S.C. Code Regs. 117-318.8 - Returned Merchandise and Restocking Fees (Effective October 1, 2008)

The sales tax is imposed upon a retailer's "gross proceeds of sales" which is defined at Code Section 12-36-90. Code Section 12-36-90(2)(b) specifically states that "gross proceeds of sales" does not include "the sales price of property returned by customers when the full sales price is refunded in cash or by credit."

The use tax is based upon the "sales price" of tangible personal property and the term "sales price" is defined at Code Section 12-36-130. Code Section 12-36-130(2)(b) specifically states that "sales price" does not include "an amount charged for property, which is returned by the purchaser, and the full amount is refunded in cash or by credit."

Therefore, the price ("gross proceeds" or "sales price") charged for property which is returned to the retailer by the purchaser is not subject to the sales tax or the use tax provided the full price is refunded to the purchaser in cash or by credit. If a purchaser returns merchandise to the retailer and receives a refund or credit that is less than the price originally paid because the retailer retains a portion of the price paid as a "restocking" or "handling" fee or for any other reason, then the original price is subject to the tax.


S.C. Code Regs. 117-318.8
Added by State Register Volume 26, Issue No. 6, Part 2, eff June 28, 2002. Amended by State Register Volume 30, Issue No. 6, eff June 23, 2006; State Register Volume 32, Issue No. 2, eff February 22, 2008.

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