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 ...
Due to unprecedented temporary closings of offices and businesses and stay-at-home orders issued across the United States during the Coronavirus (COVID-19) pandemic, many businesses have implemented temporary work at home options for employees. As a result, the South Carolina Department of Revenue (SCDOR) announced temporary relief regarding a business’s establishment of South Carolina state tax nexus solely because an employee is temporarily working in a different work location due to COVID-19, and also provided guidance with respect to employer withholding ...
The State of South Carolina has now adopted legislation allowing “pass through” entities to elect each year to be taxed at the entity level on their active trade or business income instead of having their owners taxed at the individual level on this income. This includes partnerships, S-corporations and LLCs taxed as partnerships or S-corporations. This election can be filed for tax years beginning after December 31, 2020.
South Carolina has now joined a growing number of states that have enacted federal state and local tax “workaround” legislation, and which shifts state ...
Tobacco manufacturers and distributors have long made refund/rebate payments to retailers for the retailer’s purchase of cigarettes and other tobacco products from the manufacturer, provided the retailer reduces the price of the cigarettes and other tobacco products sold to the retailer’s customers.
In 2020, the South Carolina Department of Revenue issued SC Revenue Ruling #20-3 (“Buydowns – Tobacco Company Payments to Retailers”), and related Information Letter #20-35, administratively determining that these “buydown” payments from 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 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 ...
Due to the COVID-19 pandemic, many employers have furloughed some or all of their workforce in South Carolina. Furloughed employees may now be entitled to receive unemployment benefits, and enhanced by $600 per week by the federal government through the CARES Act.
In South Carolina, unemployment benefits paid to unemployed workers are funded by the South Carolina Unemployment Insurance Tax (UI Tax). The UI Tax – also known as South Carolina’s version of “SUTA” – is imposed on employers and paid to the South Carolina Department of Employment and Workforce (SCDEW) and which ...
On April 13, 2020, the South Carolina Department of Revenue issued SC Information Letter #20-8 with updated guidance concerning COVID-19 related filing and payment extensions. This guidance provides:
- Filing Deadlines Extended. South Carolina tax relief to July 15, 2020, now applies to all taxpayers that have an income tax, franchise tax, or corporate license fee filing or payment deadline (originally or pursuant to a valid extension) between April 1, 2020 and July 15, 2020. Individuals (including individuals working or living outside the United States), corporations ...
On March 17, 2020, the South Carolina Department of Revenue announced, through SC Information Letter #20-3, that all South Carolina tax filing and payment deadlines starting on April 1, 2020 were extended to June 1, 2020. Penalties and interest are waived by SCDOR during this period. This includes not only state income taxes, but also sales taxes, admission taxes, and other taxes administered by SCDOR.
The IRS had initially announced that the due date for 2019 federal income tax payments was extended to July 15, 2019, but that the April 15th tax return filing date was not extended. The ...
The South Carolina Department of Revenue (SCDOR or DOR) recently issued a draft of long-awaiting guidance overhauling DOR’s administrative practices concerning disputed tax audits, refunds, license revocations, and other related matters. The draft guidance, SC Revenue Procedure #20-x, was released January 22, 2020. If finalized, the new Revenue Procedure will apply to all administrative protests and appeals filed with SCDOR on or after the effective date of the Revenue Procedure (presently, January 2020), and including protests and appeals pending as of this date.
The ...
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 ...
The South Carolina Department of Employment and Workforce (SCDEW) administers the South Carolina unemployment benefit program for state residents, and which is funded by a state-wide unemployment tax on employee wages. Employers are responsible for the payment of this tax.
SCDEW, and its predecessor agency, the South Carolina Employment Commission Security Commission, have had financial difficulties raising sufficient unemployment taxes to be able to pay unemployment benefits to South Carolina workers. The financial problems became so significant that SCDEW became ...
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 ...
With the adoption by Congress of the 2018 Farm Bill, which decriminalized the cultivation and growing of industrial hemp and related products, states now, including South Carolina, have adopted and expanded programs authorizing the growing of industrial hemp and also the processing of products from the plant, most notably CBD oil.
The South Carolina Hemp Farming Act, adopted in March 2019, authorizes state residents to apply with the SC Department of Agriculture (SCDA) to grow and/or process industrial hemp in the state; however, under the present status of the law, only ...
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 ...
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 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 ...
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 ...
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 ...
South Carolina has some of the highest business property taxes in the Southeast. The state generally taxes land, buildings, machinery and equipment, and furniture and fixtures, but does not tax inventory, pollution control equipment, intellectual property, and other assets.
To reduce the effect of its high business property tax rates, and to make the state a more competitive environment for business, South Carolina offers a property tax incentive and tax savings for manufacturers, and certain other businesses, investing at least $2.5 million over a five year period in the state ...
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 ...
On April 11, 2018, the South Carolina House of Representatives passed House Bill 3684, which will allow the South Carolina Department of Revenue (SCDOR or DOR) to centralize state tax lien filings. State tax lien filings are currently filed with local county recording offices throughout the state. The new bill, if adopted by the South Carolina General Assembly, would simplify the state tax lien filing process by implementing a centralized system of filing and indexing tax liens, and which would also accessible to the public online through the Internet. State tax liens would no longer ...
The new federal tax law, known as The Tax Cuts and Jobs Act, that was approved by Congress and signed into law at the end of 2017, creates a benefit for individuals paying tuition for children in private or religious schools in grades Kindergarten through 12th grade. 529 Plan funds were only allowed for qualified education expenses, which was previously limited to higher education tuition, room and board, books, computers and software, but NOT for tuition for elementary through high school. The new law has added tuition for private and religious K-12 schools as an approved qualified ...
South Carolina assesses a recording fee on deeds to real property. The South Carolina deed recording fee is imposed for "the privilege of recording a deed," and is based on the transfer of real property from one person or business entity to another. The fee is generally imposed on the grantor of the real property, although the grantee may be secondarily liable for the fee. There are specific instances where the grantee, and not the grantor, is directly accountable.
This fee is composed of two fees - a state fee of $1.30 for every $500, or fractional part of $500, of the real property's value ...
If an individual or business owes federal taxes and does not have the current ability to pay these taxes, the IRS can consider placing the account into "currently not collectible" (CNC) status. If placed in CNC status, a taxpayer is not required to make a current payment on the unpaid taxes to the IRS, and the IRS will also not "levy" or "garnish" wages or seize bank accounts while an account is in CNC status.
Before the IRS will consider placing a taxpayer's account into CNC status, the individual or business must be up-to-date or "current" with the filing of their required tax returns, and ...
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 U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts mandatory surveys to collect information on direct investment. There are three (3) specific surveys which track "out-bound" foreign investment: a quarterly survey, an annual survey, and a 5-year benchmark survey. The purpose of the quarterly survey is to report positions and transactions between a U.S. reporter and its foreign affiliates. The purpose of the annual survey is to report annual financial and operating data of the U.S. reporter and its foreign affiliates. The benchmark surveys are ...
The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts mandatory surveys to collect information on direct investment. There are three (3) specific surveys which track "out-bound" foreign investment, a quarterly survey, an annual survey, and a 5-year benchmark survey. The purpose of the quarterly survey is to report positions and transactions between a U.S. reporter and its foreign affiliates. The purpose of the annual survey is to report annual financial and operating data of the U.S. reporter and its foreign affiliates. The benchmark surveys are ...
The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts mandatory surveys to collect information on direct investment. There are three (3) specific surveys which track "out-bound" foreign investment: a quarterly survey, an annual survey, and a 5-year benchmark survey. The purpose of the quarterly survey is to report positions and transactions between a U.S. reporter and its foreign affiliates. The purpose of the annual survey is to report annual financial and operating data of the U.S. reporter and its foreign affiliates. The benchmark surveys are ...
The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts seven (7) mandatory surveys to collect information on direct investment. These seven surveys consist of an initial survey for any new direct investment and then applicable quarterly, annually, and within 5-year benchmark surveys.
The initial five blog posts in this series summarized the applicable reporting and survey requirements for foreign investment into the United States. The next blog posts in this series now focus on the reporting and survey requirements where U.S. companies make "out-bound ...
The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts seven (7) mandatory surveys to collect information on direct investment. These seven surveys consist of an initial survey for any new in-bound direct investment, and then applicable quarterly, annual, and 5-year benchmark surveys. The purpose of the new foreign direct investment survey is to capture new investment transactions when a foreign direct investment relationship is created. The purpose of the quarterly survey is to report positions and transactions between a U.S. affiliate and its foreign ...
The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts seven (7) mandatory surveys to collect information on direct investment. These seven surveys consist of an initial survey for any new in-bound direct investment, and then applicable quarterly, annual, and 5-year benchmark surveys. The purpose of the new foreign direct investment survey is to capture new investment transactions when a foreign direct investment relationship is created. The purpose of the quarterly survey is to report positions and transactions between a U.S. affiliate and its foreign ...
The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts seven (7) mandatory surveys to collect information on direct investment. These seven surveys consist of an initial survey for any new in-bound direct investment, and then applicable quarterly, annual, and 5-year benchmark surveys. The purpose of the new foreign direct investment survey is to capture new investment transactions when a foreign direct investment relationship is created. The purpose of the quarterly survey is to report positions and transactions between a U.S. affiliate and its foreign ...
If South Carolina property taxes are not timely paid, the county Assessor must assess a late-payment penalty. However, the county Treasurer is given authority to waive an assessed late payment penalty if a taxpayer can actually show the property taxes were timely paid. This late-payment waiver by the county Treasurer is discretionary, and generally not subject to appeal; however, if a taxpayer alleges error by the county in its assessment of a late-payment penalty, the taxpayer is then entitled to an administrative hearing through a county committee, consisting of the county ...
The U.S. Department of Commerce, Bureau of Economic Analysis (BEA), conducts seven (7) mandatory surveys to collect information on direct investment. These seven surveys consist of an initial survey for any new in-bound direct investment, and then applicable quarterly, annual, and 5-year benchmark surveys. The purpose of the new foreign direct investment survey is to capture new investment transactions when a foreign direct investment relationship is created. The purpose of the quarterly survey is to report positions and transactions between a U.S. affiliate and its foreign ...
Businesses making investments in the United States, directly or indirectly, are required to report this investment to the United States government. This "in-bound" investment is reported to the United States Department of Commerce, through its Bureau of Economic Analysis (BEA). This is the first in a series of posts on the subject.
The BEA promotes a better understanding of the U.S. economy by preparing official economic statistics. These statistics provide accurate and relevant economic information that helps gauge the performance of the U.S. economy and the role of the U.S. in ...
South Carolina's gas tax is one of the lowest in the country. The result is the deplorable condition of the state's highway system and roads. South Carolina is a conservative state, politically, and any tax increase, gas or otherwise, is often seen as political suicide for our state's elected officials.
Due to a groundswell of outcry, however, from residents, businesses, and even now from public officials, the state is about to pass major legislation to fund much-needed road improvements, and with the funding to be from a variety of new "fees" (note the aversion to referencing anything ...
The April 30th 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 ...
If an individual or business owes unpaid income taxes to the IRS, or to a state, federal bankruptcy laws may provide relief for some, if not all, of these taxes. Generally applicable to "older" federal and state income taxes, if a taxpayer has filed timely tax returns for a tax period, the due date of which, including extensions, is more than 3 years from the date a bankruptcy petition is filed; if the tax return is filed late, at least 2 years have elapsed since the filing of the late return and the filing of the bankruptcy petition; and, where the IRS has made an "assessment" of the tax owed, at ...
If an individual or business owes South Carolina taxes, and does not have the present ability to pay off this state tax debt, the South Carolina Department of Revenue is authorized to enter into payment plans with taxpayers to pay these back taxes. Even with a payment plan, DOR may still file tax liens protectively against a taxpayer and his property, and which will remain recorded during the time the payment plan is in effect and until all back taxes are paid. SCDOR also has the power to seize assets of a taxpayer who has not paid state taxes, including bank accounts, and to levy (garnish) a ...
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 ...
In Olds v. City of Goose Creek, 2016 S.C. App. LEXIS 147, the South Carolina Court of Appeals provides a thorough discussion of the application of the South Carolina business license tax to a taxpayer's gross income. The central issue of the case concerns the meaning of the term "gross income" and how that term is used in computing a taxpayer's business license tax under the City of Goose Creek's applicable business license ordinance.
The facts of this case indicate that Olds was engaged in the business of buying and selling real property. In January 2011, when Olds filed an application to ...
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 ...
South Carolina offers a wide variety of economic development incentives to businesses seeking to locate or expand in the state. This incentive array focuses on certain types of businesses the state wishes to attract. One such business is the warehouse and distribution facility.
Like all states, the State of South Carolina, and its local government bodies (counties and cities), impose a number of different taxes on businesses, including a state income tax, sales and use taxes, property taxes, and local business license taxes. The South Carolina General Assembly and local ...
The Internal Revenue Code (IRC) provides that distributions from certain retirement arrangements (e.g., qualified retirement plans, individual retirement accounts (IRAs), §403(a) annuity plans, §403(b) tax-sheltered annuities, and §457 eligible governmental plans) will not be taxed (the tax is deferred) if the distribution is transferred to an eligible retirement plan (typically one of the above-described arrangements) within 60 days of receipt (i.e., a rollover distribution). The 60 day transfer requirement is commonly referred to as the "60 day rollover ...
Businesses seeking to locate or expand operations in South Carolina may be eligible for one or more types of grant funding through the State of South Carolina. Grants are designed to be a reimbursement mechanism, where the state will reimburse the business for certain project-related costs (e.g. land, buildings, roads, and infrastructure). The state often funds the grant to the local county government in which the project is located, and the applicable county government then administers the grant for the business.
Grant funding is discretionary, and may be in addition to, or in lieu ...
Once the South Carolina Department of Revenue (SCDOR) completes an audit of a taxpayer, if there are any proposed adjustments and additional taxes SCDOR seeks, it will issue to the taxpayer a proposed notice of assessment with an examination report. A taxpayer then has 90 days to administratively protest/appeal the proposed assessment within SCDOR.
SCDOR formerly had an "appeals" audit function. This appeals audit function was abolished by SCDOR, however, and appeals/protests of proposed audit assessments now simply go back to the auditor, and to the auditor's supervisor.
If a ...
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 ...
South Carolina requires submission of a Form SC2848, Power of Attorney and Declaration of Representative, in order for an attorney, CPA, or enrolled agent to represent a taxpayer administratively before the South Carolina Department of Revenue (SCDOR). This includes representation in examinations, audits, appeals, tax collection, and other administrative tax matters.
The Form SC2848 has important differences from its current IRS counterpart, including:
- In the Form SC2848 is the notification that "All Notices and Communications will be sent to the taxpayer only.", while the ...
South Carolina has some of the highest business property taxes in the Southeast. The state generally taxes land, buildings, machinery and equipment, and furniture and fixtures, but does not tax inventory, pollution control equipment, intellectual property, and other assets.
To reduce the effect of its high business property tax rates, and to make the state a more competitive environment for business, South Carolina offers a property tax incentive and tax savings for those businesses investing at least $2.5 million over a five year period in the state. This incentive is known as the ...
Many businesses are purchased in South Carolina every year. Many of these same businesses, however, have high worker unemployment claims, and are paying high South Carolina Unemployment Insurance taxes to the state to fund these claims.
South Carolina pays unemployment benefits to people that are out of work. The state funds these benefits through a special tax on employers in the state - the South Carolina Unemployment Insurance Tax, or "UI Tax." The more unemployment claims that are filed with the state and related to an employer, the higher the employer's UI Tax rate will be.
Where a ...
While South Carolina has low income taxes, and comparatively low sales taxes as well, the state makes up for this by having some of the highest business property tax rates in the Southeast. These property taxes are generally levied on the land, buildings and personal property (excluding inventory) of a business in the state.
South Carolina law does authorize its counties, which bill and collect the state's property taxes, to enter into property tax incentive arrangements with businesses, which can reduce property taxes. These property tax incentive arrangements generally require ...
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 ...
Sales Tax: In South Carolina, a 6% sales tax is imposed upon every person engaged within this State in the business of selling tangible personal property and other types of goods and services sold at retail. Voters in various South Carolina counties have approved an additional 1 - 2.5% additional tax assessment ("Local Option Sales Tax") where the additional proceeds are applied by the county for infrastructure improvements or rollback of property taxes. This can bring the South Carolina sales tax to 8.5% in areas of the state.
Use Tax: South Carolina also imposes a complimentary 6% use ...
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 offers many statutory and discretionary incentives to promote capital investment and job creation in our state. The Job Development Credit ("JDC") is a discretionary credit, applied through and approved by the South Carolina Coordinating Council for Economic Development ("Council"), which is available to a new or expanding business making capital investment and creating new jobs in the state.
The JDC will reduce a business's state employee withholding tax liability (refundable only to the extent of withholding actually paid) as reimbursement of the cost of ...
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 30th.
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 ...
The South Carolina Supreme Court recently ruled against Duke Energy Corporation (“Duke”) in Duke’s claim for a $126 million state income tax refund. The issue came down to whether gross receipts from Duke’s sales of short-term investments should be included in the apportionment fraction used by South Carolina to divide income among South Carolina and other states in which Duke operates. The South Carolina Supreme Court’s opinion is important because it can pose significant hurdles to businesses with multi-state operations that have planned with investment income to ...
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 ...
If a taxpayer owes South Carolina taxes, the South Carolina Department of Revenue (SCDOR) will require payment of these taxes, including any related penalties and interest. SCDOR will consider payment plans for outstanding state taxes, however.
SC Form FS-102, Installment Agreement Request, should be submitted for this purpose. A nonrefundable fee of $45 and a 10% down payment is required. All tax returns during the period of the payment plan must be filed. Collection information statements using IRS forms (e.g. 433-A, Collection Information Statement for Wage Earners and ...
The South Carolina Department of Revenue (formerly the South Carolina Tax Commission) is the state's tax agency. Established as the Tax Commission in 1915, SCDOR came into existence in 1993, in connection with a state restructuring act.
SCDOR is organized centrally, with its headquarters in Columbia, and regional "Service Centers" and local field offices throughout the state. All state tax returns are filed and processed by SCDOR in Columbia.
SCDOR is led by a Director, Rick Reames, and an Executive Management Team consisting of Mont Alexander (Deputy Director of Field ...
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 31st of the preceding calendar year. Property taxes are due on January 15th 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 employers must pay a variety of taxes on employee payroll, including federal social security taxes (FICA and FUTA), and South Carolina employee income withholding taxes. While the employer is able to collect some of these taxes from the employee's wages, other taxes (like the employer matching portion of FICA and FUTA) must come out of the employer's pocket.
Another tax that South Carolina employers must pay is the state Unemployment Insurance Tax, or "UI Tax". All employers that pay wages in South Carolina must file a quarterly report with the South Carolina ...
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 ...
South Carolina generally follows federal law for purposes of the assessment of tax, including time limits on which taxes may be assessed (statutes of limitation). The South Carolina Department of Revenue (SCDOR) generally has 36 months from the date an original return was filed or due to be filed (whichever is later) in which to assess additional taxes. S.C. Code Ann. § 12-54-85(A). An important exception concerns substantial understatements of tax, however.
For federal purposes, an extended 6-year statute of limitations exists for substantial omissions of income - where a ...
South Carolina imposes a sales and complimentary use tax on the retail sale or use of tangible personal property in the state. The taxes are assessed by the South Carolina Department of Revenue (DOR). Retailers are generally required to collect and remit the sales tax to the DOR, while purchasers are required to directly pay the use tax. There are significant exclusions and exemptions to both taxes. If a business retailer or purchaser does not pay the sales or use tax, the DOR may have the ability to make a "responsible person" assessment of the tax (including penalties and interest ...
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 ...
The South Carolina Economic Impact Zone Community Development Act of 1995 established an income tax credit for qualified manufacturing and production facilities. The credit is designed to encourage capital investment in the state through the formation of new businesses and the retention and expansion of existing businesses. Known as the "investment tax credit", the credit was initially limited to businesses making qualified investments in 27 designated counties in South Carolina, but has been expanded statewide.
The credit applies for qualified manufacturing and ...
South Carolina provides an income tax credit to a taxpayer who invests in motion picture related projects. Specifically, the state provides a credit equal to 20% of the cash invested by a person in a company that: (1) develops or produces a qualified South Carolina motion picture project or (2) constructs, converts, or equips a motion picture production facility or post-production facility in South Carolina. Key requirements of each credit are:
- Motion Picture Project Credit
- The credit is earned when cash only is spent. This credit, when combined with a taxpayer's other South ...
South Carolina provides a tax credit to corporations against the state corporate income, or state corporate license fees, equal to 20% of the qualifying costs of establishing a corporate headquarters in South Carolina, or expanding or adding to an existing corporate headquarters. The credit is made up of two parts, the real property costs and the personal property costs. Key Features of the credit are:
- A corporation may qualify for only the real property portion of the credit, or may qualify for both the real and personal property portions of the credit.
- Any unused credit may be carried ...
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 a statutory incentive to new and expanding businesses that create jobs in our state. The Job Tax Credit ("JTC"), codified in S.C. Code Ann. § 12-6-3360, permits certain businesses to reduce their corporate income tax liability annually by a maximum of 50%. Any unused credit may be carried forward for up to 15 years. There are three types of JTCs: (1) the "traditional" annual job tax credit, (2) the "annual" small business job tax credit, and (3) the "accelerated" small business job tax credit. This blog will address the "traditional" JTC only.
To qualify for JTC, a ...
South Carolina offers a broad range of tax and financial incentives to encourage new and existing businesses to open or expand operations in the state. This is the first in a series of blogs which will review these lucrative incentives and how they function. This blog address the players in economic development in South Carolina, from the Department of Commerce to the county economic development alliances.
- Department of Commerce
The South Carolina Department of Commerce ("DOC") is overseen by Secretary of Commerce Bobby Hitt, who was appointed by Governor Nikki Haley. DOC is the ...
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 ...
The South Carolina General Assembly approved a law on June 4, 2015 allowing the South Carolina Department of Revenue to offer an amnesty program to taxpayers in the state who have not filed tax returns and/or owe state taxes. The law becomes effective on the Governor's signature. Adoption of the law was advocated by the Department of Revenue.
The new law, South Carolina Code Section 12-47-397, is designed to encourage voluntary compliance and payment of taxes owed to the State. The law authorizes the South Carolina Department of Revenue to establish an amnesty program and to designate ...
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 ...
On December 2, 2014, the South Carolina Department of Revenue issued S.C. Temporary Revenue Ruling No. 14-8 and No. 14-9 regarding the income and property tax treatment for married same-sex couples.Same-sex couples filing a federal income tax return with a married filing status must now file a South Carolina income tax return using the same married filing status.
In S.C. Temporary Revenue Ruling No. 14-8, the Department of Revenue instructs same-sex couples who are legally married under any state law to file their 2014 South Carolina income tax return as a married couple - either ...
Robert is a veteran tax return preparer of 20 years, who walks into his office on February 2, 2015 to begin a busy income tax filing season. Julie and Michelle stop by Robert's office and give their wage and income statements to Robert for the calendar year 2014. They tell Robert they were legally married in Massachusetts on July 4, 2013, but they are South Carolina residents now and wish to file both a federal and South Carolina income tax return as a married couple. Shortly thereafter, another couple, Mark and Brad, walk into Robert's office and state they were married in South Carolina on ...
In Colleen Therese Condon and Ann Nichols Bleckley v. Nimrata (Nikki) Randhawa Haley, et al., Civil Action No. 2:14-4010-RMG (November 12, 2014), the United States District Court for the District of South Carolina (Charleston Division) held that South Carolina's prohibition of marriage for same sex couples who otherwise meet all other legal requirements for marriage in the state is unconstitutional and violates the Due Process Clause and Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution. The District Court also invalidated as a matter of law ...
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 ...
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 ...
In what can only be considered a "game-changer" for South Carolina property owners, the South Carolina Court of Appeals in Taylor v. Aiken County Assessor, ___ S.E.2d ___, 2013 WL 1223185 (S.C. Ct. App., March 27, 2013) has recently ruled that a current owner of property can "look back" and challenge the county assessed value of real estate not owned in the prior year.
For over half a century, tax practitioners in South Carolina have assumed, without much comment, that South Carolina law imposed responsibility to pay current property taxes on the owner of property as of December 31st of ...
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 ...
On August 15, 2011, the South Carolina Supreme Court ruled in Clarendon County v. TYKAT, Inc. (Op. 270252011, WL 3568536) that Section 12-37-950 of the Code of Laws of South Carolina, 1976, as amended (the "Code"), subjected a leasehold interest in real estate to property taxation where the property was otherwise exempt from such taxation in the hands of the owner. The court's ruling in TYKAT affirmed the ruling of the South Carolina Administrative Law Court (the "ALC") below finding that TYKAT, Inc. ("TYKAT") was liable to Clarendon County for property taxes on the value of TYKAT's ...