South Carolina: Sales and Use Tax Exemption for Medication
- Sales Tax News
- Apr 17, 2013 | Gail Cole
South Carolina law allows a sales and use tax exemption "for certain injectable medications and injectable biologics." Interestingly, this exemption is not standard, but rather dependent on "certain requirements" regarding state revenue growth.
An exemption for injectable medications and injectable biologics* is described by South Carolina Code Section 12-36-2120(80). Subitem (a) explains that the exemption is "[e]ffective on July first immediately following a forecast meeting the requirements of subitem (b)…."
Take a deep breath. Subitem b reads:
"Beginning with the February 15, 2013, forecast by the Board of Economic Advisors of annual general fund revenue growth for the upcoming fiscal year, and annually thereafter until the conditions of this item are met, if the forecast of that growth equals at least two percent of the most recent estimate by the board of general fund revenues for the current fiscal year, then on July first, the exemption described in subitem (a) shall apply to fifty percent of the gross proceeds of sales of the described items. Beginning the next July first, the exemption shall apply to one hundred percent of the gross proceeds of sales of the described items…." (Emphasis mine).
The South Carolina Department of Revenue recently released an information letter (IL #13-9) regarding this exemption, notifying the public that the exemption will not take effect this July:
"At its February 15, 2013 meeting, the BEA did not forecast sufficient revenue growth for the upcoming fiscal year for this exemption to become effective July 1, 2013.
Therefore, sales of certain injectable medications and injectable biologics are subject to the 6% State sales and use tax plus applicable local sales and use tax until at least June 30, 2014, unless otherwise exempt under another exemption provision."
Interested parties are directed to S.C. Revenue Ruling #11-3, where they may read more about exemptions for medicines, prosthetic devices, diabetic supplies and other medical supplies.
* Biologics are here defined as "products that are applicable to the prevention, treatment, or cure of a disease or condition of human beings and that are produced using living organisms, materials derived from living organisms, or cellular, subcellular, or molecular components of living organisms."
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