goods or services to South Dakota customers, or engaged in 200 or more separate transactions with South Dakota customers, to collect sales tax. South Dakota enacted the law to provide a basis to challenge the physical presence rule. The physical presence rule precludes a state from requiring an out-of-state seller to collect sales tax if the seller does not have a physical ...

In an important decision, the South Carolina Administrative Law Court (ALC) recently ruled that a bartending service was not liable for sales tax on separately-stated service charges. See A Southern Bartender v. South Carolina Department of Revenue, Docket No. 17-ALJ-17-0002-CC (April 26, 2018). The business provided several bartending service packages. Customers could choose to pay a flat price for both alcohol and bartending services together, but could also select to pay for the alcohol and bartending services separately and where the alcohol and bartending services were ...

Taxpayers who disagree with a proposed tax assessment issued by the South Carolina Department of Revenue (SCDOR or DOR) may or may not be able reach an agreement at the administrative level. When taxpayers and SCDOR cannot resolve a proposed tax assessment at the administrative level, DOR will issue a Department Determination. A taxpayer can then seek judicial review of the Department Determination by filing a request for a contested case hearing with the South Carolina Administrative Law Court (ALC) within 30 days of the issuance of the Department Determination. This is the only ...

There are 12.9 million acres of commercial forestland in South Carolina. More than half of the forestland is family-owned, and 82% of private owners live on the land. The state also has about 25,000 farms, which encompass 4.9 million acres. Many landowners would like to maintain their property as farmland or forestland but are tempted to capitalize on appreciating land values as development moves towards their property. Conservation easements can help owners monetize development rights while preserving property as farmland or forestland.  A conservation easement is a voluntary ...

The South Carolina Infrastructure and Economic Development Reform Act, 2017 Act 40, was recently enacted and is designed to enhance South Carolina's economic competitiveness. The Act, commonly referred to as the gas tax bill, increased the South Carolina gas tax to pay for infrastructure improvements. In addition, the Act provided several tax credits and incentives, including a new property tax exemption for manufacturers.

The Act provides an exemption equal to 14.2857% of the property tax value of manufacturing property. S.C. Code § 12-37-220(B)(52)(a). The exemption is ...

The April 30^th deadline for the calendar year South Carolina taxpayers to file their annual Form PT-300, Property Return, is fast approaching. Taxpayers subject to a fee-in-lieu of tax (FILOT) must file a new schedule with their 2017 property tax year that is designed to help local governments comply with their new financial reporting requirements under Statement No. 77 of the Governmental Accounting Standards Board (GASB Statement 77). GASB Statement 77 requires governmental entities that enter into "tax abatement agreements" to now disclose information about these ...

Property tax values in South Carolina are generally determined every five years through county-wide reassessments. Since property tax values are determined every five years (and subject to a 15% cap on increases under reassessments), the fair market value of property is often higher than the property tax value. When property is sold, however, property is revalued for property tax purposes at its fair market value, beginning in the property tax year following the sale.

Example: John purchased an apartment building in 2013 for $8 million. The property was assigned a value of $8 ...

The South Carolina Department of Revenue (the "Department" or "DOR") issued SC Revenue Ruling #16-12 on December 16, 2016. The ruling provides guidance to manufacturers on property tax return filings, assessment procedures, and payment obligations. The ruling focuses primarily on the procedural aspects applicable to a manufacturer's property tax obligations as opposed to substantive provisions used to determine a manufacturer's property tax liability.

While a taxpayer's liability for property tax under general South Carolina law is determined based on property the ...

The South Carolina Department of Revenue (the "Department" or "DOR") files tax liens when a taxpayer fails to timely pay his or her state tax liability. The Department files a tax lien in order to establish its priority to a taxpayer's assets. While South Carolina tax liens are similar to federal tax liens, there are important differences.

A "silent" tax lien arises in favor of DOR whenever a person fails to pay his or tax state taxes. S.C. Code § 12-54-120. DOR generally has ten years from the date of a tax assessment to collect a tax liability by seizing a taxpayer's property. S.C. Code § ...

Residents of South Carolina are required to file an income tax return, even if they do not earn income in the state. A resident is an individual who is "domiciled" in South Carolina. South Carolina law does not define domicile. The South Carolina Administrative Law Court (ALC) in a recent decision, however, has analyzed whether a taxpayer was domiciled in South Carolina for purposes of our state income tax. Floyd v. S.C. Dept. of Rev., Admin. Law Ct., Dkt. No. 15-ALJ-17-0458-CC (February 11, 2016).

The taxpayer was a native of Spartanburg, South Carolina. She lived in Oxford ...

On May 23, 2016 the South Carolina Textiles Communities Revitalization Act was amended to remove a fifty percent cap applicable to the income tax credit provided by the Act. L. 2016, H5009. This taxpayer-friendly amendment enhances the value of the credit by accelerating the time period for claiming the credit. The amendment applies to credits claimed for income tax year 2016, regardless of when the credit was earned.

The South Carolina Textiles Communities Revitalization Act provides financial incentives for the rehabilitation, renovation, and redevelopment of abandoned ...

The South Carolina General Assembly has clarified how outdoor advertising signs (i.e. billboards) are taxed in the state for property tax purposes. The new law amends South Carolina Code Section 12-43-230, and applies to property tax years after 2014. See House Bill 4712.

Billboards are treated as personal property in most states, although a few treat billboards as improvements to real property. The new law provides that all "off-premises outdoor advertising signs" will be treated as personal property for South Carolina property tax purposes. "Off-premises outdoor advertising ...

On March 30, 2016 the South Carolina Administrative Law Court (ALC) issued an order which determined that proceeds from the sale of damage waivers are subject to sales tax. Rent-A-Center East, Inc. v. South Carolina Department of Revenue, Docket No. 13-ALJ-17-0601-CC. Businesses renting and selling tangible personal property should be aware of the decision, and carefully evaluate whether they should be collecting sales tax on charges for damage waivers or similar insurance type products.

The ALC case involved a taxpayer in the business of renting and selling tangible personal ...

South Carolina manufacturers are required to file an annual property tax return. The PT-300 must be filed with the South Carolina Department of Revenue ("Department" or "DOR") by the last day of the fourth month following the close of a taxpayer's accounting year (no extension is available). For example, calendar year taxpayers must file Form PT-300 by April 30^th.

The Form PT-300 reports all property owned as of the close of the taxpayer's accounting year. There are ten different schedules that may need to be filed with the PT-300. The schedules report property subject to regular ...

On February 16, 2016, a new income tax credit for taxpayer's who construct, purchase, or lease solar energy property was enacted, and is effective for income tax years beginning after 2015. L. 2016, H3874 (to be codified at S.C. Code § 12-6-3770). The credit is scheduled to sunset on December 31, 2017. The credit is equal to 25% of the cost, including installation cost, of solar energy property. The maximum credit that can be claimed is $2,500,000. The credit is claimed over five years in equal annual installments. To qualify for the credit, the solar energy property must be located on the ...

Residents of South Carolina are required to file an income tax return, even if they do not earn income in the state.  A resident is an individual who is “domiciled” in South Carolina.  South Carolina law does not define domicile.  The South Carolina Administrative Law Court (ALC) in a recent decision, however, has analyzed whether a taxpayer was domiciled in South Carolina for purposes of our state income tax.  Floyd v. S.C. Dept. of Rev., Admin. Law Ct., Dkt. No. 15-ALJ-17-0458-CC (February 11, 2016).

The taxpayer was a native of Spartanburg, South Carolina.  She lived in Oxford ...

Property taxes are often the largest South Carolina tax paid by manufacturers. Property taxes are assessed annually on real and personal property owned by a manufacturer (excluding inventory and supplies) on December 31^st of the preceding calendar year. Property taxes are due on January 15^th of the year following the tax year.

A manufacturer's property tax liability is determined by multiplying the value of its property by an assessment ratio by a local millage rate. The default property tax regime may be altered when a manufacturer enters into a fee-in-lieu of tax arrangement ...

South Carolina offers multi-state companies an alternative method of allocating and apportioning their income as an incentive for planning new facilities or expanding existing facilities in the State. Generally, a company that transacts or conducts business partly within and partly outside South Carolina is subject to income tax based on the portion of its business carried on in the State. The portion of a company's income carried on in South Carolina is determined by allocation and apportionment. The law requires that certain classes of income, less related expenses, be ...

Federal and South Carolina law provide income tax incentives to make it easier to save for college. Contributions made to a 529 plan (technically known as a "qualified tuition program" or "QTP") may be deductible for South Carolina income tax purposes. Earnings on contributions made to a 529 plan are not subject to federal or South Carolina income tax if they are used for qualified education expenses.

A 529 plan is a plan operated by a state designed to help families set aside funds for future college costs. Each state can establish its own 529 plan and plans differ from state to state. South ...

Update: As of June 16, 2016 all community development tax credits have been claimed.

South Carolina provides valuable tax incentives to people who support Community Development Corporations (CDCs) and Community Development Financial Institutions (CDFIs). A 33% credit is provided for each dollar invested in or donated to a certified CDC or CDFI. S.C. Code § 12-6-3530. This credit is commonly referred to as the community development tax credit.

The community development tax credit was enacted in 2000 and is scheduled to sunset on June 30, 2020. A total of $5 million in credits are ...

South Carolina offers many tax credits that can be used to reduce or even eliminate state income taxes and license fees.  Examples of these tax credits include the new jobs credit, infrastructure credit, corporate headquarters credit, abandoned buildings credit, biomass resource credit, research credit, community development credit, venture capital credit, historic rehabilitation credit, and conservation easement credit (and many others).

A taxpayer will sometimes seek to claim more than one state tax credit at the same time, which raises the question of how the tax credits ...

Property taxes are the oldest taxes levied in the United States and the only major tax imposed by all 50 states. Property taxes are the primary source of revenue for local government entities in South Carolina. In South Carolina per capita property tax collections are almost twice as high as income taxes.

The amount of property taxes you pay is determined by the classification of your property, the tax rate set by your local government entity, and the value of your property. The classification schedules are set by law, and range from 4% for owner-occupied residential real estate to 10.5 ...

Rehabilitating or renovating an existing building can often be more expensive than greenfield construction. South Carolina provides several tax credits to encourage the use of abandoned buildings. The tax credits are available for the renovation or rehabilitation of qualifying buildings which have been abandoned. Recently issued guidance by the South Carolina Department of Revenue provides guidance on:

• Abandoned Building Income Tax Credit (SC Rev. Rul. #15-7)
  • Statutes: Title 12, Chapter 67
  • Form to Claim: TC-55
  • Repeal Date: December 31, 2019
• Textile Mill Income Tax Credit (SC ...

South Carolina employers are required to withhold income taxes from employee wages, and to pay these withheld taxes to the South Carolina Department of Revenue (DOR).  South Carolina businesses are also required to pay sales taxes to DOR on sales of goods to their customers, and the business can collect the sales tax from the customer.  When an employer or business fails to pay employee tax withholdings or collected sales taxes to DOR, individual(s) associated with the business may be held personally liable for these unpaid taxes as a "responsible party".  These responsible party taxes ...

The income of a multi-state business subject to tax in South Carolina is ordinarily determined by allocating certain income to South Carolina and apportioning the remainder of the business's income based on the ratio of South Carolina sales to gross sales everywhere. However, the law permits a taxpayer or the South Carolina Department of Revenue to use an alternative method when the ordinary allocation and apportionment rules do not fairly represent the extent of a taxpayer's business activities in South Carolina.

On December 23, 2014 the South Carolina Supreme Court issued an ...

The United States Tax Court recently determined the value of a conservation easement using a subdivision development method in the case of Schmidt v. Commissioner, TC Memo 2014-159. The case involved a taxpayer who purchased a 40-acre parcel of vacant land in May 2000 for $525,000, with the intention of subdividing and developing it. The taxpayer began the process of obtaining the required permits and approvals to develop the property. The facts indicated that the taxpayer would receive all required permits and approvals to develop the property, but the taxpayer ultimately granted ...

The South Carolina Department of Revenue ("DOR") is the state agency charged with collecting most South Carolina taxes, including income taxes, sales and use taxes, and withholding taxes. If a taxpayer fails to pay an assessed tax liability, DOR may file a tax lien against a taxpayer, with the lien notice being filed in one or more of the county register of deeds offices. The filing of the lien notice makes the delinquent tax liability a matter of public record.

Prior to March 1, 2014, when a taxpayer fully paid the amount secured by a filed tax lien, DOR would file a lien satisfaction with the ...

On January 2, 2014, the Internal Revenue Service (the "IRS") issued an advance copy of Revenue Procedure 2014-11 which updates the procedures for an organization to request retroactive or non-retroactive reinstatement after having its tax-exempt status automatically revoked under Section 6033(j) of the Internal Revenue Code (the "Code") for failure to file required annual returns or notices for three consecutive years. Revenue Procedure 2014-11 will be published in the Internal Revenue Bulletin 2014-3, dated January 13, 2014.

Generally, Section 6033(a) of the Code requires ...

For property tax purposes, the South Carolina Department of Revenue has the sole responsibility for appraising real and personal property used by specified businesses, including utilities, manufacturers, and transportation businesses (e.g. railways and airlines).  The South Carolina Department of Revenue is authorized to use any accepted or recognized valuation method which reflects property’s fair market value, including methods with the unit valuation concept, when appraising real and personal property for property tax purposes.

The unit valuation method is not set ...

On July 24, 2013 the South Carolina Supreme Court issued its opinion in the case of Centex International, Inc. v. South Carolina Department of Revenue, Opinion No. 27288. In a 3-2 decision, the Court found that a partnership did not qualify for the infrastructure tax credit and that its corporate owners could not claim the infrastructure tax credit. The partnership clearly incurred infrastructure expenses, but the Department of Revenue argued that only a corporate taxpayer was entitled to earn and claim the credit. The Court agreed.

The Court framed its analysis by reciting general ...

Anyone who buys tangible personal property from out-of-state and brings it into South Carolina is responsible for paying a use tax of 6% on the sales price of the property, plus any local tax rate addition.  Individuals may report purchases subject to use tax on their individual income tax return (SC 1040, Line 26).  The Department of Revenue publishes a worksheet, UT-3W, which can be used to determine the purchases subject to use tax and the amount of use tax due.  An individual who does not report use tax purchases on his or her income tax return should file Form UT-3, Use Tax Payment Return.  ...

On June 11, 2013 the "South Carolina Abandoned Buildings Revitalization Act" was signed into law by the Governor. The Act provides new incentives for the rehabilitation, renovation, and redevelopment of abandoned buildings in South Carolina. Taxpayers meeting the requirements of the Act can receive a tax credit equal to 25% of the cost of rehabilitating property against either (1) state income taxes and corporate license fees, or (2) property taxes.

In order to qualify for the credit a taxpayer must rehabilitate an abandoned building for commercial use. A building with an ...

Landowners may be allowed a federal income tax deduction for the contribution of a conservation easement restricting donated property. A qualified conservation contribution is a donation of a qualified real property interest to a qualified organization which is exclusively used for conservation purposes. The conservation easement must also be protected and the restrictions on the use of the property must be granted in perpetuity. The contribution must be made to governmental units, churches, schools, hospitals, or Section 501(c)(3) public charities and supporting ...

On May 31, 2012 the Fourth Circuit Court of Appeals issued its opinion in the case of Starnes v. Commissioner, upholding a decision of the United States Tax Court which determined that the former shareholders of a corporation were not liable as transferees for unpaid corporate income taxes. The opinion is the first appellate level decision addressing the proper legal standard to be applied in order to determine if a person is liable as a transferee under § 6901 of the Internal Revenue Code.

The Starnes case involved what the IRS characterizes as an "intermediary transaction tax ...

Many individuals and business entities create charitable organizations to serve the needs of a specific group of persons or a specific community with a need for a type of service. Most charitable organizations undertake the arduous task of applying for tax-exempt status with the Internal Revenue Service in order to be exempt from paying corporate income taxes and to solicit charitable donations from public and private patrons. In June of 2011, the IRS revoked the tax-exempt status of approximately 275,000 organizations because these organizations failed to file the required ...

A landowner who donates a conservation easement to a qualifying organization can benefit from state tax incentives, in addition to the available federal income tax deduction. South Carolina provides an important transferable income tax credit for landowners who donate a conservation easement on property located in South Carolina. The income tax credit is equal to twenty-five percent of the amount of a charitable deduction resulting from the donation of a conservation easement.

The twenty-five percent credit is subject to several caps. First, the credit may not exceed $250 per ...

South Carolina imposes various taxes and reporting requirements on purchasers transacting business in the state. A sales tax is imposed on the sale at retail of tangible personal property and certain services in the state. South Carolina imposes a sales tax of six (6) percent (plus an additional one (1) percent "local option" tax in certain counties) on the retail sale of tangible personal property between a purchaser and seller within the state. A seller or retailer is required to collect the sales tax from a purchaser and remit the tax to the South Carolina Department of Revenue ...

Employers are generally required to withhold and pay employment taxes on wages paid to employees. Conversely, employers are generally not required to withhold and pay employment taxes on wages paid to independent contractors or nonemployees. If an employer incorrectly treats an employee as a nonemployee, the employer is potentially liable for the employment taxes which should have been withheld. The employer may often not learn of this liability for years, until an IRS notice appears in the mail.

Section 530 of the Revenue Act of 1978, as amended, provides relief for employers who ...

When spouses file a joint income tax return each is jointly and severally liable not only for the reported tax liability, but also for any additional taxes, penalties and interest later claimed by the IRS as due.  A spouse can request relief from this joint liability by filing a request for innocent spouse relief with the Internal Revenue Service.

The IRS states that an innocent spouse request must be filed within two years after the date initial collection activities for the unpaid taxes have begun.  The United States Tax Court has repeatedly disagreed with the IRS, however, ruling in ...