South Carolina Sales Tax Guide
Chapter 8: Understanding South Carolina sales tax rules for shipping & handling
If you are an ecommerce seller who ships products to customers in South Carolina, it’s important to understand the rules regarding sales tax. South Carolina’s sales tax laws aren’t exactly straightforward, but they do provide sufficient guidelines to help sellers stay in compliance.
Let’s take a look at what you need to know about charging sales tax on shipping and delivery charges in South Carolina.
Is Shipping Taxable in South Carolina?
According to the South Carolina Department of Revenue, the taxability of shipping and delivery charges isn’t determined by the method you use to prepare your invoices like it is in some states. In South Carolina, the rules don’t change if you include the charges in the invoiced total or list them separately.
The short explanation of sales tax on delivery charges in South Carolina is that if you charge the buyer to deliver a product or service, you are required to add sales tax to those charges.
But things are never that easy when it comes to sales tax, are they? Read on for the fine print.
Does Delivery Method Matter?
South Carolina complicates things a bit when it comes to how a product is delivered. The state rules change depending on whether the delivery services are rendered to the seller or the buyer.
If the seller uses their own trucks to deliver the product and charges the buyer for delivery, South Carolina considers those charges part of the total sale, and requires the seller to charge sales tax on them.
If the seller contracts with and pays a common carrier to deliver the products on Free on Board Destination terms, then charges the buyer for delivery, they should also charge sales tax on the fee. For example, if you sell products on eBay or Etsy and ship them using the post office or any third party carrier, you should charge the buyer sales tax on those delivery fees.
On the other hand, if the seller contracts with a common carrier to deliver the products on F.O.B. Shipping Point terms, South Carolina does not require the seller to collect sales tax on it.
If the buyer contracts with the delivery company and pays the delivery charge, the retailer is not responsible for collecting sales tax on the transaction. So if you sell a product to your customer and they arrange for the delivery, you’re off the hook when it comes to charging sales tax on that delivery.
Finally, if the seller contracts with a common carrier, but does not specify the terms of the delivery, the seller is required to collect sales tax for the delivery charge.
Shipping Tax Exempt Purchases
South Carolina makes things a little easier when it comes to charging delivery fees for tax-exempt purchases. If you ship products that include both taxable and exempt items, you should not charge sales tax for any portion of the delivery.
What About Local Taxes?
South Carolina has many local municipalities that charge additional sales taxes on qualified purchases, but a representative from the Sales and Use Tax Department in the South Carolina DOR says there will never be an instance where the local rules differ from the state rules.
Finally, the representative said retailers should pay attention to the counties they list on their sales tax returns because some municipalities are in multiple counties. “For example,” she says, “Charleston and Berkeley counties share some of the same municipalities, and we see people writing down the wrong counties all the time.”