The following guidelines provide background information on the most common types of filings and the related exemptions in South Carolina.
This state has a narrow religious exemption for groups that are exempt from filing the IRS Form 990, such as churches. For these groups, the exemption is automatic. Depending on their activities in this state, other religious organizations, not exempt from the IRS Form 990 requirement, may need to complete a charitable registration, despite their religious identity. More information about charitable registration and exemption is available on the South Carolina Secretary of State’s website.
In this state, registration is required before conducting any solicitation activity. However, organizations that do not expect to fundraise more than $7,500 during a calendar year do not need to register. The statute does not specify whether the $7,500 maximum applies to total contributions in South Carolina or total contributions from all sources.
In this state, organizations that are required to register have the option of registering through the Unified Registration Statement, which is a standardized charitable registration accepted in many states. Using the URS, rather than a state-specific registration form, has pros and cons. The URS typically must be submitted by mail.
South Carolina has an online filing system, and it may be more efficient to use that system, rather than complete and mail the URS manually. Additionally, information from state-specific initial online registration can be used to auto-populate annual reports, saving an organization time in the future.
Note that this jurisdiction requires organizations incorporated in other states to appoint an in-state registered agent. This can be done through a commercial service or by appointing a person or entity who is a supporter of your organization and a resident of the state.
This state does not require organizations to post specific language when conducting charitable solicitations.
Depending on the type and volume of activities an organization has in this state, the organization may also need to register as an out-of-state business (sometimes called a “foreign business”) with the secretary of state or another state agency.
These foreign business registration requirements are separate from the charitable registration. Not every out-of-state organization needs to register. An attorney can assist the organization in determining whether its connections with this state are significant enough to trigger the foreign business registration requirement.
Examples of activities that might trigger this requirement include having employees physically located in the state, conducting programs in the state, and having an office in the state.
In this state, organizations that have received recognition of federal income tax exemption under IRC Sec. 501(c)(3) are automatically exempt from state income tax. Some organizations may choose to send a copy of their IRS determination letter to the state department of revenue to indicate the organization’s position that it qualifies for the exemption. Although an organization may be exempt, if it has unrelated business taxable income (UBTI) that is subject to federal taxation, that UBTI will be subject to South Carolina’s income tax. See S.C. Code § 12-6-540. For more information, see Accord Palmetto Kids First Scholarship Program v. S.C. Dept. of Rev., Docket No. 14-ALJ- 17-0591IJ, 2015 WL 2159509 (S.C. ALC Apr. 30, 2015).
It is also important to consider whether applying for sales and use tax and property tax exemptions would be appropriate for your organization. More information about state sales, use, and property tax and exemptions, including links to the exemption application form, is available on the South Carolina Department of Revenue Website. An accountant or attorney can provide answers to specific questions about your organization’s eligibility.
Special Note: Although an organization may be exempt, if it has unrelated business taxable income (UBTI) that is subject to federal taxation, that UBTI will be subject to South Carolina’s income tax. S.C. Code § 12-6-540. For more information, see Accord Palmetto Kids First Scholarship Program v. S.C. Dept. of Rev., Docket No. 14-ALJ- 17-0591IJ, 2015 WL 2159509 (S.C. ALC Apr. 30, 2015).
Information on Starting a Business in South Carolina: https://businessfilings.sc.gov/BusinessFiling/Home/-DownloadForms?pdfCategoryId=1&category=Starting%20a%20Business%20in%20South%20Carolina
Online Registration: https://sos.sc.gov/online-filings/charities-pfrs-and- raffles/charities
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