South Carolina Sales and Use Tax Protest

SOUTH CAROLINA SALES AND USE TAX PROTEST / REFUND CLAIM

TABLE OF CONTENTS

1. Submission Header
2. Identification of Assessment or Refund Claim
3. Statement of Timeliness
4. Statement of Facts
5. Issues Presented
6. Legal Argument
7. Burden of Proof
8. Penalty and Interest Abatement
9. Conference and Hearing Request; Reservation of Rights
10. Relief Requested
11. Verification and Signature
12. Certificate of Service
13. Schedule of Exhibits
14. South Carolina Practice Notes
15. Sources and References

1. SUBMISSION HEADER

TO: South Carolina Department of Revenue
Office of General Counsel — Litigation Section
[OR Sales Tax / Audit Division identified on the Notice]
300A Outlet Pointe Boulevard
Columbia, South Carolina 29210

FROM: [TAXPAYER LEGAL NAME]
[STREET ADDRESS]
[CITY, STATE ZIP]
SSN/FEIN: [XXX-XX-XXXX or XX-XXXXXXX]
S.C. Retail License No.: [________________________________]
SCDOR Account No.: [________________________________]
Telephone: [(___) ___-____]

RE: [Written Protest of Notice of Proposed Sales and Use Tax Assessment / Claim for Refund of Sales and Use Tax Paid] No. [________________________________]
Tax Type: South Carolina Sales and Use Tax (Title 12, Chapter 36)
Tax Periods: [__/__/____] through [__/__/____]
Date of Notice / Date Tax Paid: [__/__/____]
Statutory Deadline: [__/__/____] (90 days for protest under § 12-60-450 / 3 years for refund under § 12-54-85)
Amount in Dispute / Refund Sought: $[________________________________] (tax, penalty, and interest)

FORM REFERENCE: SCDOR Form C-245 (Protest Pursuant to Revenue Procedures Act) for protests, OR SCDOR Form ST-14 (Sales & Use Tax Refund Claim) for refund claims, filed concurrently as a cover document. This Written Submission constitutes the substantive submission required by S.C. Code § 12-60-450(B) or § 12-60-470, as applicable.

2. IDENTIFICATION OF ASSESSMENT OR REFUND CLAIM

2.1. Taxpayer [TAXPAYER LEGAL NAME] ("Taxpayer") is a [entity type] holding (or required to hold) South Carolina Retail License No. [____], with principal place of business / nexus contact at [ADDRESS].

2.2. [Assessment Context] On [__/__/____], the South Carolina Department of Revenue ("Department" or "SCDOR") issued Notice of Proposed Assessment No. [NUMBER] (the "Proposed Assessment") asserting additional South Carolina sales and use tax of $[____], penalty of $[____], and interest of $[____] computed through [__/__/____] for the periods [__/__/____] through [__/__/____].

2.3. [Refund Context] On [__/__/____] Taxpayer paid $[____] in South Carolina sales and use tax for the periods [__/__/____] through [__/__/____]. Taxpayer now claims a refund pursuant to S.C. Code § 12-60-470 in the amount of $[____], plus interest as allowed by law.

2.4. The basis for the Proposed Assessment / overpayment includes: [summarize — e.g., asserted economic nexus under § 12-36-2691; alleged underreported taxable sales; disallowance of resale or manufacturing exemption under § 12-36-2120; sourcing dispute; characterization of services as taxable communication services or admissions; bundled-transaction issue; assessment of use tax on out-of-state purchases].

2.5. Taxpayer disputes the Proposed Assessment / asserts entitlement to refund as set forth below and timely files this Written Submission pursuant to S.C. Code §§ 12-60-450 and 12-60-470.

3. STATEMENT OF TIMELINESS

3.1. [Protest Track] The Proposed Assessment is dated [__/__/____]. Pursuant to S.C. Code § 12-60-450(A), the deadline to file a written protest is ninety (90) days from that date, which is [__/__/____]. This Protest is filed on [__/__/____] and is therefore timely.

3.2. [Refund Track] Taxpayer paid the disputed tax on [__/__/____]. Pursuant to S.C. Code § 12-54-85(F), a claim for refund must be filed within three (3) years from the date the tax was paid or the date the return was due, whichever is later. This refund claim is filed on [__/__/____] and is therefore timely.

3.3. [Stay of Collection — Protest Track] By timely filing this Protest, Taxpayer invokes the automatic stay of collection on the contested portion of the Proposed Assessment under S.C. Code § 12-60-450(I), excepting any jeopardy assessment under § 12-54-120.

3.4. [If applicable] This Submission was filed through MyDORWAY / by certified mail, postage prepaid, return receipt requested, on the date set forth above and is deemed filed as of the postmark or electronic submission date.

4. STATEMENT OF FACTS

4.1. Business Description. [Entity formation, headquarters, business model — describe whether Taxpayer is a brick-and-mortar retailer, remote seller, marketplace seller, marketplace facilitator, or service provider.]

4.2. South Carolina Activity. [Describe the nature and extent of any S.C. presence — physical, employees, inventory, deliveries, agents, contractors. For remote sellers, set out gross revenue from sales delivered into S.C. by calendar year.]

4.3. Transactions at Issue. [Describe the specific sales or purchases giving rise to the disputed tax, including price, date, customer/vendor, sourcing, and any exemption certificates or resale certificates received.]

4.4. Audit / Filing History. [Describe SCDOR audit, IDRs, conferences, position changes, and any returns or amended returns filed for the periods at issue.]

4.5. Marketplace Facilitator Collection (if applicable). [Describe any sales for which a marketplace facilitator collected and remitted S.C. tax, with reference to facilitator certifications.]

5. ISSUES PRESENTED

5.1. Whether Taxpayer satisfied the economic nexus threshold of S.C. Code § 12-36-2691 / S.C. Revenue Ruling #18-14 for the periods at issue.

5.2. Whether the transactions at issue qualify for an exemption under S.C. Code § 12-36-2120 (e.g., [resale, manufacturing machinery, agricultural inputs, motion picture, durable medical equipment, etc.]).

5.3. Whether the Department correctly sourced the transactions to South Carolina under § 12-36-1920 (sourcing rules).

5.4. Whether the Department correctly characterized the transaction as a [taxable sale of tangible personal property / taxable service / taxable communication / taxable admission / non-taxable service / true bundled transaction].

5.5. Whether Taxpayer accepted exemption / resale certificates in good faith such that liability for uncollected tax is shifted to the purchaser under SCDOR Revenue Ruling guidance.

5.6. Whether the assessed penalties under S.C. Code §§ 12-54-43 and 12-54-155 should be abated for reasonable cause.

5.7. Whether the periods of limitation in S.C. Code § 12-54-85 bar all or part of the Proposed Assessment.

6. LEGAL ARGUMENT

6.1. Economic Nexus Under § 12-36-2691 and Revenue Ruling #18-14

6.1.1. In South Dakota v. Wayfair, Inc., 585 U.S. 162, 138 S. Ct. 2080 (2018), the United States Supreme Court overruled the physical-presence rule of Quill Corp. v. North Dakota and held that a state may impose sales and use tax collection obligations on remote sellers consistent with the substantial nexus standard.

6.1.2. South Carolina implemented Wayfair through S.C. Revenue Ruling #18-14 (effective for sales on or after November 1, 2018). The economic nexus threshold is gross revenue from sales of tangible personal property, products transferred electronically, and services delivered into South Carolina exceeding $100,000 in the previous or current calendar year. South Carolina does not impose a transaction-count threshold.

6.1.3. The threshold is later codified and reflected in S.C. Code § 12-36-2691, and the substantial-nexus definition in § 12-36-70.

6.1.4. [Apply to facts: Taxpayer's gross revenue from sales delivered into S.C. in calendar year [YYYY] was $[____]; in [YYYY] was $[____]. Demonstrate whether and when the threshold was crossed, the resulting registration / collection obligation, and any retroactive assertion of liability.]

6.1.5. [If pre-Wayfair / pre-November 1, 2018 periods are at issue: Taxpayer had no physical presence in South Carolina before [DATE], and under the rule of Quill (and as recognized in Revenue Ruling #18-14) had no obligation to collect during that period. Any assessment for pre-effective-date periods is contrary to the Department's own published guidance.]

6.2. Marketplace Facilitator Collection

6.2.1. [If applicable: A marketplace facilitator collected and remitted South Carolina tax on the sales at issue under S.C. Code § 12-36-71 / Revenue Ruling 19-6. Liability for such sales is allocated to the facilitator and not to Taxpayer.]

6.3. Exemption Under § 12-36-2120

6.3.1. The transactions at issue qualify for the [specific subsection — e.g., § 12-36-2120(11) (sales for resale); § 12-36-2120(17) (manufacturing machinery); § 12-36-2120(74) (durable medical equipment)] exemption.

6.3.2. Taxpayer obtained, in good faith, resale certificates and/or exemption certificates as required, copies of which are produced as Exhibit [____]. South Carolina law shifts liability for tax to the purchaser when the seller accepts a properly completed certificate in good faith.

6.4. Sourcing Under § 12-36-1920

6.4.1. [Apply S.C. sourcing rules — generally destination-based for tangible personal property; identify origin / destination and any drop-ship considerations.]

6.5. Statute of Limitations

6.5.1. Under S.C. Code § 12-54-85(A), the Department must assess additional tax within three (3) years from the later of the return's due date or the filing date.

6.5.2. The returns for the period(s) ending [__/__/____] were filed on [__/__/____]; the limitations period expired on [__/__/____], barring assessment for those periods.

6.5.3. [If applicable: No exception applies. Taxpayer did not omit more than 20% of gross income (six-year rule under § 12-54-85(C)), did not fail to file, and did not commit fraud. The Department did not obtain a written extension under § 12-54-85(G).]

6.6. Refund Entitlement Under § 12-60-470

6.6.1. [Refund Track] Pursuant to S.C. Code § 12-60-470, a taxpayer who has overpaid a tax may file a refund claim within the limitations period of § 12-54-85(F).

6.6.2. The overpayment results from [concise statement — e.g., tax paid on sales later determined to be exempt; tax paid in error; double payment; sourcing error].

6.6.3. Where sales tax was paid by Taxpayer-purchaser to a retailer, the retailer who remitted the tax to the State must assign the right to the refund to Taxpayer in writing pursuant to § 12-60-470. [Attach assignment as Exhibit __ — see SCDOR Form ST-16 (Assignment of Rights to a Sales Tax Refund).] Where Taxpayer is the purchaser-remitter under a use tax obligation, the purchaser may claim the refund directly.

7. BURDEN OF PROOF

7.1. Taxpayer acknowledges that under S.C. Code § 12-60-2530 and ALC Rule 29(B) a Department assessment is presumed correct, and that the taxpayer bears the burden of proof by a preponderance of the evidence.

7.2. The exhibits and statements herein, together with [supporting evidence — sales records, exemption certificates, marketplace facilitator certifications, federal returns, sworn statements], are sufficient to rebut the presumption and to establish the impropriety of the Proposed Assessment / the entitlement to refund.

7.3. With respect to civil fraud penalties under S.C. Code § 12-54-155 and any allegation of intentional misconduct, the burden of proof remains on the Department.

8. PENALTY AND INTEREST ABATEMENT

8.1. Reasonable Cause. Pursuant to S.C. Code § 12-54-160 and SCDOR practice, penalties are subject to waiver upon a showing of reasonable cause and absence of willful neglect. Taxpayer relied on [written advice of counsel / SCDOR Revenue Ruling [##-##] / a marketplace facilitator certification / an exemption certificate accepted in good faith / unanticipated change in law] and exercised ordinary business care.

8.2. No Negligence. Taxpayer maintained books and records in compliance with S.C. Code § 12-54-210 and S.C. Code Regs. § 117-200, and did not negligently or intentionally disregard rules and regulations.

8.3. First-Time Penalty Relief. Taxpayer has a clean compliance history with no penalties asserted in the prior [3] years and qualifies for first-time relief consistent with SCDOR practice.

8.4. Interest. Statutory interest under S.C. Code § 12-54-25 generally cannot be waived, but Taxpayer reserves the right to interest abatement to the extent any portion was caused by Department error or unreasonable delay; in the refund context, interest on overpayments is allowed under § 12-54-25(D).

9. CONFERENCE AND HEARING REQUEST; RESERVATION OF RIGHTS

9.1. Conference Requested. Pursuant to S.C. Code § 12-60-450(D) and the South Carolina Taxpayers' Bill of Rights (S.C. Code § 12-58-10 et seq.), Taxpayer requests an informal protest conference with the Department's Office of General Counsel — Litigation Section.

9.2. Representation. Taxpayer is represented by [ATTORNEY/CPA NAME], [SC BAR / CPA LICENSE NO.], with a duly executed SCDOR Form SC2848 on file or attached as Exhibit [__].

9.3. Right to Have Representative Present. Taxpayer is informed of and exercises the right under S.C. Code § 12-58-90 to have an attorney, accountant, or other designated representative present at any meeting or hearing with the Department.

9.4. Reservation. Taxpayer reserves the right to (a) supplement this Submission with additional facts, exhibits, and authority; (b) raise additional legal issues identified through further review; (c) request a contested case hearing before the South Carolina Administrative Law Court ("ALC") under S.C. Code § 12-60-460 within thirty (30) days of any adverse Department Determination; (d) seek further appeal to the South Carolina Court of Appeals under S.C. Code § 1-23-610 and Rule 203(d)(6), SCACR; and (e) raise Commerce Clause, Due Process, Equal Protection, and Internet Tax Freedom Act defenses.

9.5. No Waiver. Nothing herein constitutes a concession of liability, an admission, or a waiver of any defense.

10. RELIEF REQUESTED

WHEREFORE, Taxpayer respectfully requests that the Department:

• A. [Protest Track] Withdraw the Proposed Assessment in its entirety; or in the alternative, reduce the Proposed Assessment to $[____] consistent with the corrected computation in Exhibit [____];
• B. [Refund Track] Allow the refund claim in the amount of $[____], together with statutory interest under § 12-54-25(D);
• C. Abate all penalties for reasonable cause and absence of willful neglect;
• D. Recompute interest consistent with the reduced principal amount and abate any interest attributable to Department delay;
• E. Schedule an informal protest conference at a mutually agreeable time;
• F. Issue a Department Determination consistent with the foregoing within the one-year period required by S.C. Code § 12-60-450(E); and
• G. Grant such further relief as the Department deems just and proper.

11. VERIFICATION AND SIGNATURE

I, [SIGNATORY NAME], [TITLE] of [TAXPAYER LEGAL NAME], declare under penalty of perjury under the laws of the State of South Carolina that I have reviewed the foregoing Submission and the attached exhibits, and that the factual statements contained herein are true and correct to the best of my knowledge, information, and belief.

Date: [__/__/____]

[________________________________]

[SIGNATORY NAME], [TITLE]

[TAXPAYER LEGAL NAME]

Submitted by counsel:

[LAW FIRM]

By: [________________________________]

[ATTORNEY NAME], S.C. Bar No. [####]

[STREET ADDRESS]

[CITY, STATE ZIP]

Telephone: [NUMBER]

Email: [EMAIL]

12. CERTIFICATE OF SERVICE

I hereby certify that on the [____] day of [_______________], 20[____], I filed the foregoing [WRITTEN PROTEST / REFUND CLAIM] with the South Carolina Department of Revenue by [MyDORWAY electronic filing / United States Mail, postage prepaid and certified, return receipt requested / hand delivery] addressed to:

South Carolina Department of Revenue
Office of General Counsel — Litigation Section
[OR Sales Tax / Audit Division identified on the Notice]
300A Outlet Pointe Boulevard
Columbia, South Carolina 29210

[________________________________]

[ATTORNEY NAME]

13. SCHEDULE OF EXHIBITS

14. SOUTH CAROLINA PRACTICE NOTES

• State sales tax rate. The South Carolina state sales and use tax rate is 6%, supplemented by various local option taxes (counties may impose 1% local option, transportation, education, capital project, and tourism development sales taxes). Identify and challenge the correct overlay where the Department asserts a particular rate.
• Wayfair / economic nexus. S.C. Revenue Ruling #18-14 (effective Nov. 1, 2018), now reflected in S.C. Code § 12-36-2691 and § 12-36-70, sets a $100,000 gross-revenue threshold for substantial nexus. South Carolina does NOT impose a transaction-count alternative. Sales for resale and exempt sales are nonetheless counted in the $100,000 threshold (gross revenue measure).
• Marketplace facilitators. Marketplace facilitators (e.g., Amazon, eBay, Etsy, Walmart Marketplace) are required to collect and remit S.C. sales and use tax on facilitated sales delivered into S.C. above the $100,000 threshold. Marketplace sellers may exclude facilitator-collected sales from their own thresholds and need not register if all S.C. sales are facilitator-collected.
• Protest pathway. The same § 12-60-450 / § 12-60-460 ladder applies to sales/use as to income tax: Notice of Proposed Assessment → 90-day written protest → Department Determination → 30-day request for ALC contested case → Court of Appeals.
• Refund pathway. Refund claims under § 12-60-470 require: (1) timely filing within § 12-54-85(F); (2) for sales-tax refunds, an assignment from the retailer-remitter (Form ST-16) where the purchaser pays the claim; (3) submission via Form ST-14 / MyDORWAY. Use tax refunds may be claimed directly by the taxpayer-remitter.
• Stay of collection. A timely protest stays collection on the contested portion under § 12-60-450(I), continuing through any timely-filed ALC contested case (subject to jeopardy and trust-fund exceptions).
• Burden of proof. Under § 12-60-2530 and ALC Rule 29(B), assessments are presumed correct; taxpayer bears the burden by a preponderance. Fraud and certain penalty additions remain with the Department.
• Statute of limitations. § 12-54-85: three (3) years for assessment and refund (latter measured from later of tax payment or return due date); six (6) years for omissions over 20% of gross; no limit for failure to file or fraud.
• Sourcing. § 12-36-1920 generally adopts destination-based sourcing for tangible personal property delivered to S.C. addresses. Drop-ship transactions raise distinct issues; Taxpayer should distinguish wholesaler / retailer roles.
• Communication services and admissions. S.C. imposes sales tax on communication services (§ 12-36-910(B)(3)) and admissions (Title 12, Chapter 21). These regimes overlap in some places with the general sales tax — verify proper classification before conceding any issue.
• Constitutional defenses. Preserve Commerce Clause (substantial nexus, fair apportionment, non-discrimination, fair relation), Due Process, and Internet Tax Freedom Act defenses, particularly for digital goods, SaaS, and remote-seller assertions.
• Confidentiality. § 12-54-240 protects return information; § 12-54-220 authorizes information sharing with the IRS and reciprocating states.
• Power of attorney. SCDOR Form SC2848 must be on file for SCDOR to communicate directly with counsel on substantive issues.

15. SOURCES AND REFERENCES

• S.C. Code Title 12, Chapter 36 (Sales and Use Tax) — https://www.scstatehouse.gov/code/t12c036.php
• S.C. Code § 12-36-2691 (Distribution facility nexus; remote seller use tax) — https://law.justia.com/codes/south-carolina/title-12/chapter-36/section-12-36-2691/
• S.C. Code § 12-36-2120 (Sales and use tax exemptions) — https://www.scstatehouse.gov/code/t12c036.php
• S.C. Code § 12-36-1920 (Sourcing rules)
• S.C. Code § 12-60-450 (Protest of proposed assessment) — https://www.scstatehouse.gov/code/t12c060.php
• S.C. Code § 12-60-460 (Contested case hearing at ALC) — https://www.scstatehouse.gov/code/t12c060.php
• S.C. Code § 12-60-470 (Refund claims) — https://law.justia.com/codes/south-carolina/title-12/chapter-60/section-12-60-470/
• S.C. Code § 12-54-85 (Periods of limitation) — https://www.scstatehouse.gov/code/t12c054.php
• S.C. Code Title 12, Chapter 58 (Taxpayers' Bill of Rights) — https://www.scstatehouse.gov/code/t12c058.php
• S.C. Revenue Ruling #18-14 (Economic nexus / remote sellers) — https://dor.sc.gov/sites/dor/files/policies/RR18-14.pdf
• SCDOR Sales & Use Tax Nexus Manual (Chapter 13) — https://dor.sc.gov/sites/dor/files/Documents/Policy%20Manuals/Chapter%2013%20-%20Nexus.pdf
• SCDOR Form C-245 (Protest Pursuant to Revenue Procedures Act) — https://dor.sc.gov/sites/dor/files/forms/C245.pdf
• SCDOR Form ST-14 (Sales & Use Tax Refund Claim) — https://dor.sc.gov/forms-site/Forms/ST14.pdf
• SCDOR Form ST-16 (Assignment of Rights to a Sales Tax Refund) — https://dor.sc.gov/sites/dor/files/forms/ST16.pdf
• SCDOR Form SC2848 (Power of Attorney) — https://dor.sc.gov/forms
• SCDOR Appeals Process — https://dor.sc.gov/notices-compliance/appeals-process
• SCDOR Taxpayers' Bill of Rights — https://dor.sc.gov/transparency/taxpayers-bill-rights
• South Carolina Administrative Law Court — https://scalc.net/
• ALC Rules of Procedure (eff. April 18, 2022) — https://www.scalc.net/Rules%20documents/Official%20ALC%20Rules%202022.pdf
• South Dakota v. Wayfair, Inc., 585 U.S. 162, 138 S. Ct. 2080 (2018)
• MyDORWAY portal — https://mydorway.dor.sc.gov

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. A South Carolina-licensed attorney must review and customize this document before submission to SCDOR. Sales and use tax statutes, regulations, SCDOR Revenue Rulings, and the boundaries of Wayfair-era nexus theories change frequently; verify all citations and deadlines before filing.