Tax & Accounting Blog

South Carolina enacts sales and use tax nexus exemption for certain in-state distribution facilities

Indirect Tax, Sales Tax Nexus June 14, 2011

On June 8, 2011, South Carolina passed new legislation that provides a temporary exemption from sales and use tax collection for certain in-state distribution facilities.  Under the new law, SB 36, a qualifying distribution center is not considered to have physical presence in South Carolina sufficient to establish a nexus with the state for sales and use tax purposes until January 1, 2016.

To qualify for the exemption:

  • A retailer’s distribution facility must be placed in service after December 31, 2010, and before January 1, 2013;
  • Retail sales must not occur at the distribution facility;
  • An initial capital investment of at least $125 million must be made;
  • At least 2,000 full time jobs with comprehensive health plan benefits must be created.

Retailers with qualifying distribution centers must notify a purchaser in a confirmation email that they may owe South Carolina use tax on the total sales price of a transaction made over the Internet and include in the email an Internet link to the Department of Revenue’s Website that allows the purchaser to pay the use tax.

In addition, retailers with qualifying distribution centers must provide purchasers with a statement of the total sales made to the purchaser during the preceding calendar year by February 1 of each year.

The full text of the bill can be found here: SB 36