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Amazon’s Grace Period in South Carolina Comes to a Close

  • Dec 3, 2015 | Gail Cole

 The contents of Amazon shopping carts will be subject to sales tax in South Carolina in 2016.

Amazon and South Carolina struck a deal in 2011: Amazon agreed to build distribution centers and create jobs in the state, and in return, the company’s obligation to collect South Carolina sales tax was temporarily waived. That sales tax-free grace period ends December 31, 2015. Come January 1, 2016, South Carolina residents will pay sales tax on Amazon purchases.

The deal was controversial from the outset. It was put together under Governor Mark Sanford’s administration but finalized after he departed office. Incoming Governor Nikki Haley vocally opposed it but ultimately left the decision to legislators. When the House initially rejected a plan promising 1,249 jobs and a $90 investment, Amazon announced its intention to abandon its plans. An enhanced package was then later approved without Gov. Haley’s signature.

Act 32 reads in pertinent part:

“Notwithstanding another provision of this chapter, owning, leasing, or utilizing a distribution facility, including a distribution facility of a third party or an affiliate, within South Carolina is not considered in determining whether the person has a physical presence in South Carolina sufficient to establish nexus with South Carolina for sales and use tax purposes.”

Gov. Haley objected to the tax break, not to Amazon’s presence in South Carolina. In March 2015, her office announced Amazon’s plans to hire 500 new employees at the Lexington County fulfillment center, where there were already 1,500 full-time positions. The governor then praised Amazon for its commitment to the state:

“For a company like Amazon to make the decision to expand its operations in South Carolina, it is a special source of pride and a reason to celebrate because it proves what we already know – that we have a world class work force and competitive business environment. The 500 new jobs this expansion will create is terrific news for the Midlands community, and we look forward to watching Amazon continue to grow here for many years to come.”

Part of the enhanced plan requires Amazon to send South Carolina customers a yearly tally of their Amazon expenditures, with a reminder that use tax may be owed on untaxed purchases. The law reads:

A person to whom this section applies also shall by February first of each year provide to each purchaser to whom tangible goods were delivered in this State a statement of the total sales made to the purchaser during the preceding calendar year. The statement must contain language substantially similar to the following:


State use tax collections have improved since the inception of that policy, from $1.4 million in 2011 to $4.1 million in 2013. However, because the South Carolina Department of Revenue is not privy to the information Amazon sends its customers, there is no way to know the extent of the customers’ consumer use tax compliance.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.