Which in-state activities did SC Revenue Ruling 14-4 identify as creating sales-and-use-tax nexus?

Plain-English summary

South Carolina Revenue Ruling 14-4 is a fact-by-fact checklist of activities that may create sales-and-use-tax nexus for an out-of-state retailer.

It focuses on physical connections such as property, inventory, employees, contractors, affiliates, delivery, and in-state internet infrastructure. RR 18-14 later modified it after South Dakota v. Wayfair by recognizing economic nexus for remote sellers even without physical presence.

How to read the checklist

Every answer assumes:

• the business sells tangible personal property at retail to South Carolina customers;
• the described contact is its only possible nexus activity or relationship; and
• the activity is not de minimis unless the question says otherwise.

A “yes” means that single activity creates nexus under the ruling's assumptions. A “no” means only that the activity by itself does not. The ruling warns that several individually insufficient activities may combine to create nexus and that any factual change can alter the result.

Activities covered

The ruling analyzes contacts including:

• registration with South Carolina agencies, bank accounts, listings, and local telephone numbers;
• offices, storage, inventory, distribution facilities, leased property, software, catalogs, kiosks, and returnable containers;
• sales representatives, installers, delivery personnel, repair and warranty contractors, trainers, customer-service providers, affiliates, fulfillment centers, photographers, collection agents, seminars, and temporary in-state selling;
• company vehicles, non-common-carrier delivery, and South Carolina drop shippers;
• commercial printers, stored printing materials, and personnel visits during printing;
• local, national, satellite, catalog, mail, and website advertising; and
• South Carolina servers and disregarded entities operating in the state.

Clear physical-presence examples

The checklist treats maintaining a South Carolina selling location, storage, inventory, or distribution facility as nexus-creating, subject to the now-expired distribution-facility safe harbor described in the ruling.

It also treats in-state representatives who sell, install, deliver, service, repair, train, troubleshoot, solicit, or provide customer support as potentially creating nexus under the stated facts. Company-owned or representative delivery and use of a South Carolina company to drop-ship merchandise are also listed as nexus-creating contacts.

Commercial-printer safe harbor

The ruling reproduces Code Section 12-36-75's protection for a person contracting with a South Carolina commercial printer. Specified printer-related property, printed-goods shipments, and activities at the printer's premises do not by themselves create a duty to collect sales and use tax when the statute's conditions are met.

Economic-nexus update

RR 18-14 modified this ruling after Wayfair. Under that later ruling, a seller can have South Carolina nexus from the amount of sales delivered into the state even with no property, employee, or representative here. A remote seller therefore must test both current economic-nexus rules and the physical-presence activities cataloged in RR 14-4.

Common questions

Q: Does one “no” answer guarantee no South Carolina nexus?

A: No. The ruling says combinations of contacts and additional facts may create nexus.

Q: Can an independent contractor create nexus?

A: Yes under several listed scenarios, including installation, delivery, repair, warranty, solicitation, and customer-service work performed for the seller.

Q: Does using a South Carolina printer always create nexus?

A: No. The statute and ruling provide a specific safe harbor for qualifying printing arrangements.

Q: Can a remote seller rely on the old physical-presence-only answers?

A: No. RR 18-14 modified the ruling after Wayfair and added economic nexus.

Citations and references

• S.C. Code Ann. Chapter 36 of Title 12 (Sales and Use Tax Act)
• S.C. Code Ann. § 12-36-60 (tangible personal property)
• S.C. Code Ann. § 12-36-75 (commercial-printer safe harbor)
• S.C. Code Ann. § 12-36-2691 (historical distribution-facility safe harbor)
• SC Revenue Ruling #18-14 (economic-nexus modification identified in the corpus)
• South Dakota v. Wayfair, Inc., 585 U.S. 162 (2018) (later decision discussed in RR 18-14)

Subject

Nexus Creating Activities for Sales and Use Taxes

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR14-4.pdf

Original ruling text

State of South Carolina

Department of Revenue
300A Outlet Pointe Blvd, P. O. Box 12265, Columbia, South Carolina 29211
Website Address: www.sctax.org

SC REVENUE RULING #14-4

SUBJECT:

Nexus Creating Activities for Sales and Use Taxes
(Sales and Use Tax)

EFFECTIVE DATE: Applies to all open periods under the statute, unless otherwise
stated in the Introduction.
SUPERSEDES:

SC Revenue Ruling #07-3 and all previous advisory opinions and
any oral directives in conflict herewith.

REFERENCES:

Chapter 36 of Title 12 (2014)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2014)
S. C. Code Ann. Section 1-23-10(4) (2014)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the
public. It is an advisory opinion issued to apply principles of tax
law to a set of facts or a general category of taxpayers. It is the
Department’s position until superseded or modified by a change in
statute, regulation, court decision, or another Departmental
advisory opinion.

Introduction:
Nexus is a sufficient connection between a person and a state, and a sufficient connection
between an activity, property, or transaction and a state, that allows the state to subject
the person, and the activity, property, or transaction to its taxing jurisdiction. The Due
Process and Commerce Clauses of the United States Constitution and other federal
statutes provide limitations on a state’s powers to tax out of state business.
Over the years, the courts have provided limitations and guidelines in determining
whether certain activities create nexus in a taxing state. For example, see Quill Corp. v.
North Dakota 502 U.S. 808, 112 S. Ct. 1904, 119 L. Ed. 2d 27 (1992), Complete Auto
Transit, Inc. v. Brady, 430 U.S. 274, 97 S. Ct. 1076, 51 L. Ed. 326 (1977), Miller
Brothers v. Maryland, 347 U.S. 340, 347, 74 S. Ct. 535, 98 L. Ed. 744 (1954), Scripto,
Inc. v. Carson, 362 U.S. 207, 80 S. Ct. 52, 4 L. Ed. 2d 54 (1960), National Bellas Hess,
Inc. v. Department of Revenue, 386 U.S. 753, 87 S.Ct. 1389, 18 L.Ed.2d 505 (1967),
Helicopteros Nacionales de Columbia, S.A. v. Hall, 104 S. Ct.1868 (1984), and National
Geographic Society v. California Bd. of Equal, 430 U.S. 551, 97 S. Ct. 1386, 51 L. Ed.
2d 631 (1977).
1

The purpose of this advisory opinion is to provide written guidance from the Department
concerning sales and use tax nexus creating activities.
This opinion reflects the Department’s official position regarding sales and use tax
nexus at this time. Since developments in this area are constantly taking place, any
response is subject to change due to a future statute, regulation, court decision, or
advisory opinion.
Any change in South Carolina’s position as set forth in this document that is not the
result of a court case or change in statute or regulation will be prospective. Any
change that is the result of a court case will apply to all periods open under the
statute unless the court states otherwise and any change in statute or regulation will
be applicable as of the effective date established by the General Assembly.
Questions concerning the existence of nexus with South Carolina should be directed to
the Department’s Nexus/Discovery Section at 803-898-5235 or 803 898-5695.
Qualifications to Responses:
Each response is based upon the specific facts described in the question and the
following assumptions:
•

The business is selling tangible personal property 1 at retail to residents or
others in South Carolina;

•

Each specific question by itself was the only possible nexus creating activity
or relationship a business has in South Carolina 2; and,

•

The activities described are not “de minimis” unless the question or answer
specifically states otherwise.

A “yes” response indicates the activity or relationship will, by itself, create nexus
with South Carolina. A “no” response indicates the activity or relationship will, by
itself, not create nexus with South Carolina. However, it is important to note that a
combination of several different activities or relationships, even if each by itself does
not create nexus, may create nexus with South Carolina. In addition, any variance
from the facts stated in a question, or any additional facts not stated in a question,
may change the answer set forth in this document.

1

See Code Section 12-36-60 for the definition of “tangible personal property” and the various imposition
provisions of Chapter 36 of Title 12 (Sales and Use Tax Code of Laws) for information as to services and
intangibles that are “tangible personal property” by definition.
2
Even though some questions specifically state that the activity represents the business’ “sole activity” in
South Carolina, all other questions represent the business’ sole activity in South Carolina whether or not
such is specifically stated. The difference in wording only represents how each question was originally
presented to the Department.

2

Each response refers only to sales and use tax nexus. Activities that create nexus for sales
and use tax purposes differ somewhat from those that create nexus for other tax purposes.
A. General Activities
YES

NO

YES

NO

1. The business holds a certificate of authority to conduct business in
   South Carolina, or is otherwise registered with the Secretary of State or any
   other regulatory agency in South Carolina.
2. The business maintains a bank account in South Carolina.
3. The business is listed in the local telephone books of cities in South
   Carolina.

4. The business uses local phone numbers in South Carolina, which
   are forwarded to its headquarters in another state.
   B. Property in South Carolina

5. The business’ sole activity in South Carolina is maintaining or using
   a place of business for selling tangible personalty.

6. The business’ sole activity in South Carolina is maintaining or using
   a place of business for storing 3 tangible personal property.
7. The business’ sole activity in South Carolina is maintaining inventory
   in South Carolina.
8. The business’ sole activity in South Carolina is maintaining or
   using a distribution facility.
   Note: South Carolina enacted a limited “safe harbor” nexus statute for
   persons who placed a distribution facility in service in South Carolina
   after December 31, 2010, but before January 1, 2013. This answer does
   not apply to a person who has met the investment and job requirements of
   Code Section 12-36-2691 before January 1, 2013. For persons who met
   these investment and job requirements, this “safe harbor” is applicable
   until the earlier of (a) January 1, 2016; (b) when the person no longer
   meets the requirements of the statute; or (c) the effective date of a law
   enacted by Congress that allows states to require sales tax collection for
   taxpayers that do not have substantial nexus. For all other person, this
   “safe harbor” is no longer available and the above answer is applicable.

3

See Question B.4.

3

YES

5. The business’ sole activity in South Carolina is maintaining
   tangible personal property for lease through a representative.
6. The business’ sole activity in South Carolina is the existence of
   unrelated in-state office (e.g. advertising).
7. The business’ sole activity in South Carolina is licensing software
   for use in South Carolina and
   (a) the business sold and delivered the licensed software into South
   Carolina via a tape, disk, flash drive, or some other form of tangible
   personal property as defined in the South Carolina sales and use
   tax law; or,
   (b) the business sold and delivered the licensed software into South
   Carolina as an attachment to an e-mail or a download from a website.
   Note: See SC Revenue Rulings #12-1, 11-2, 03-5 and 96-3.
8. The business’ sole activity in South Carolina is that of a mail-order
   catalog seller with property or solicitors in South Carolina.
9. The business’ sole activity in South Carolina is the drop shipment
   of catalogs in South Carolina, for mailing to residents within South Carolina.
   Note: See Question D.4 for the application of nexus to a business that uses
   a company in South Carolina to drop-ship merchandise to customers.
10. The business sells tangible personal property to residents in South
    Carolina from outside of South Carolina (e.g., telephone, over the
    Internet, via catalog/direct mail, or otherwise) and delivers merchandise
    to customers in South Carolina in returnable containers.
11. The business sells tangible personal property at retail to businesses
    in South Carolina from outside of South Carolina (e.g., telephone, over
    the Internet, or otherwise) and delivers the merchandise to customers by
    the business’ tractor-trailers or railcars and leaves the trailer or railcar
    with the customer for a specified number of days or until the next
    delivery is made during which the customer will remove the merchandise
    from the trailer or railcar.
12. The business sells tangible personal property to residents in South
    Carolina from outside of South Carolina (e.g., telephone, over the
    Internet, via catalog/direct mail, or otherwise) and provides in-state
    telephone and kiosks that allow customers to access inventories and
    purchase merchandise from remote subsidiaries.
    4

NO

C. Activities of an Employee or Third Party (e.g., Sales Representative,
Independent Contractor or Affiliated Company)
YES

1. The business’ sole activity in South Carolina is the presence of a
   representative selling in South Carolina.
2. The business authorizes an employee or third party (e.g., independent
   contractor, affiliated company or other representative) to install, deliver,
   service, or repair merchandise in South Carolina or hires independent
   contractor to perform warranty or repair services on tangible personal
   property in South Carolina. (The repairs may be under warranty for which
   there is no separate charge or may be under warranty for which there was
   a separate charge.)
   3

The business uses an employee or third party in South Carolina
(e.g., independent contractor, affiliated company, or other representative)
to investigate, handle or resolve customer issues, provide training or
technical assistance, or otherwise provide customer service to customers
in South Carolina.

4. The business’ sole activity in South Carolina is an employee/representative providing training to South Carolina customers.
5. The business’ sole activity in South Carolina is an employee/representative providing trouble-shooting to South Carolina customers.
6. The business sells tangible personal property to residents in South Carolina
   from outside the state (e.g., by telephone, over the Internet, via catalog/direct
   mail, or otherwise) and has an employee visit South Carolina four or more
   times during the year.
7. The business’ sole activity in South Carolina is telemarketing activity
   into South Carolina (telemarketer not located in South Carolina).
8. The business’ sole activity in South Carolina is the use of a telemarketing
   firm with a South Carolina office.
9. The business hires an unrelated call center or fulfillment center located
   in South Carolina to process telephone or electronic orders that primarily
   derive from out-of-state customers.
10. The business’ sole activity in South Carolina is using an in-state
    photographer, if the vendor's products are shipped to South Carolina during
    the photographic sessions.
11. The business collects delinquent accounts using a collection agency in
    South Carolina or hires attorneys or other third parties to file collection suits
    in South Carolina.
    5

NO

YES

12. The business is affiliated with an entity that sells tangible personal
    property or services to customers in South Carolina, and
    (a) the South Carolina affiliate sells similar merchandise and uses
    common trade names, trademarks or logos; or,
    (b) uses the South Carolina affiliate to accept returns, take orders, perform
    customer service or distribute advertising materials on its behalf.
13. The business sells tangible personal property to residents in South
    Carolina from outside the state and authorizes an employee or third party
    (e.g., sales representative, independent contractor, or affiliated company)
    to solicit sales in South Carolina.
14. The business’ sole activity in South Carolina is soliciting through
    independent agents.
15. The business’ sole activity in South Carolina is using a broker to
    arrange rentals of customer mailing lists, that constitute tangible personal
    property under the South Carolina sales and use tax law, to vendors in
    South Carolina and other states.
16. The business’ in -state representative maintains an in-home office.
    Note: This answer applies whether or not the business reimburses the instate representative for the costs of maintaining the in-home office. In
    addition, as noted elsewhere in this advisory opinion, it is not necessary
    that a representative maintain an in-state office in order for nexus to exist.
17. The business sells tangible personal property to residents in South
    Carolina from outside of South Carolina (e.g., telephone, over the
    Internet, via catalog/direct mail, or otherwise) and ships its product for
    distribution to a third-party distributor located in South Carolina that
    performs the functions such as labeling, packaging, and shipping.
    Note: This answer assumes that the third-party distributor did not purchase
    the merchandise, but is providing a service on behalf of a retailer selling
    tangible personal property to South Carolina residents.
18. The business sells tangible personal property to residents in South
    Carolina from outside of South Carolina (e.g., telephone, over the
    Internet, via catalog/direct mail, or otherwise) and makes remote sales
    of tangible personal property to South Carolina residents and holds two
    or more one-day seminars in South Carolina.

6

NO

YES

NO

19. The business sells tangible personal property to residents in South
    Carolina from outside of South Carolina (e.g., telephone, over the
    Internet, via catalog/direct mail, or otherwise) and makes remote sales of
    tangible personal property to South Carolina residents and holds two
    or more one-day seminars in South Carolina, and has its employees visit
    South Carolina five times during the year.
20. The business sells gifts cards in affiliated South Carolina stores.
21. The business makes remote sales of “canned software,” that constitutes
    tangible personal property under the South Carolina sales and use tax law, to
    residents of South Carolina and then sends a representative to customize it to
    meet the customer’s specific needs or to provide other Information Technology
    services.
22. The business sells tangible personal property while temporarily located
    in South Carolina for up to three days.
    Note: The answer depends on whether or not the business’ presence or
    sales are de minimis, the business’ intent with respect to returning to the state,
    the value of the sales, and other facts and circumstances. However, even if
    nexus is not established, the seller must be licensed and remit the tax on all
    sales made by the employee during the employee’s time in the state
23. The business sells tangible personal property to residents in South
    Carolina from outside of South Carolina (e.g., telephone, over the
    Internet via catalog/direct mail, or otherwise) and produces an “infomercial” that runs on an in-state television channel and pays commissions
    to the local TV station based on a percentage of sales to South Carolina
    customers who made purchases using the phone number or website
    address displayed on the infomercial.”
    Note: The answer depends on the facts and circumstances (e.g., nexus may
    exist if the advertising consists of a personal endorsement by a local personality)
    D. Delivery
    YES
24. The business’ sole activity in South Carolina is in-state delivery via
    company-owned vehicles.
25. The business’ sole activity in South Carolina is the presence of a
    representative to deliver merchandise in South Carolina 4.

4

See Question B.4.

7

NO

YES

NO

YES

NO

YES

NO

3. The business delivers merchandise in South Carolina by means other
   than common carrier or the U.S. Postal Service.

4. The business uses a company in South Carolina to drop-ship
   merchandise to customers.
   Note: See SC Revenue Ruling #98-8. In addition, see Question B.9 for
   the application of nexus to a business whose sole activity in South Carolina
   is the drop shipment of catalogs in South Carolina for mailing to residents
   within South Carolina.
   E. Transactions with South Carolina Printers 5.

5. The business’ sole activity in South Carolina is using a South Carolina
   printing company to print catalogs or advertisements, if the vendor's
   personnel enter the state occasionally (1-3 times per year) during
   the printing process.
   Note: See Code Section 12-36-75

6. The business’ sole activity in South Carolina is using a South Carolina
   printing company to print catalogs or advertisements, if the vendor's
   personnel do not enter South Carolina during the printing process.
   Note: See Code Section 12-36-75.

7. The business’ sole activity in South Carolina is using a South Carolina
   printing company where the taxpayer’s printing materials or printed
   goods are stored.
   Note: See Code Section 12-36-75.
   F. Advertising

8. The business’ sole activity in South Carolina is spillover advertising
   from neighboring states.
   Note: This answer assumes that the advertiser and retailer have no physical
   presence in South Carolina.

5

See Exhibit A.

8

YES

NO

2. The business’ sole activity in South Carolina is that of a mail-order
   catalog seller with only mail communication in the state.
   Note: This answer assumes that the retailer has no physical presence in
   South Carolina and that the catalogs are not mailed from within South Carolina.
3. The business’ sole activity in South Carolina is mailing catalogs to
   South Carolina consumers.
   Note: This answer assumes that the retailer has no physical presence
   in South Carolina and that the catalogs are not mailed from within South
   Carolina.
4. The business is an Internet-based retailer with an out-of-state home
   office and enters into an agreement with a South Carolina operator of a
   website. The website operator hosts advertisements directing consumers
   to the website of the out-of-state retailer, and is paid each time an ad is
   displayed (per impression).
5. The business’ sole activity in South Carolina is advertising on local
   media (e.g., newspapers, radio, TV).
   Note: The answer depends on the facts and circumstances (e.g., nexus may
   exist if the advertising consists of a personal endorsement by a local personality)
6. The business’ sole activity in South Carolina is advertising on national
   media, which may be circulated in South Carolina (e.g., national magazines
   or TV).
   Note: The answer depends on the facts and circumstances (e.g., nexus may
   exist if the advertising consists of a personal endorsement by a local personality)
7. The business’ sole activity in South Carolina is advertising on satellite TV.
   Note: The answer depends on the facts and circumstances (e.g., nexus may
   exist if the advertising consists of a personal endorsement by a local personality)

G. Other Issues
YES

1. The business sells tangible personal property over the Internet and
   operates a website which is maintained on a server that is owned
   by the business and located in South Carolina.

9

NO

YES

2. The business makes remote sales of digital content such as music and
   video that is downloaded by residents of South Carolina.
   Sales of digital content that is downloaded is not subject to the tax.
3. The business sells tangible personal property to residents in South Carolina
   from outside of South Carolina (e.g., telephone, over the Internet, via
   catalog/direct mail, or otherwise) and is the single member in a single member
   LLC that is a disregarded entity and is operating in South Carolina.

Note: As stated in the “Introduction,” the above answers are based on the
assumption that the business is selling tangible personal property at retail to
residents or others in South Carolina and that each specific question by itself was
the only possible nexus creating activity or relationship a business has in South
Carolina. However, it is important to note that a combination of several different
activities or relationships, even if each by itself does not create nexus, may create
nexus with South Carolina. In addition, any variance from the facts stated in a
question, or any additional facts not stated in a question, may change the answer set
forth in this document.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Rick Reames III
Rick Reames III, Director
September 10
, 2014
Columbia, South Carolina

10

NO

EXHIBIT A
PERSONS CONTRACTING WITH STATE COMMERCIAL PRINTER
NEXUS SAFE HARBOR STATUTE
CODE SECTION 12-36-75

(A) Notwithstanding any other provision of this chapter, tangible or intangible property
that is:
(1) owned or leased by a person that has contracted with a commercial printer for
printing and used in connection with a printing contract; and
(2) located at the premises of the commercial printer;
shall not be considered to be, or to create, an office, a place of distribution, a sales
location, a sample location, a warehouse, a storage place, or other place of business
maintained, occupied, or used in any way by the person. A commercial printer with
which a person has contracted for printing by reason of any printing contract which may
include storing and shipping the items printed shall not be considered to be in any way a
representative, an agent, a salesman, a canvasser, or a solicitor for the person.
(B) Notwithstanding any other provision of this chapter, the following shall not cause a
person that has contracted with a commercial printer for printing to have a duty to
register as a retailer or to collect or remit the sales or use tax imposed by this chapter:
(1) the ownership or leasing by that person of tangible or intangible property
located at the South Carolina premises of the commercial printer and used in
connection with printing contracts;
(2) the sale by that person of property printed or imprinted at and shipped or
distributed from the South Carolina premises of the commercial printer by the
commercial printer;
(3) the activities performed pursuant or incident to a printing contract by or on
behalf of that person at the South Carolina premises of the commercial printer by
the commercial printer; or
(4) the activities performed pursuant or incident to a printing contract by the
commercial printer in South Carolina for or on behalf of that person

11