Tax Management Services
Our team ensures compliance with federal, state, and local tax laws. In addition, our team files tax returns as well as remits tax payments to the appropriate government authorities.
- Imposed on the seller of goods and certain services.
- Liability lies with supplier for charging the university the sales tax and paying it to the state.
- Generally retail sales are subject to the sales tax.
- All SC suppliers should be registered in SC to charge sales tax on their invoices.
- Non SC suppliers generally not registered in SC to charge sales tax on their invoices unless criteria for nexus is met.
- State rate equal to 6% of gross proceeds of sale.
- Counties may elect to impose additional local sales tax equal to 1%.
- Imposed on the purchaser of goods and certain services.
- Liability lies with the university to accrue and remit the use tax to the state, not the supplier.
- Use tax is complementary to sales tax.
- Generally accrue use tax on purchases from non-SC suppliers that do not meet criteria for nexus.
Sales and Use Tax Exemptions and Exclusions
It is important to note that the University of South Carolina is not exempt from sales and use tax. However, there are certain goods and services that the University is exempt or excluded from paying sales and use tax on. Please see “Use Tax Matrix” below.
In addition to the exemptions noted above, there is a University form that must be completed to claim exemption from sales and use tax on research and development equipment. Please see “R&D Equipment Sales and Use Tax Exemption Form” below.
Sales and Use Tax Returns are filed monthly by the Office of the Controller. Departments should send these returns to the Tax Management team by the 10th of every month to ensure timely filing. For related inquires and assistance, contact firstname.lastname@example.org.
In accordance with Internal Revenue Code (IRC) Section 115 and IRS determination, the University is exempt from federal income tax but not state sales tax.
- IRS Determination Letter – Section 115 [pdf]
- Federal Tax ID (EIN): 57-6001153
An admissions tax of 5% must be collected by all places of amusement when an admission fee has been charged. If you operate a place of amusement, an Admissions Tax License must be obtained. It may also be required to obtain a Retail License. Various exemptions apply under Section 12-21-2420 of the SC Code of Laws and the tax does not apply to:
- any amount separately stated on the ticket of admission for the repayment of money borrowed for the purpose of constructing an athletic stadium or field by any accredited college or university; or
- any amount of the charge for admission, whether or not separately stated, that is a fee or tax imposed by a political subdivision of the State.
Admissions Tax Returns are filed monthly by the Office of the Controller. Departments should send these returns to the Tax Management team by the 10th of every month to ensure timely filing. For related inquires and assistance, contact email@example.com.
A 5% sales tax and 2% accommodations tax, in addition to local county sales taxes, is imposed upon the gross proceeds from the rentals or charges for sleeping accommodations furnished at any place in which rooms, lodgings, or sleeping accommodations of any kind are furnished. The sales tax on accommodations does not apply to:
- the lease or rental of accommodations supplied to the same person for a period of 90 continuous days;
- the lease or rental of accommodations at a facility consisting of less than six sleeping rooms, contained on the same premises, which is used as the place of abode of the owner or operator of such facilities; or
- the gross proceeds from rental income wholly excluded from the gross income of the taxpayer pursuant to IRC Section 280A(g).
Accommodations Tax Returns are filed monthly by the Office of the Controller. Departments should send these returns to the Tax Management team by the 10th of every month to ensure timely filing. For related inquires and assistance, contact firstname.lastname@example.org.
- Sales and Use Tax Manual, Chapter 11
- SC Sales Tax Rate on Accommodations by Municipality
As a Section 115 organization, per IRS determination, the University is generally exempt from income tax. However, under certain circumstances, activity may be taxable as unrelated business income. If the associated activity meets all three of the following criteria, it constitutes unrelated business income and may be taxed as such:
- It is from a trade or business;
- It is regularly carried on; and
- It is not substantially related to furthering the exempt purpose of the organization.
There are many exceptions and special circumstances that may cause a revenue stream to be deemed UBI or exempt from tax. As such, before entering into revenue generating agreements, Tax Management should be contacted for a review of activity for potential tax implications: email@example.com
When making payments to students, it is critical to ensure the payment has been accurately classified and processed as there are varying taxing implications for these disbursements. Depending on the nature of the underlying payment, the proper disbursement method may be via Payroll, Accounts Payable, or Financial Aid. The purpose of the decision tree below is to serve as a tool for determining proper student payment classifications and disbursement methods.
Payments to Entities
A properly completed W-8 will be required before a foreign entity is set up as a supplier and a payment is issued. Reference the latest W-8 instructions on the Internal Revenue Service website for additional information.
- Form W-8BEN-E: Most commonly used W-8 for a USC supplier that is an entity. Applicable when a beneficial owner is providing a personal service outside of the United States and solely claiming foreign status or treaty benefits.
- Form W-8ECI: Applicable if foreign entity has a trade or business in the United States.
- Form W-8IMY: Applicable if a foreign entity acts in the capacity of a custodian, broker, nominee, or any other person that acts as an agent for another person.
- Form W-8EXP: Primarily applicable when the foreign entity is a foreign government, foreign bank, foreign tax-exempt organization, or foreign foundation.
Payments to Individuals
A properly completed W-8BEN or 8233 will be required before a foreign individual is set up as a supplier and a payment is issued. Reference the latest 8233 instructions on the Internal Revenue Service website for additional information.
- Form W-8BEN: Most commonly used form for a USC supplier that is an individual. Applicable when a beneficial owner is providing a personal service outside of the United States and solely claiming foreign status or treaty benefits.
- Form 8233: Applicable if foreign individual is a nonresident alien who is receiving compensation for independent personal services or dependent personal services performed in the United States. In addition, applicable if nonresident alien is receiving non compensatory scholarship or fellowship income from USC.
Foreign nationals are strictly limited in what sources of income they are authorized to accept, and all payments are taxable unless an exemption exists under a U.S. tax treaty or Internal Revenue Service code. The purpose of the matrix below is to serve as a tool to illustrate allowable expenses by Visa classification. It does not, however, preclude one from gathering all necessary supporting documentation, in coordination with the Office of International Services and/or International Student and Scholar Support. Common Visa classifications include B1, VWB, F-1, and J-1.
In accordance with Internal Revenue Service (IRS) regulations, U.S. source taxable scholarships, fellowships, and grants are subject to tax withholding when paid to nonresident aliens. The standard withholding rate is 30%. However, it may be exempt or reduced to 14% based on applicable tax treaties and visa classifications, among other factors. We strongly recommend these potential tax implications be concurrently communicated to the international student when applicable scholarships, fellowships, or grants are awarded. Nonpayment of existing tax bills could prevent the student from registering for future courses.
For additional assistance with determining proper student payment classifications and disbursement methods, see the Student Payment Method Decision Tree [pdf] available on the Office of the Controller’s website.
If a supplier, international or domestic, does not reside in the state of South Carolina and is not registered with the SC Secretary of State or SC Department of Revenue, we are required to withhold on the following payments at the rates stated below:
For Services – 2% of each payment made to the nonresident under the contract that exceeds $10,000.
For Rentals and Royalties (Non-Corporations) – payments at a rate of $1,200 or more a year for the use of/the privilege of using property in South Carolina, withhold 7% of the total of each payment made to a nonresident taxpayer who is not a corporation.
For Rentals and Royalties (Corporations) – payments at a rate of $1,200 or more a year for the use of/the privilege of using property in South Carolina, withhold 5% of the total of each payment made to a nonresident taxpayer who is a corporation.
If a supplier does not reside in the state of South Carolina and is registered with the SC Secretary of State or SC Department of Revenue, we are required to obtain a completed SC DOR Form I-312. Once received, we are relieved of the liability of withholding on payments for services, rentals, and royalties.