When does a remote seller without physical presence have South Carolina economic nexus and need to collect sales and use tax?

Plain-English summary

South Carolina Revenue Ruling 18-14 applies the U.S. Supreme Court's 2018 decision in South Dakota v. Wayfair to remote sellers. A seller without physical presence in South Carolina has economic nexus when its gross revenue from sales delivered into South Carolina exceeds $100,000 in the current or previous calendar year. Once the threshold is crossed, the seller must obtain a South Carolina retail license and collect and remit sales and use tax on its taxable South Carolina sales.

The threshold is based on broad gross revenue, not just taxable retail sales. It includes taxable and exempt retail sales, wholesale sales of tangible personal property, products transferred electronically whether taxable or not, and services delivered into South Carolina whether taxable or not.

Marketplace revenue also counted in the remote seller's nexus calculation when the marketplace sold products owned by that seller. But under the law described in the ruling, the marketplace—not the third-party owner—reported and remitted tax on the marketplace's own gross proceeds of sales. The third-party seller collected tax on its separate direct sales. Later marketplace-facilitator guidance should also be consulted for current responsibilities.

This ruling was prospective. A remote seller that met the threshold during 2017 or January through September 2018 had to begin remitting on taxable sales made on and after November 1, 2018, with no assessment for earlier sales under this policy. A seller first crossing the threshold on or after October 1, 2018 had to register and begin remitting on the first day of the second calendar month after nexus was established.

What this means for you

Remote online, catalog, and mail-order sellers

Track all gross revenue delivered into South Carolina across the current and prior calendar years. Do not exclude exempt, wholesale, electronic-product, or service revenue merely because the individual transaction is not taxable. If the total exceeds $100,000, the ruling requires registration and collection on taxable sales.

Sellers using both their own site and a marketplace

Include sales of your products through the marketplace when testing your economic-nexus threshold, even if the marketplace handles collection on those transactions. Then distinguish who made each sale when determining which party reports the taxable gross proceeds.

Sellers below the threshold

The ruling allowed a remote seller without required nexus to register voluntarily. Once voluntarily licensed, the seller had to collect and remit tax on all taxable South Carolina sales until it notified the Department that the license was being closed.

Common questions

Q: Is the threshold $100,000 or more?
A: The ruling uses exceeds $100,000. Its example treats $100,001 as exceeding the standard.

Q: Do exempt and wholesale sales count toward the threshold?
A: Yes. The ruling includes all gross revenue from tangible property delivered into South Carolina, including taxable retail, exempt retail, and wholesale sales.

Q: Do electronically delivered products and services count?
A: Yes, whether or not the particular product or service is subject to South Carolina sales and use tax.

Q: If marketplace sales push a seller over $100,000, who collects tax?
A: Under the example in this ruling, the seller includes marketplace sales in its nexus calculation but collects on its own direct taxable sales, while the marketplace reports and collects on sales it makes through the marketplace. Check later marketplace-facilitator guidance for current duties.

Q: When did collection begin under this ruling?
A: November 1, 2018 for sellers that had already crossed the threshold in 2017 or by September 30, 2018. Sellers crossing later began on the first day of the second calendar month after establishing nexus.

Q: Can a below-threshold seller register voluntarily?
A: Yes. The ruling says voluntary collection then continues for all licensed periods until the seller closes the license with the Department.

Citations and references

• S.C. Code Ann. Section 12-36-70 (definition of retailer and seller, including persons without an in-state office)
• S.C. Code Ann. Section 12-36-30 (definition of person, including groups acting as a unit)
• S.C. Code Ann. Section 12-36-60 (tangible personal property)
• S.C. Code Ann. Section 12-36-90 (gross proceeds of sales)
• S.C. Code Ann. Sections 12-36-910(B), 12-36-920, 12-36-1310(B), and 12-36-2645 (specified taxable services)
• S.C. Code Ann. Section 12-4-320 (Department authority)
• South Dakota v. Wayfair, Inc., 585 U.S. 162, 138 S. Ct. 2080 (2018)
• Quill Corp. v. North Dakota, 504 U.S. 298 (1992), and National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967) (physical-presence cases overruled by Wayfair)

Subject

Retailers Without a Physical Presence (“Remote Sellers”) - Economic Nexus

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR18-14.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #18-14

SUBJECT:

Retailers Without a Physical Presence (“Remote Sellers”) - Economic
Nexus
(Sales and Use Tax)

EFFECTIVE DATE:

For sales made on or after November 1, 2018, unless a later date is
otherwise provided in this advisory opinion.

SUPERSEDES:

SC Revenue Advisory Bulletin #01-7 and all previous documents and
oral directives in conflict herewith.

MODIFIES:

SC Revenue Ruling #14-4 and all previous documents and oral
directives in conflict herewith.

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
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 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.

I. OVERVIEW OF NEXUS AND WAYFAIR DECISION
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 businesses. Over the years, the courts have
provided limitations and guidelines in determining whether certain activities create nexus in a
taxing state.
On June 21, 2018, the United States Supreme Court in South Dakota v. Wayfair, Inc., 585 U.S.
, 138 S. Ct. 2080 (2018), ruled that retailers (including online retailers) without physical
presence in a state may be subject to sales and use tax. This decision overturned the Court’s
longstanding position in Quill Corp. v. North Dakota, 504 U.S. 298 (1992) and National Bellas
Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967), which allowed states to
collect sales and use tax only on retailers with a physical presence.
1

South Carolina Code Section 12-36-70 defines “retailer” and “seller” to include persons not
maintaining a physical presence in South Carolina, and reads in part:
“Retailer” and “seller” include every person:
(1)(a) selling or auctioning tangible personal property whether owned by the
person or others;
*
*
*
(2)(a) maintaining a place of business or qualifying to do business in this State; or
(b) not maintaining an office or location in this State but soliciting business by
direct or indirect representatives, manufacturers agents, distribution of catalogs, or
other advertising matter or by any other means, and by reason thereof receives
orders for tangible personal property or for storage, use, consumption, or
distribution in this State (Emphasis added).
South Carolina has not enforced this provision against retailers without a physical presence
because of the constitutional nexus restrictions under National Bellas Hess and Quill. 1 Because
the United States Supreme Court has reversed its longstanding position and eliminated the
physical presence requirement, South Carolina will require retailers who do not have a physical
presence in South Carolina but who establish an economic presence as outlined below to remit
the sales and use tax on a prospective basis beginning November 1, 2018, unless a later date is
otherwise provided in this advisory opinion.
The purpose of this advisory opinion is to provide written guidance for retailers (i.e., persons
engaged in the business of selling tangible personal property at retail) without a physical
presence in South Carolina regarding sales and use tax registration and remittance in light of
Wayfair.
For purposes of this advisory opinion, a retailer with no physical presence in South
Carolina is referred to as a “remote seller” (e.g., marketplace, 2 online, catalog, or mail
order retailer). In addition, a remote seller includes any related entity assisting the remote
seller in sales, storage, distribution, payment collection, or in any other manner with
respect to the remote seller. 3

1

See SC Revenue Procedure #92-2, “Filing Requirements Where Nexus Is an Issue;” SC Information Letter #92-19,
“Nexus - Quill Corp. v. North Dakota;” and SC Information Letter #90-29, “Nexus - Economic Presence.”
2
A “marketplace” is a person engaged in the business of facilitating a retail sale of tangible personal property by (1)
listing or advertising, or allowing the listing or advertising of, the products of another person in any marketplace
where sales at retail occur and (2) collecting or processing payments from the purchaser, either directly or indirectly
through an agreement or arrangement with a third party, regardless of whether the marketplace receives
compensation or other consideration in exchange for its services. A marketplace includes any related entity assisting
the marketplace in sales, storage, distribution, payment collection, or in any other manner with respect to the
marketplace.
A marketplace may be physical or electronic and includes, but is not limited to, any space, store, booth, catalog,
website, television broadcast, or similar place, medium, or forum.
3
See the definition of the term “person” in Code Section 12-36-30, which includes “any group or combination
acting as a unit.”

2

The prospective treatment outlined in this advisory opinion is limited to remote sellers and
does not apply to retailers who have a physical presence in South Carolina or retailers
currently licensed with the Department for sales and use tax purposes.
Note: This advisory opinion reflects the Department’s official position at this time. Since
developments in this area are taking place, any guidance 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.

II. SUBSTANTIAL NEXUS STANDARDS FOR REMOTE SELLERS
In accordance with Code Section 12-36-70 and the principles of Wayfair, a remote seller whose
gross revenue from sales of tangible personal property, 4 products transferred electronically, and
services delivered into South Carolina exceeds $100,000 in the previous calendar year or the
current calendar year has economic nexus (i.e., substantial nexus) with South Carolina and is
responsible for obtaining a retail license and remitting South Carolina sales and use tax.

III. CALCULATION OF THE $100,000 ECONOMIC NEXUS STANDARD
The $100,000 economic nexus standard for a remote seller includes:
 the total gross revenue from all sales of tangible personal property delivered into South
Carolina, including all taxable retail sales, exempt retail sales, and wholesale sales of
tangible personal property;
 the total gross revenue from all sales of products transferred electronically into South
Carolina, whether or not the transfer of such product is subject to the South Carolina
sales and use tax; and,
 the total gross revenue from all services delivered into South Carolina, whether or not
the service is subject to the South Carolina sales and use tax.
Example 1 – Sales on Own Website: Assume a remote seller makes sales into South Carolina via
his own website. His annual South Carolina sales total $100,001. These sales consist of $75,000
in taxable retail sales and $25,001 in exempt retail sales and wholesale sales. Since the remote
seller’s total gross revenue from all sales into South Carolina exceeds $100,000, the remote seller

4

Code Section 12-36-60 defines “tangible personal property,” in part, as “personal property which may be seen,
weighed, measured, felt, touched, or which is in any other manner perceptible to the senses. It also includes services
and intangibles, including communications, laundry and related services, furnishing of accommodations and sales of
electricity, the sale or use of which is subject to tax under [the South Carolina sales and use tax law].” For services
that are specifically subject to the sales and use tax, and therefore by definition are “tangible personal property,” see
Code Sections 12-36-910(B), 12-36-1310(B), 12-36-920, and 12-36-2645.

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meets South Carolina’s economic nexus standard and he is required to obtain a retail license and
remit the sales and use tax to the Department.
Example 2 – Sales on Own Website and Via a Marketplace: Assume a remote seller makes sales
on his own website. He also lists his products for sale on a marketplace that has economic nexus
with South Carolina. The remote seller sells $75,000 of items into South Carolina via his own
website. A marketplace makes sales of $50,000 of products owned by the remote seller into
South Carolina, and the marketplace collects or processes customer payments from these
marketplace sales.
The calculation of the remote seller’s economic nexus standard includes the gross revenue from
property owned by the remote seller but sold via the marketplace. Since the remote seller’s total
gross revenue from South Carolina exceeds $100,000 ($75,000 + $50,000), the remote seller
meets South Carolina’s economic nexus standard. He is required to obtain a retail license and
remit the sales and use tax to the Department on his “gross proceeds of sales” 5 of $75,000.
Since South Carolina’s economic nexus standard is based on “gross revenue,” revenue from the
sales made via the marketplace in this example (Example 2) is included in the calculation for
determining if the remote seller has established economic nexus with South Carolina. However,
under South Carolina sales and use tax law, the sales made via the marketplace are sales by the
marketplace, and the marketplace is required to obtain a retail license and collect and remit the
sales and use tax on the marketplace’s “gross proceeds of sales,” which includes the $50,000 in
sales of products owned by the remote seller but sold by the marketplace.

IV. REGISTRATION AND TAX REMITTANCE BY REMOTE SELLERS
WITH ECONOMIC NEXUS
In accordance with Code Section 12-36-70, Code Section 12-4-320, and the principles of
Wayfair, remote sellers with economic nexus must remit the sales and use tax for all taxable
sales made into South Carolina on and after November 1, 2018, as provided below. Remote
sellers who are not currently licensed for sales and use tax purposes with the Department should
follow the guidelines below.
A. Guidelines for Timely Registration and Remittance of Tax

1. Economic Nexus in Calendar Year 2017, or from January 1, 2018 through
   September 30, 2018
   Remote sellers having economic nexus with South Carolina in calendar year 2017, or from
   January 1, 2018 through September 30, 2018, are responsible for remitting the sales and
   use tax for all taxable sales made into South Carolina on and after November 1, 2018.
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   “Gross proceeds of sales” is defined in Code Section 12-36-90. Generally, “gross proceeds of sales” is the value
   proceeding or accruing from the sale, lease, or rental of tangible personal property and, therefore, is the total amount
   charged in conjunction with the sale or rental of tangible personal property. However, see Code Section 12-36-90(2)
   for charges that are not included in “gross proceeds of sales.” For purposes of this advisory opinion, “gross proceeds
   of sales” applies to sales tax transactions and use tax transactions.

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These remote sellers must obtain a retail license from the Department by November 1,
2018. Sales and use tax, penalties, and interest will not be assessed against these remote
sellers for taxable sales by these remote sellers before November 1, 2018.

2. Economic Nexus Established on or after October 1, 2018
   Remote sellers who establish economic nexus with South Carolina on or after October 1,
   2018, are responsible for remitting the sales and use tax for all taxable sales made into
   South Carolina beginning the first day of the second calendar month after economic
   nexus is established.6 These remote sellers must obtain a retail license from the
   Department by the first day of the second calendar month after economic nexus is
   established. Sales and use tax, penalties, and interest will not be assessed against these
   remote sellers for taxable sales made into South Carolina before the first day of the second
   calendar month after economic nexus is established.
   Example: Assume a remote seller establishes economic nexus in South Carolina on
   December 10, 2018 (i.e., it exceeds $100,000 in gross revenue from South Carolina). The
   remote seller must: (1) obtain a retail license by February 1, 2019 (the first day of the
   second calendar month after economic nexus is established) and (2) collect and remit the
   sales and use tax for all taxable sales made into South Carolina on and after February 1,
   2019.
   B. Failure to Timely Register and Remit Tax
   Remote sellers who establish economic nexus with South Carolina as noted above, but who
   do not timely obtain a retail license from the Department are subject to sales and use tax
   assessment, penalties, and interest for all taxable sales made into South Carolina beginning
   with the date the remote seller was required to obtain a retail license.

V. VOLUNTARY REGISTRATION AND TAX REMITTANCE BY
REMOTE SELLERS WITHOUT ECONOMIC NEXUS
Remote sellers who are not required to collect and remit the South Carolina sales and use tax
may voluntarily obtain a retail license from the Department at any time and remit the sales and
use tax for all taxable sales made into South Carolina. The collection and remittance of the sales
and use tax by the remote seller applies to all taxable sales made in South Carolina on and after
the effective date of the retail license. The voluntary filer must continue to collect and remit the
tax for all tax periods until the remote seller notifies the Department that the retail license is
being closed.

VI. SUBMITTING AN APPLICATION FOR A RETAIL LICENSE
Remote sellers who have established economic nexus with South Carolina, or who wish to
voluntarily collect and remit the South Carolina sales and use tax, must obtain a retail license.
6

This is approximately 30 days from the end of the month in which economic nexus is established.

5

The Department’s online portal for obtaining a retail license can be found at
MyDORWAY.dor.sc.gov. Remote sellers using the online portal may submit the electronic
application, along with the $50 fee, beginning September 28, 2018.
The Department’s paper application for a remote seller’s retail license is South Carolina Form
DOR-111RS, “Remote Seller Sales and Use Tax Registration.” This form is on the Department’s
website (dor.sc.gov). Remote sellers using this form may submit the paper application, along
with the $50 fee, at any time.
A remote seller who has obtained a retail license from the Department must file a sales and use
tax return (paper or electronic) and report its total gross proceeds of sales for each month it is
licensed beginning with the effective date of the retail license.

VII. ADDITIONAL INFORMATION

1. Filing Requirements
   Remote sellers licensed with the Department must file a monthly sales and use tax return.
   Each monthly return is due by the 20th day of the following month. Returns must be filed
   for all months, even in those months the taxpayer has no sales into South Carolina or has
   no tax due. Exception: If a remote seller’s total state and local sales and use tax due does
   not exceed $100 for any month, then the remote seller may file quarterly upon approval by
   the Department.
2. Information for Remote Sellers
   Remote sellers may obtain additional information on the Department’s website
   (dor.sc.gov). The website provides information on the sales and use tax base, local sales
   and use taxes, exemptions and exclusions, obtaining a retail license, forms, and frequently
   asked questions.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
September 18
, 2018
Columbia, South Carolina

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