Update as of June 5, 2025: The SCDOR has confirmed that the DME exemption will take effect on May 12, 2025, with no retroactive relief for sales between June 26, 2024, and May 11, 2025. Sales tax must still be collected and remitted for that period. The SCDOR’s information letter is expected by June/July 2025. Our SALT team is available to assist with amending sales tax returns for the collection period and accurately reporting sales tax on DME for May 2025 before the June 20 filing deadline.
If your business sells Durable Medical Equipment (DME) to customers in South Carolina, sales tax still applies—for now.
On June 26, 2024, the South Carolina Supreme Court struck down the state’s sales tax exemption for DME paid directly by Medicaid or Medicare. The Court ruled that limiting the exemption to entities with a principal place of business in South Carolina violated the Commerce Clause of the U.S. Constitution by favoring in-state businesses. As a result, all DME sellers, regardless of location, must collect and remit South Carolina sales tax.
A new amendment, effective May 12, 2025, removes the in-state location requirement. Businesses do not need a physical presence in South Carolina, but they do still need a valid SC retail license to remain compliant.
According to the SC Department of Revenue (SCDOR), vendors should continue collecting sales tax on DME until formal guidance is issued, which is anticipated by the end of June or July 2025. Out-of-state vendors may be eligible for refunds on sales tax collected and remitted prior to June 26, 2024, under South Carolina’s statute of limitations.
What This Means for You
- DME is currently taxable in South Carolina, regardless of payer.
- Medicaid/Medicare-paid DME will regain exempt status only once official guidance is released.
- Out-of-state vendors may qualify for refunds on sales tax collected before June 26, 2024.
Need help with filing refunds, registering for a retail license, or understanding how this affects your business? The Elliott Davis State and Local Tax (SALT) Team is in direct contact with the SCDOR and ready to assist. We’ll keep you updated as new guidance is released.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
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