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by Angela Queen
The South Carolina (SC) Supreme Court recently affirmed the decision of an SC circuit court and found that the state's Durable Medical Equipment sales and use tax exemption for Durable Medical Equipment, which is paid directly by Medicaid or Medicare funds, discriminated against interstate commerce and was in violation of the Commerce Clause, as it was only available to entities whose principal place of business was within the state of SC.
Effective June 26, 2024, the state of South Carolina no longer offers a sales tax exemption for the sale of Durable Medical Equipment (DME).
• For entities selling DME to customers in SC, you must begin collecting and remitting sales tax on all DME transactions.
• For entities whose principal place of business is OUTSIDE the state of SC, you may have the opportunity to file for a refund of sales tax paid to the state of SC on the sale of DME prior to June 26, 2024. Limiting the exemption to only SC entities created an unfair advantage over out-of-state entities. To remedy this, entities outside of SC may be able to claim the exemption on the sale of DME prior to June 26, 2024. Impacted entities should watch closely for additional guidance from the SC Department of Revenue (SCDOR) regarding opportunities related to filing for refunds.
Our team will keep you updated on any further movement in the legislature to reenact this exemption without the discriminatory language, but the exemption is currently not available to any taxpayer. If you need assistance registering to collect sales tax, filing/remitting sales tax returns and payments, or have questions about how this change may impact your business, please reach out to our Elliott Davis State and Local Tax (SALT) Team. If you would like Elliott Davis to follow up with you when additional guidance is released, please reach out to us via the contact form below.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
