Information current as of December 31, 2020.
The SARS-CoV-2 virus and the incidence of COVID-19 are changing life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor™ or visit our COVID-19 Resource Center for current information as needed.
Information Specific to South Carolina
- Tax returns and payments normally due from April 1 through June 1 now are all due June 1, and penalties and interest won’t be charged for those extensions. This includes state individual and corporate income, sales and use, admissions and other taxes that are filed and paid to the DOR.
- South Carolina Information Letter 20-3, March 17, 2020.
- The DOR extended the April 15 tax filing deadline to July 15 for individual, corporate and franchise taxes to mirror the announced deadline change from the IRS.
- South Carolina Information Letter 20-4, March 23, 2020.
- South Carolina announced additional tax filing and payment relief to July 15, 2020, for all taxpayers who have an income tax, franchise tax or corporate license fee filing or payment deadline (originally or under a valid extension) between April 1, 2020, and July 15, 2020. This includes estimated tax payments.
- South Carolina DOR Information Letter 20-8, April 13, 2020.
- South Carolina clarified the available state tax relief. Income tax, franchise tax, estimated tax and corporate license fee filings and payments originally due between April 1 and July 15 are extended to July 15. All other taxes administered by the DOR due April 1 to June 1 are extended to June 1. The filing and payment relief applies to all other state taxes automatically.
- South Carolina DOR Notice, April 14, 2020.
- South Carolina won’t use changes solely in an employee’s temporary work location due to the remote work requirements arising from or during the COVID-19 relief period (March 13, 2020, to September 30, 2020) as a basis for establishing nexus or altering apportionment of income. Likewise, a business’s withholding requirements aren’t affected by the current/temporary shift of employees teleworking in/out of South Carolina.
- South Carolina DOR Information Letter 20-11, May 15, 2020.
- South Carolina announced that federal COVID-19 economic stimulus payments aren’t subject to the state’s personal income tax. Because federal income taxes aren’t deductible in arriving at an individual’s South Carolina taxable income, the federal income tax refund, or the stimulus payment in the form of a rebate or refundable tax credit, isn’t includable in arriving at South Carolina taxable income.
- South Carolina DOR Information Letter 20-13, June 11, 2020.
- South Carolina issued guidance on the taxability of unemployment compensation benefits under the CARES Act, which to the extent that unemployment compensation is taxable for federal income tax purposes (including the CARES Act benefits), unemployment compensation also is taxable for South Carolina income tax purposes. An individual receiving unemployment compensation may elect to have South Carolina income tax deducted and withheld from unemployment payments at the rate of 7 percent or may choose to make estimated tax payments.
- South Carolina DOR Information Letter No. 20-15, June 12, 2020.
- South Carolina opined that while the plain language of S.C. Code Ann. §12-51-50 mandates tax sales be conducted “at a public auction at the courthouse or other place within the county” means conducting a live auction within the county, due to the pandemic, allowing bidding through an online platform substantially complies with the statutory requirements if the taxpayer is provided with the same level of protection as they would receive via a live auction conducted in person.
- South Carolina Attorney General Opinion, August 3, 2020.
- South Carolina issued guidance on the application of sales and use tax to an additional COVID-19 surcharge or fee, a handling fee, a takeout charge, or a similar charge imposed by retailers due to COVID-19. The charges/fees included in gross proceeds of nonexempt sales are taxable. Retailers may add the charges/fees to a customer’s bill to recover the lost sales revenue or the costs of implementing health and safety measures.
- South Carolina DOR Information Letter No. 20-23, August 5, 2020.
- South Carolina has extended the income and sales tax nexus relief related to temporary employee work locations due to COVID-19 through December 31, 2020. Under the relief provision, South Carolina will not use changes solely in an employee’s temporary work location due to the remote work requirements arising from, or during, the COVID-19 relief period as a basis for establishing nexus or altering apportionment of income. The extension also covers related guidance that was issued on employer withholding requirements.
- South Carolina DOR Information Letter 20-24, August 26, 2020.
- South Carolina opined on delinquent tax sales affected by COVID-19, including that a court wouldn’t seek to require in-person tax sales that delinquent tax collectors only temporarily postponed due to the pandemic and that online payment processors aren’t permissible legal tender for purposes of a tax sale.
- South Carolina Attorney General Opinion, August 31, 2020.
- South Carolina issued guidance regarding the federal PPP loans. During the 2020 legislative session, South Carolina enacted S.B. 545 (3rd S.S., Laws 2020), which provides that under state law, PPP loans are not taxable and the forgiveness of the PPP loans is not taxable for tax year 2020. The state will follow the IRS’ position in Notice 2020-32 and will disallow related payroll and occupancy costs to the forgiven portion of the PPP loan, i.e., a business is not permitted to deduct expenses that are normally deductible to the extent the expenses were reimbursed by a PPP loan that was then forgiven.
- South Carolina DOR Information Letter No. 20-28, November 2, 2020.
- South Carolina has further extended relief for income and sales tax nexus solely because an employee is temporarily working in a different work location due to COVID-19 through June 30, 2021 (previously December 31, 2020). The state will not use changes in an employee’s temporary work location solely due to the pandemic as a means to decide whether a company has economic presence or to change the apportioning of income, nor will this change withholding requirements. South Carolina businesses with nonresident employees temporarily working remotely in another state still are subject to South Carolina withholding. The wages of South Carolina resident employees temporarily working from within the state for out-of-state businesses aren’t subject to South Carolina withholding.
- South Carolina DOR Information Letter 20-29 (extends guidance in Information Letter 20-11), November 30, 2020.