South Carolina Enacts Nexus Safe Harbor Law With Notice Requirements

South Carolina Enacts Nexus Safe Harbor Law With Notice Requirements By Marlia Berg Posted Today at 5:58 pm on The SALT Minds part of the CCH Community at community.cchgroup.com

Looks like Amazon will have its distribution facility in South Carolina after all, as Gov. Nikki Haley has allowed S.B. 36 to become law without her signature. The bill gives Amazon.com a five-year nexus safe harbor for sales and use tax purposes in exchange for the Internet retail giant building and operating a distribution facility near Cayce in Lexington County. The provisions are a little different from the provisions in H.B. 3488 discussed in a previous post that were defeated by the Legislature earlier this year.

Specifically, S.B. 36 provides that “owning, leasing, or utilizing a distribution facility, including a distribution facility of a third party or an affiliate, within South Carolina is not considered in determining whether the person has a physical presence in South Carolina sufficient to establish nexus with South Carolina for sales and use tax purposes.” To qualify for the safe harbor, Amazon or any other distribution facility will have to:

-place the distribution facility in service after December 31, 2010, and before January 1, 2013;

· make, or cause to be made through a third party, a capital investment of at least $125 million after December 31, 2010, and before December 31, 2013;

· create at least 2,000 full-time jobs, including a comprehensive health plan for those employees, after December 31, 2010, and before December 31, 2013; and

· after meeting the initial job requirements, maintain at least 1,500 full-time jobs until January 1, 2016.

Amazon and other retailers qualifying for the safe harbor will have to notify purchasers in a confirmation email that they may owe South Carolina use tax. The emails must include a link to the South Carolina Department of Revenue website. Also, by February 1 of every year, the retailer has to provide South Carolina purchasers with a statement of the total sales made to the purchaser during the preceding calendar year.

According to The State, Amazon’s distribution center is expected to open this fall. The State also reports that the loss in tax revenues from the exemption is initially estimated at $2.5 million yearly and that supporters say the center will generate at least $11 million annually in payroll and property taxes.

via The SALT Minds – South Carolina Enacts Nexus Safe Harbor Law With Notice Requirements.

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About Brad Merrill

Brad W. Merrill is the Principal at Brad W. Merrill Accounting and Tax Services. He specializes in Sales & Use taxes and accounting for small businesses. He has a B.S. in Accounting from the David Eccles School of Business at the University of Utah.
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