Does your business qualify for the Sales and Use Tax Recovery Refund?

In New York, sales tax is applied differently based on what phase of the manufacturing process you use items in. 

There are three phases: administration, production, and distribution. 

Your business usually pays sales tax when you buy items you use for administration (e.g., marketing, accounting, sales, testing raw materials, etc.) or distribution (e.g., storing, displaying, shipping, etc.). 

Fortunately, New York generally exempts sales tax on products you buy for production.

In South Carolina, manufacturers, processors, and compounders get a bunch of sales and use tax exemptions. 

These exemptions include the following:

• Machinery and equipment, and applicable repair parts, used in the production of tangible goods;
• Materials that will become an integral part of the finished product;
• Coal, coke or other fuel for manufacturers, transportation companies, electric power companies and processors;
• Industrial electricity and other fuels used in manufacturing tangible personal property;
• Research and development machinery and equipment;
• Air, water and noise pollution control equipment;
• Material handling equipment for manufacturing or distribution projects investing $35 million or more in the state;
• Packaging materials; and
• Long distance telephone calls and access charges, including 800 number services.

Yes! Machinery and equipment used directly and predominantly in the production of tangible personal property for sale can be purchased exempt from sales tax (Form ST-121).

Machinery and equipment used in the administration or distribution phases does not qualify for the exemption, though.

Yes! "Machine exemptions" exempt purchases of machines used to manufacture, process, package, compound, mine, or quarry tangible personal property from sales tax in South Carolina. 

That would be an excise tax! 

Excise taxes are taxes required on specific goods or services like fuel, tobacco, and alcohol. Excise taxes are primarily taxes that must be paid by businesses, usually increasing prices for consumers indirectly. Excise taxes can be ad valorem (paid by percentage) or specific (cost charged by unit).

For example, New York State imposes an excise tax on the sale or use in New York State of beer, wine, and liquor. New York City imposes an additional excise tax on the sale or use in New York City of: beer; and. liquor containing more than 24% alcohol by volume.

Another example is South Carolina, where cigarettes are subject to a state excise tax of $0.57 per pack of 20. Cigarettes are also subject to South Carolina sales tax of approximately $0.29 per pack, which adds up to a total tax per pack of $0.86. Additionally, other tobacco products are subject to a state excise tax of 5% of the manufacturer's price as well as federal excise taxes. 

The price of all tobacco products sold in South Carolina also includes Federal Tobacco excise taxes, which are collected from the manufacturer by the Tobacco and Tobacco Tax and Trade Bureau and generally passed on to the consumer in the product's price. 

You may be eligible for a refund of sales or use tax if you are a business registered for sales tax and you overpaid sales or use tax, paid sales or use tax in error, or collected, reported, and remitted sales tax but then repaid it to your customers.  

If you are a business registered for sales tax, you may claim a credit against your sales tax due on your sales tax return. A credit will reduce the amount you owe.   

Form AU-11, Application for Credit or Refund of Sales or Use Tax, is the most commonly used refund form, MTRSNow is available to help you begin this process of Sales and Use Tax refund claim in New York state. 

Businesses can claim back sales tax back in South Carolina for Sales and Use tax.  

For Sales Tax transactions, the seller must request a refund. However, the purchaser may request a refund if the seller provides an assignment of refund rights. 

For Use Tax transactions, the purchaser must request a refund. However, the seller may request a refund if the purchaser provides an assignment of refund rights. No assignment is necessary when the seller establishes that they have paid the tax and refunded it to the purchaser.

Business filing the claim should provide the amounts of tax paid, by period, on their original return corresponding to this request, MTRSNow is available to help you begin this process of Sales and Use Tax refund claim in South Carolina.

In New York state, a business can generally claim a credit or refund that was filed within three years from the date a return is filed or two years from the date the tax was paid, whichever is later.

The general rule for a sales tax refund claim in South Carolina, is that the claim must be filed within three years of the time the timely filed return, including extensions, was filed, or two years from the date of payment, whichever is later. 

If no return was filed, a claim for refund must be filed within two years from the date of payment.