COLUMBIA — Online shopping will soon get more expensive in South Carolina as the state requires more retailers to collect sales taxes.
A start date is being worked out. And whether you'll pay more will likely depend on the size of the seller.
The state Revenue Department is expected to issue guidelines within the next month.
What is clear is that legislators don't need to pass a law for South Carolina to take advantage of the U.S. Supreme Court's June decision that out-of-state online retailers can be required to collect sales taxes.
South Carolina's tax-collection agency has had the authority to collect taxes from out-of-state sellers since 1990.
But the agency couldn't flex that power because of a 1992 U.S. Supreme Court decision that banned states from requiring businesses to collect sales taxes from customers in states where they have no "physical presence." Justices reversed that requirement, allowing South Carolina's tax agency to enforce existing state law, said its director, Hartley Powell.
"This is leveling the playing field. This is important. This is good," Powell told Gov. Henry McMaster at a Cabinet meeting Wednesday. "We're all moving to online retailers, but we've got to protect our local businesses. Everybody's got to collect sales taxes" and send them back to South Carolina.
Actually, there will still be exceptions.
The agency's rules will take into account that the high court's decision applied to out-of-state retailers who deliver more than $100,000 worth of goods and services or make at least 200 separate sales yearly, Powell told legislators in a letter last month after determining a new law was unnecessary.
How many retailers will be affected is unknown, agency spokeswoman Bonnie Swingle said.
Those that are will be required to start adding 6 percent to 9 percent in sales taxes to customers' tabs, depending on where the shoppers live in South Carolina. Most counties add at least one extra penny-on-the-dollar to sales. Sales taxes are highest in Charleston and Jasper counties, as well as the city of Myrtle Beach.
But the additional tax collections are not expected to be the windfall many legislators hoped.
They could total up to $74.4 million yearly, with roughly $50 million of that going into state coffers, $14 million given to counties and $10 million going toward property tax relief for homeowners, according to estimates released by the state Revenue and Fiscal Affairs Office.
Most major online retailers already collect the tax, since they operate brick-and-mortar stores or distribution centers somewhere in South Carolina.
That includes Amazon — at least, on items shipped from its warehouses. The e-commerce giant still doesn't collect sales taxes for third-party sellers on its website. State tax officials contend it should. That fight is set to go before the state's Administrative Law Court next year. The U.S. Supreme Court ruling has no bearing on that case, Swingle said.
Even without that ruling, online sales would likely bring in $375 million in sales taxes this fiscal year, according to state economists.
Once the rules kick in, the small seller exemptions could leave about $30 million uncollected. The state's economists note exact amounts for what will and won't be collected will depend on the tax agency's guidelines and the economy in general, since sales tax revenue fluctuates.
South Carolina's brick-and-mortar "retailers are very excited about the Supreme Court decision and the direction South Carolina is taking," said Lindsey Kueffner, director of the state Retail Association. "It's about time we had some equity."
Asked how the state should use the additional cash, McMaster said, "It's going to have to be collected first." He had no specific suggestions.
"We are always looking to grow and expand the economy, and anything that brings money in is, of course, a help," he told reporters following the Cabinet meeting. "What we can enhance is the economic growth of the state by keeping taxes low and regulations low. ... We have a lot of improvements to do, but the main way to do that is by expanding our economic prospects."