South Carolina Retailers Unaware of Sales Tax Change

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A risk I am sure many retailers don’t think about when opening a business is the risk of sales tax fraud or non-compliance. Mistakes happen and for a number of retailers in York County, South Carolina, a recent sales tax mistake is going to cost them customers and money.

According to a WCNC.com report, “In January, stores located in York County were no longer allowed to continue collecting sales tax on hundreds of food items that are now classified as ‘exempt.’”

Apparently, a “Capital Projects Tax” that made certain food items such as snacks, salads and sandwiches sales tax exempt was “re-implemented” in January 2012. The original tax had expired December 31, 2011 and the South Carolina Department of Revenue said, “Retailers in York County may be charging the one percent tax because they are unaware of those items that are exempt.” It's unclear, but it appears the food items were not exempt in the previous implementation of the tax.

Despite going for four months charging and reporting the one-cent sales tax, a number of businesses are striving to “make things right.” NewsChannel 36 found out about the tax and tested out who was charging and who was not. Among those charging, each retailer indicated that they had no idea they were mis-charging the tax until the NewsChannel team told them.  As a result, businesses like Lowes Foods, Harris Teeter and Walmart are all willing to refund the sales tax if their customers can return to the store with proof of purchase in order to gain the refund.

The South Carolina Department of Revenue indicates that stores were informed four months ago about the new rule. And a few stores were able to make the changes in a timely manner—“Family Dollar and Dollar General are two retailers who are not collecting the sales tax.”