If you run an Ecommerce or CPG business in South Carolina, securing an South Carolina resale certificate, in this case, your Sales Tax Permit, is a smart move to protect your margins and streamline operations.
This certificate enables you to purchase inventory and raw materials tax-free, thereby reducing your upfront costs, helping you stay competitive on pricing, and ensuring compliance with South Carolina sales tax laws.
Understanding Resale Certificates in South Carolina
What is a South Carolina Resale Certificate?
In South Carolina, a resale certificate (Form ST‑8A) is a document issued by the South Carolina Department of Revenue (SCDOR). It allows businesses to:
- Purchase goods without paying sales tax, provided the buyer plans to resell the goods to their customers in the normal course of their business.
- Make tax-exempt purchases of inventory and materials that will become part of the products they sell by presenting a valid resale certificate to their suppliers.
The purpose of this certificate is to prevent double taxation, once at the wholesale level and again at the retail sale.
However, a South Carolina resale certificate is not a blanket exemption. Businesses still must collect and remit sales tax on taxable sales to their end customers.
Why do you need a South Carolina Resale Certificate?
Obtaining a resale certificate in South Carolina offers several significant advantages for businesses that purchase goods for resale.
Here are some key benefits:
- Avoid Paying Sales Tax on Inventory: You can purchase inventory tax-free, so long as the goods are for resale and your tax permit is active and valid.
- Maintain Competitive Pricing: By not paying sales tax upfront on goods you resell, you reduce your cost of goods sold, giving you pricing flexibility in competitive markets.
- Legal Compliance: Using your sales tax permit number for resale purchases ensures you’re following state rules, avoiding misclassification or penalty risks.
In South Carolina, the form required for resale purchases is Form ST‑8A (Resale Certificate).
When completing this form, purchasers must include their South Carolina Retail License Number or a valid resale certificate number from another state to verify that they are registered with the South Carolina Department of Revenue (or their home state’s taxing authority) and authorized to make tax‑exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
A South Carolina Sales Tax Permit (also known as a retail license) authorizes your business to collect and remit sales tax on taxable sales.
A South Carolina Resale Certificate (Form ST‑8A) allows you to purchase goods tax‑free from suppliers when those goods are intended for resale. To use a resale certificate, you must have an active sales tax permit.
Who Can Use a Resale Certificate in South Carolina?
Only businesses actively engaged in selling taxable tangible products can use a South Carolina Resale Certificate.
To qualify, you must hold a valid South Carolina Sales Tax Permit (Retail License) issued by the South Carolina Department of Revenue, or a valid resale certificate number from another state if you are an out-of-state purchaser buying for resale into your state.
How to Get a Resale Certificate in South Carolina: A Step-by-Step Guide
Getting a resale certificate in South Carolina is simple, but you’ll need to meet a few key requirements first. Here’s how to do it:
1. Make Sure You’re Eligible
Your business must sell taxable goods or services and be registered with the South Carolina Department of Revenue (SCDOR) if you are an in-state business. Out-of-state businesses may use a valid resale certificate from their home state.
2. Get a South Carolina Sales Tax Permit
If you don’t already have one and are an in-state business, apply for a South Carolina Sales Tax Permit through the SCDOR website. This permit is required before you can issue or use a resale certificate as a South Carolina business.
Need help? Read our blog: How to Get a Seller’s Permit in South Carolina
3. Gather Your Business Information
You’ll need basic business details to complete the resale certificate, including:
- Business Identification Information: Legal Business Name, Physical Address, Mailing Address
- Business Entity Structure (i.e., Sole Proprietorship, Partnership, Subchapter S Corp., Corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Name, Address, and SSN of Owners, Partners, or Officers
- Business Activity Details: Date & State of Incorporation, Start Date with the State of South Carolina (Nexus Start Date)
- NAICS Code
4. Complete Form ST-8A
Download and fill out Form ST‑8A (Resale Certificate) from the SCDOR forms page. You’ll present this form to your suppliers when making tax‑exempt purchases.
5. Provide it to Your Suppliers
You don’t submit resale certificates to the state. Instead, present the completed certificate directly to your suppliers. Vendors must receive the document within 90 days of the sale for it to be considered valid and to relieve them of tax liability.
6. Pay Any Applicable Fees
There’s no cost to use Form ST-8A, but you’ll need a valid South Carolina Sales Tax Permit. The permit costs $50 per physical location from which retail sales are made, and each location requires a separate retail license.
This license remains valid as long as the business continues operating at the same location.
7. Maintain and Renew
Your resale certificate remains valid only while your South Carolina Sales Tax Permit is active. South Carolina Sales Tax Permits do not typically require renewal unless there is a change in ownership, location, or the SCDOR revokes it.
How to Use a Resale Certificate in South Carolina
To properly utilize your resale certificate in South Carolina when making tax-exempt purchases for resale, you’ll need to present a valid copy of your South Carolina Sales and Use Tax Resale Certificate to your supplier at the time of purchase.
South Carolina generally does accept resale certificates issued by other states. However, there might be specific conditions:
- Good Faith Acceptance: Vendors can accept an out‑of‑state resale certificate if it contains all the required details, including the purchaser’s name, address, sales tax permit number from their home state, and a clear reason for claiming the exemption.
- Vendor Discretion: South Carolina vendors are not required to accept out‑of‑state certificates. Always confirm the vendor’s policy before making a purchase.
- Proper Documentation: Even for out‑of‑state buyers, the certificate must be fully and accurately completed. In some cases, the vendor may still require you to fill out Form ST‑8A to document the exemption properly.
If you are an out-of-state business purchasing from a vendor in South Carolina and plan to use your home state’s resale certificate, be prepared to provide it at the time of purchase. It’s always a good idea to confirm the vendor’s policy on accepting out-of-state certificates beforehand.
For detailed guidance on South Carolina’s resale certificate rules, visit the South Carolina Department of Revenue website.
Multi-Jurisdictional Resale Certificates
A multi-jurisdictional resale certificate is a standardized form designed to simplify tax-exempt purchases for businesses that operate and make purchases for resale across state lines.
Unlike a standard resale certificate issued by a single state, a multi-jurisdictional certificate aims to be recognized and accepted by multiple states as valid proof that the goods being purchased are intended for resale and are therefore exempt from sales tax at the time of purchase.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This form is recognized by many states and is accepted in South Carolina if it includes your South Carolina Retail License Number (or your home state’s number if you’re out of state) and is fully completed.
- Streamlined Sales Tax (SST) Certificate of Exemption: South Carolina is not a member of the Streamlined Sales Tax Governing Board, so while some vendors may accept this certificate, most will prefer Form ST‑8A or the Uniform Multijurisdiction Certificate.
Businesses need to verify whether South Carolina accepts these multi-jurisdictional certificates and if there are any specific requirements or limitations on their use within the state. This is to avoid any audit issues.
Responsibilities When Using or Accepting a South Carolina Resale Certificate
Buyer Responsibilities
If you use a South Carolina resale certificate, you must ensure it’s applied only to purchases intended for resale. Using it for personal items or operational expenses, such as office supplies or equipment, is illegal and can result in fines of double the tax amount plus up to $500 under 68 O.S. §1356.2.
- South Carolina-based buyers: You must hold a valid South Carolina Retail License Number and present it on Form ST‑8A or an equivalent document. If you withdraw items from inventory for personal or business use, you must report and pay use tax on those items as required by South Carolina law.
- Out-of-state buyers: Vendors may still require you to complete Form ST‑8A to properly document the exemption. You can present your home state’s resale certificate, but you must provide all the information South Carolina requires, including your retail license number and business details.
Seller Responsibilities
- South Carolina-based buyers: You must hold a valid South Carolina Retail License Number and present it on Form ST‑8A or an equivalent document. If you withdraw items from inventory for personal or business use, you must report and pay use tax on those items as required by South Carolina law.
- Out-of-state buyers:
- Accept the certificate in good faith
- Ensure it includes all required information: buyer’s name, address, sales tax permit number (or equivalent), reason for exemption, and signature
- Reject the certificate if the items aren’t for resale (e.g., personal or business use)
- Keep records for at least 4 years: A properly completed resale certificate is your official proof of why sales tax wasn’t collected. You must retain it in your records for at least four years in case of a sales tax audit by the South Carolina Comptroller.
Businesses need to verify whether South Carolina (or their specific vendor in South Carolina) accepts these multi-jurisdictional certificates and if there are any specific requirements or limitations on their use within the state. This is to avoid any audit issues.
Frequently Asked Questions About the South Carolina Resale Certificate
Are There Penalties for Misusing a South Carolina Resale Certificate?
Yes. Misusing a resale certificate, such as using it for personal or non‑resale purchases, can result in serious penalties.
Under South Carolina law, a purchaser who fraudulently uses a resale certificate may be liable for the unpaid tax plus a penalty of 5% of the tax for each month the tax remains unpaid, up to a maximum of 50%. Additional penalties or legal actions may also apply.
Does an South Carolina Resale Certificate Expire?
No. A South Carolina resale certificate (Form ST‑8A) does not have a fixed expiration date. However, it is only valid as long as your South Carolina Sales Tax Permit remains active. If your permit is revoked or becomes inactive, your resale certificate is no longer valid.
How Do I Verify a Resale Certificate in South Carolina?
To confirm a buyer’s resale certificate:
- Request a properly completed Form ST‑8A from the purchaser.
- Check the South Carolina Retail License Number listed on the form.
- Use the South Carolina Department of Revenue Retail License Verification Tool to verify that the permit is valid and active.
How TaxHero Can Help
You don’t have to complicate managing sales tax compliance and resale certificates in South Carolina. TaxHero simplifies the process, from keeping your South Carolina Sales Tax Permit active to ensuring you use resale certificates correctly.
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Schedule a Demo to see how TaxHero can streamline your resale certificate in South Carolina process today!