Many communities are having to increase millage rates in order to fund essential services. The millage rates across the state generally range from 250 mills to over 500 mills. If a property is located within a municipality, the municipal millage is added to the county millage. As a result, the millage in some communities may even exceed 600 mills. To put this in perspective, the annual tax bill for a $1 million investment in a commercial real estate venture could range from $15,000 (250 mills) to $36,000 (600 mills). This is a substantial difference. For larger investments, the difference would be even more substantial.

 

There are a variety of reasons for the increase in millage rates. Growth in the commercial or industrial base may be stagnant or decreasing. Some communities have numerous tax-exempt properties (i.e., government offices, university facilities, and non-profits). The result is that, for whatever reason, these communities do not have a sufficient commercial and industrial base to support the tax burden created by the services provided by such communities. In such cases, these communities may lose the competitive edge to attract commercial or industrial businesses unless they are able to grant incentives to induce such commercial or industrial enterprises to locate in the community.

 

Property tax incentives are routinely granted to manufacturers, but many communities are adverse to granting incentives to commercial enterprises. The problem is that developers and commercial owners are now paying more attention than ever before to property tax burdens. If property taxes are too high, it may not make sense for a developer or commercial owner to build or locate a facility in that community.

 

So what is the answer? It is a tough call, but I believe communities will need to reduce spending or increase incentives to both commercial and industrial projects until such time as the millage rates become more reasonable.

SCDOR has issued final guidance implementing the Department's final sales and use tax nexus standard and rules for remote sellers with no physical presence in the state. The ruling provides generally that a remote seller whose gross revenue from sales into South Carolina exceeds $100,000 in the previous or current calendar has "economic nexus" with South Carolina.  Effective November 1, 2018, remote sellers with economic nexus must begin collecting and remitting sales and use taxes on their taxable sales into South Carolina.  The ruling provides important guidance for remote sellers including calculation of the $100,000 economic nexus standard, sales through an online marketplace (e.g. Amazon), registration with SCDOR, and remittance of the tax.   S.C. Revenue Ruling #18-14 (September 18, 2018).   

 

SCDOR also issued updated guidance to clarify that remote sellers with economic nexus must collect any applicable local sales and use taxes administered by SCDOR.  The updated ruling includes general information on the various local sales and use taxes administered by SCDOR and provides rules and guidance regarding collection and remittance of these taxes.   S.C. Revenue Ruling #18-15 (September 20, 2018).

 

For questions regarding sales and use tax compliance after Wayfair, please contact a member of HSB's tax or economic development team.

HSB ED team members Frank Davis, Gary Morris and Ben Zeigler were also listed in  The Best Lawyers in America©. Overall, HSB had 10 attorneys named "Lawyer of the Year" and 60 listed in  The Best Lawyers in America ©.  Click here for the full release.