South Carolina Enacts Law Clarifying Marketplace Facilitator Definition

Matthew Gonnella
April 30, 2019

[April 30, 2019] South Carolina Governor Henry McMaster signed S.B. 214 into law clarifying the definition of marketplace facilitators and reinforcing the requirements to collect and remit sales tax in the state. Under this new law, a marketplace facilitator is defined as “any person engaged in the business of facilitating a retail sale of tangible personal property by listing or advertising, or allowing the listing or advertising of, the products of another person in any marketplace where sales at retail occur; and collecting or processing payments from the purchaser, either directly or indirectly through an agreement or arrangement with a third party.”  A business meeting this definition is considered a marketplace facilitator regardless of whether it receives compensation or other consideration in exchange for services In the event a marketplace facilitator is comprised of multiple entities, the entity that lists or advertises, or allows the listing or advertising of, the products sold at retail in the marketplace is the entity responsible for remitting the sales and use tax to the State.

It is important to note that the passage of S. 214 is a response by South Carolina to ongoing litigation between the Department of Revenue and Amazon Services LLC regarding Amazon’s sales and use tax collection requirements in South Carolina. Amazon currently does not collect sales tax on third-party sales in states which have not enacted legislation that obligates marketplaces to collect and remit sales tax. The fiscal note clarifies that in an event of an adverse ruling in this case, S. 214 will “replace an adverse finding [and] clarify the state’s policy going forward.”

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Matthew Gonnella

Matthew Gonnella is a Junior Regulatory Counsel at Sovos. Matthew joined the Sovos team in 2019 and focuses his work on U.S. sales and use tax law. Matthew is a member of the Massachusetts Bar, has a B.A. from Saint Anselm College, and a J.D. from Suffolk University Law School.
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