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South Carolina clarifies sales tax obligations for remote sellers and marketplaces


internet sales tax?

South Carolina requires out-of-state retailers, including marketplace facilitators, to collect and remit state sales and use tax if they have over $100,000 in gross revenue from South Carolina sales in the current or previous calendar year. This economic nexus requirement took effect, according to Department of Revenue Ruling #18-14, on November 1, 2018. A measure that codifies and clarifies the sales tax collection obligations for marketplace facilitators was enacted April 26, 2019; it’s effective immediately.

The Palmetto State was one of the first states to adopt an economic nexus rule after the Supreme Court of the United States determined physical presence is no longer the only requisite for sales tax collection (physical presence does still trigger sales tax nexus). Prior to the decision in South Dakota v. Wayfair, Inc. (June 21, 2018), states were prohibited from imposing a sales tax collection obligation on businesses with no physical presence in the state.

Within a month of the Wayfair ruling, the South Carolina Department of Revenue (SCDOR) published Remote Sellers Frequently Asked Questions, which provides detailed information about the new sales tax obligations for remote sellers and marketplaces. The SCDOR noted that South Carolina Code Section 12-36-70 has long considered “soliciting business” in the state by any means to be a basis for sales tax collection, although that provision wasn’t enforced due to “constitutional nexus restrictions” (aka, physical presence rule).

Newly enacted Senate Bill 214 “reinforces” the policy established by Ruling #18-14. It “does not represent a change in South Carolina’s longstanding sales tax policy.”

Recap: South Carolina’s sales tax policy for remote sellers and marketplaces

What is the economic nexus threshold?

A remote seller with more than $100,000 in gross revenue from South Carolina sales in the current or previous calendar year establishes economic nexus in South Carolina.

What is the $100,000 threshold based on?

To determine whether the $100,000 threshold has been met, a remote seller/marketplace should tally the total gross revenue from both taxable and non-taxable (exempt) sales of the following in the current or previous calendar year:

  • All tangible personal property delivered into the state
  • All products transferred electronically into the state
  • All services delivered in South Carolina

Once economic nexus has been established, remote sellers and marketplaces owe sales and use tax on their gross proceeds.

What is a marketplace (aka, marketplace facilitator, marketplace provider)?

The bulk of SB 214 is dedicated to defining “marketplace facilitator.”

A marketplace facilitator is any person that facilitates the retail sale of tangible personal property in South Carolina by listing or advertising another person’s products where retail sales occur, and directly or indirectly collecting and processing payments from the purchaser.

Marketplaces may be electric or physical and include “any related entities assisting the marketplace facilitator in sales, storage, distribution, payment collection, or in any other manner, with respect to the marketplace.”

Who is responsible for collecting and remitting tax on marketplace sales?

A marketplace facilitator or provider must collect and remit sales or use tax on all sales made through the marketplace if its gross revenue from sales into South Carolina exceed the $100,000 threshold. At this point, the marketplace is the retailer.

If the marketplace has not met the $100,000 threshold, it is not required to collect and remit tax on all sales made through the marketplace.

A marketplace seller that makes more than $100,000 in gross revenue in South Carolina from sales through multiple channels, including one or more non-collecting marketplaces, is responsible for collecting and remitting tax on its South Carolina sales.

Do marketplace sellers have to obtain a retail license from the SCDOR?

A marketplace seller that sells only through marketplace(s) that collect and remit on its behalf is not considered a retailer and is not required to register with the department or collect and remit South Carolina sales tax.

A marketplace seller that sells through multiple platforms, including its own ecommerce store, must obtain a retail license from the Department of Revenue if its total gross revenue in South Carolina exceeds the $100,000 threshold. However, it’s only liable for the tax on sales made through its own store and non-collecting marketplaces.

Do businesses that make only non-taxable or wholesale sales need to obtain a retail license?

Non-taxable sales must be included in the threshold count. However, whether remote sellers of non-taxable products need to register depends.

A remote seller that makes more than $100,000 in non-taxable sales in the state (such as sales of medicine or sales to a federal agency) is required to register and file a “zero tax due” sales tax return each filing period. Quarterly or annual filings may be requested.

A remote seller that makes more than $100,000 in wholesale sales only in the state is not considered a retailer because wholesale sales are not subject to South Carolina sales and use tax. Thus, wholesale sellers do not need to obtain a retail license, collect sales tax, or file sales tax returns.

What about the pending litigation involving Amazon?

SB 214 references litigation with “at least one retailer … [that] is not remitting sales and use tax in compliance with state law.” It doesn’t name names, but the SCDOR has been embroiled in a legal battle with Amazon for years over uncollected sales tax on third-party sales. Although Amazon complies with marketplace facilitator laws in numerous states, it continues to fight South Carolina.

The Department of Revenue suggested back in 2017 that Amazon collect South Carolina sales tax and hold it in trust until the outcome of the lawsuit. It later gave similar advice to Amazon sellers.

According to SB 214, the non-compliant vendor will be expected to “remit uncollected taxes from prior years and comply prospectively” with SB 214 if the department wins the legal fight. The department assumes “any other such retailer” would do the same.

Check out Avalara’s state-by-state guide to marketplace facilitator laws to learn about other states’ requirements.


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.
Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara 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.