If you are buying products to resell in the state of South Carolina, you can avoid paying sales tax on that purchase by presenting your South Carolina resale certificate.
It’s important to note that you should only use a South Carolina resale certificate if you truly intend to resell, lease or rent the items or use them as parts or ingredients in products for resale. It is illegal to use a resale certificate for purchases you intend to use yourself.
Here’s what you need to know as a seller about using a South Carolina resale certificate, or if one of your customers presents a South Carolina resale certificate to you.
If you Wish to Use a South Carolina Resale Certificate
You are allowed to use this certificate to buy items tax free as long as you fill the form out wholly and correctly and you truly intend to sell, lease or rent the items you are purchasing tax free. (Don’t skip this step! You can be held legally liable if you buy items tax free but don’t sell them. Fortunately, if you find yourself unable to sell items, you’re off the hook if you remit South Carolina use tax on the items later.)
The South Carolina resale certificate requires a sales tax registration number, but doesn’t necessarily require you to be registered in the state of South Carolina. So if you’re registered in another state, you can use that number instead.
You can find out more about South Carolina resale certificates at their sales tax FAQ.
If You are Presented with a South Carolina Resale Certificate
You are responsible for a few things when it comes to accepting a South Carolina resale certificate from a buyer. If you fail to do any of these things and face an audit, you will be the party on the hook for fines and penalties. But luckily, these are all easy to do!
- Make sure the resale certificate is properly completed – Ensure the South Carolina resale certificate is fully filled out and signed. It must also include your buyer’s South Carolina sales tax registration number. South Carolina retailers are also allowed to accept resale certificates from buyers based out of state, but you must be sure they still give you all of the information required, including their state sales tax registration number.
- Check it with the state – Use this link to verify the validity of a South Carolina resale certificate. Make sure your buyer’s sales tax registration number is valid and current. You can see where to verify retail certificates from every state here.
- Don’t participate in fraud – Okay, so “don’t participate in fraud” is pretty good business advice all around. But in this case South Carolina is careful to mention that if you, as the seller, collude with the buyer to fraudulently make a sell without charging sales tax, you will be on the hook for fines, penalties and maybe even worse. So keep that in mind if a buyer gives you a resale certificate and asks you to look the other way!
Do you have questions or comments about South Carolina resale certificates? Start the conversation in our Sales Tax for eCommerce Sellers Facebook group!