Sales,
use tax holiday Aug. 2 through 4
Beginning at 12:01 a.m. Friday, Aug. 2 and ending at midnight Sunday, Aug
4, the annual sales tax holiday will take place. The law is as follows:
Law:
Code Section 12-36-2120(56) exempts from the sales and use tax:
(a) sales taking place during a period beginning 12:01 a.m. on the
first Friday in August and ending at twelve midnight the following Sunday
of:
(i) clothing;
(ii) clothing accessories including, but not limited to, hats,
scarves, hosiery and handbags;
(iii) footwear;
(iv) school supplies, including, but not limited to, pens, pencils,
paper, binders, notebooks, books, bookbags, lunchboxes, and calculators;
(v) computers, printers and printer supplies, and computer software.
(b) The exemption allowed by this item does not apply to:
(i) sales of jewelry, cosmetics, eyewear, wallets and watches;
(ii) sales of furniture;
(iii) a sale of an item placed on layaway or similar deferred
payment and delivery plan however described;
(iv) rental of clothing or footwear;
(v) a sale or lease of an item for use in a trade or business.
(c) Before July 10 of each year, the department shall publish and make
available to the public and retailers a list of articles qualifying for
the exemption allowed by this item.
Q & A
Has the department published a list, as required
by law, of those articles qualifying for the exemption?
Yes. SC Revenue Advisory Bulletin #02-4 lists items exempt from the
sales and use tax during the three-day sales tax holiday. SC Revenue Advisory
Bulletin #02-4 can be found at the department's Web site http://www.sctax.org.
When is the sales tax holiday?
The three-day sales tax holiday is held annually beginning at 12:01
a.m. on the first Friday in August and ending on the following Sunday at
midnight.
Must the eligible item being sold be delivered
to the customer during the three-day sales tax holiday in order for the
exemption to apply?
An item qualifying for the sales tax holiday will be exempt if:
-
the eligible item is both delivered to and paid for by the customer during
the three days of the sales tax holiday; or
-
the eligible item is ordered and paid for by the customer and the order
is accepted by the retailer during the sales tax holiday for immediate
shipment, even if delivery is made after the sales tax holiday. An order
is accepted by the retailer when it has taken an action to fill the order
for immediate shipment.
Actions to fill an order include placing an “in date” stamp on a mail order
or assigning an order number to a telephone order. An order is for immediate
shipment when delayed shipment is not requested by the customer and is
for immediate shipment, notwithstanding that the shipment may be delayed
because of a backlog of orders or because stock is currently unavailable
to, or on back order, by the retailer.
Does the sales tax holiday apply to sales made
by mail order, Internet or similar retailers?
Yes, provided the item sold is one qualifying for the exemption and
the sale occurs during the three days of the sales tax holiday as discussed
in an above question.
Are delivery charges subject to the tax during
the sales tax holiday?
Most delivery charges are included in the tax base for the sales tax
and the use tax. If an item qualifies for the exemption under the sales
tax holiday, then all delivery charges associated with that sale are exempt.
For example, if a retailer sells a computer during the sales tax holiday
for $2,000 and also charges $55 to deliver the computer, then the entire
charge of $2,055 is exempt from the sales or use tax.
Are alteration charges for clothing sold during
the sales tax holiday subject to the tax?
If an item of clothing qualifies for the exemption under the sales
tax holiday, then all alteration charges associated with that sale are
exempt. For example, if a retailer sells a pair of pants during the sales
tax holiday for $75 and also charges $10 to alter the pants, then the entire
charge of $85 is exempt from the sales or use tax.
How are exchanges of items purchased during the
sales tax holiday handled when returned after the sales tax holiday?
If a customer purchased an exempt item during the sales tax holiday
and later exchanges the item for the same item (different size, different
color, etc.) no additional tax will be due even if the exchange is made
after the sales tax holiday.
However, if the customer returns the item after the sales tax holiday
and receives credit on the purchase of a different item, the sales or use
tax of the newly purchased item.
How are exchanges of items purchased before the
sales tax holiday handled when returned during the sales tax holiday?
If a customer purchased an item before the sales tax holiday and later
exchanges the item during the sales tax holiday for the same eligible item
(different size, different color, etc.) or receives credit on the purchase
of a different item, no additional tax will be due if the item received
in the exchange is one that qualifies for the exemption.
How will the sales tax holiday apply to rain checks?
The issuance of a rain check during the sales tax holiday will not
qualify an item for the exemption if the item is actually purchased after
the sales tax holiday.
Items that qualify for the exemption which are purchased during the
sales tax holiday using a rain check will be exempt from sales or use tax
regardless of when the rain check was issued.
Does an item placed on layaway during the sales
tax holiday qualify for the exemption?
No. The exemption provision specifically states that the exemption
does not apply to a sale of an item placed on layaway or similar
deferred payment and delivery plan however described.
Does the sales tax holiday apply to local sales
and use taxes collected by the department on behalf of counties that have
imposed such local sales and use taxes?
Yes, provided the item sold is one qualifying for the exemption and
the sale occurs during the three days of the sales tax holiday as discussed
in an above question.
How should retailers report sales exempt during
the sales tax holiday?
With respect to the return filed for August, all sales, whether or
not exempt from the tax, should be reported on Line 1 of the worksheet
on the back of the sales and use tax return. Sales of items exempt from
the tax during the sales tax holiday should be listed as one of the deductions
in the space provided on line 4 of the worksheet on form ST-3. On forms
ST-388 and ST-403, the deduction for sales exempt under the sales tax holiday
should be listed as “Sales Tax Holiday Exempt” as one of the deductions
on line 4 of the worksheet.
Can retailers elect not to participate in the
sales tax holiday and collect the sales tax from their customers on eligible
items during the three days of the sales tax holiday?
No. Retailers may only pass on to their customers sales taxes that
are legally due.
The department may revoke any and all licenses issued by the department
and held by a retailer if the retailer passes on sales taxes that are not
legally due.
Is the sale of an exempt item on a “90 days same
as cash” basis exempt from tax if purchased during the sales tax holiday?
Yes, provided the contract obligating the buyer to pay is signed during
the sales tax holiday and delivery of the item is made during the sales
tax holiday or the retailer accepts the order during the sales tax holiday
for immediate shipment, even if delivery is made after the sales tax holiday.
For more information, call the Department of Revenue at (803) 898-5788
or e-mail the department at salestax@sctax.org.
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