Use Tax: The Basics
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Transcript of Use Tax: The Basics
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PRESENTED BY PRESENTED BY THE SC DEPARTMENT OF REVENUETHE SC DEPARTMENT OF REVENUE
Use Tax:Use Tax:The BasicsThe Basics
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Use Tax
Use Tax applies to a transaction between an out of state seller and a purchaser where there has been a purchase of tangible personal property
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Use tax is complimentary to the sales tax
Serves to “even the playing field” where out of state sellers are concerned
Use Tax
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Purchaser is liable for the use tax
Purchaser is relieved of the use tax liability if he has a receipt from the retailer specifying South Carolina tax collected
Use Tax
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Liability for the Use Tax
PurchaserThe person storing, using or
consuming the tangible personal property
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Credit for taxes paid AND legally due another state To be legally DUE another state, goods must
be delivered in that state
If tax is paid to a registered out-of-state retailer, no additional tax is due to SC
If substantial use of goods occurs outside SC, then no additional use tax is due
Use Tax
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Use Tax is due on items purchased via:
Internet Example: Ebay, Amazon
TV Example: Home Shopping Network
Mail Order Catalog Example: Land’s End
Use Tax
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Purchaser’s Certificate of Registration
required for those persons not making retail sales
who purchase tangible personal property from outside South Carolina
and store, use or consume the property in South Carolina
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Apply by using Form SCDOR111Apply on SCBOSApply at the DOR Service CentersMail the SCDOR 111
No charge for a Purchaser’s Certificate of Registration
Purchaser’s Certificate of Registration
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How Do You Report Use Tax?
ST-3 (or other returns) Worksheet (Back of ST-3)
Line 2 – Out of state purchasesLine 3 - Total of Gross Proceeds of Sales and out of state
purchasesDOR Individual Use Tax, UT-3, SC1040Subject to 6% state sales/use taxSubject to applicable local taxesTax is reported monthly, quarterly or
annually
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When you purchase items for resale and you withdraw the item for your own use or use in your business, sales tax is due on the fair market value of the item withdrawn
Fair market value is essentially the price at which you would sell the item at retail to the customer (not less than cost)
Withdrawals for Own Use
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Freight Charges and Delivery Charges
Regulation 117-310Freight Charges – Separately stated
FOB Destination – Taxable FOB Origin – Non-Taxable Not Defined – Taxable
Delivery Charges Taxable
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Hardware Warranty/Maintenance
SC Revenue Rulings # 11-1 and 11-2
Contract sold at the same time as the hardware (equip) = TAXABLE (eff. 9/1/11)
Contract NOT sold at the same time as the hardware (equip) =
NOT TAXABLE (eff. 10/1/05)
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Software Products
Software, both canned and custom, is subject to the tax (unless
delivered via electronic means)
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Software Maintenance
Contract sold at the same time as the product = TAXABLE (eff. 9/1/11)
Contract NOT sold at the same time as the product = NOT TAXABLE (eff. 10/1/05)
See SC Revenue Ruling # 11-2
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Software
Software License: A license to use or consume IS taxable
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Additional Information
See SC Revenue Rulings # 11-1 and 11-2
http://www.sctax.org/Tax+Policy/default.htm
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Discounts
Taxpayers are allowed a discount for filing returns and paying taxes timely. If total tax due (for all taxes) is less than
$100, the discount is 3% If total tax due (for all taxes) is $100 or
more, the discount is 2%
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Discount Maximums
• $3,000 in a state fiscal year• July 1 through June 30• Per Taxpayer, all locations, for all tax
types
• $3,100 if you file Electronically• $10,000 if non resident retailer not required to register in SC
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Types of Returns
• ST-3 – State Sales and Use Tax Return• ST-389 – Schedule for Local Taxes• ST-388 – Sales/Use/Accommodations• ST-403 – Sales/Use/Aviation Fuel• ST-455 – Sales/Use/Maximum Tax• ST-501 – Sales/Use/Durable Medical Equipment
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Local Taxes
Local Option Sales Tax
Capital Projects Tax
Transportation Tax
School District Tax/Education Capital Improvement Tax
Tourism Development Tax
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Map of Local Taxes
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Local Option Sales Tax
Imposed to reduce the property tax burden on persons in the county
Example: Richland
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Transportation Tax
Imposed to defray the debt service on bonds issued for various transportation projects (i.e. roads & bridges)
Example: Beaufort
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Capital Projects Tax
Imposed to defray the debt service on bonds issued for various capital projects in the county (i.e. roads, bridges, public facilities, water/ sewer projects)
Example: Lancaster
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School District Tax
Imposed to pay debt service on general obligation bonds and/or cost of capital improvements
Example: Lexington
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Tourism Development Tax
Imposed specifically for tourism advertisement and promotion directed at non-South Carolina residents
Example: City of Myrtle Beach
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Transactions exempt from the Food Tax are still subject to the 1% Local Taxes
Exception: The following counties exempt food from the 1% School District Tax.
Cherokee Chesterfield Darlington Dillon Horry Jasper Lee Lexington (Clarendon County imposes the 1% School District Tax on
the purchases of food that may be purchased with USDA food coupons)
Reminder
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New for 2012
Effective January 1, 2012• York County- 1% Capital Projects Tax
exempts sales of unprepared food
Effective April 1, 2012• Newberry County – 1% Capital Projects Tax
exempts sales of unprepared food
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New for 2012
Effective July 1, 2012• Greenwood County will no longer imposed the 1%
Capital Projects Tax on their sales and purchases.
• The State sales tax rate will be reduced from 3.5% to 1.75% for retailers/providers making sales of Durable Medical Equipment and Related Supplies.
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ReviewWho is responsible for the use tax?
Purchaser (buyer)
How do you report use tax? Businesses use ST-3 or ST-455
Line 2 on worksheet Line 3 on front of form
Personal use is DOR Individual Use, UT-3 or SC-1040
How much is the discount for filing returns and paying taxes timely? 2% or 3%
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Contact Numbers
General Sales Tax Questions (803) 896-1420
Technical Sales Tax Questions(803) 896-1370
Monday-FridayMonday-Friday8:30 a.m.-4:45 p.m.8:30 a.m.-4:45 p.m.
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Questions