Powell: Wait for state tax refunds is about six weeks

February 12, 2019

For anyone wondering how long it will take to get a tax refund from the state of South Carolina, Hartley Powell provided an answer during the Rotary Club of Aiken meeting Monday at Newberry Hall.

The director of the S.C. Department of Revenue, who was the guest speaker, said to expect a wait of about six weeks.

The reason why is the growing problem of tax refund fraud.

“The IRS (Internal Revenue Service) expects refund fraud to hit $21 billion this year, up from $6.5 billion two years ago,” Powell said. “It’s a national epidemic.”

He then talked about what the Department of Revenue is trying to do to combat it.

“We are continuously fighting the tax refund fraud out there,” Powell said. “I’ve got outside vendors who come in to help us with refund fraud. We want to make sure that your tax refund is going to you and not somebody else. Even though people want their refunds immediately, I’ve got to hold them back to make sure we get it right.”

Powell also discussed an emerging issue, taxation of online retail sales.

“We conducted an audit on internet retailers,” he said. “And what did I find? I found that internet retailers were not collecting taxes on all their sales. They had suddenly decided that if they owned the product, they’d charge sales tax. But if they didn’t own the product and it came from a third party, they wouldn’t collect sales tax.”

One way the Department of Revenue is trying to change that is through the legal system.

“We’ve been in litigation with Amazon,” Powell said. “Am I proud of it? Absolutely not. But I am passionate about it. I absolutely am. I don’t think it’s right for Amazon to charge sales tax for products they own and not charge sales tax for products they don’t own. I think it’s an arbitrary line that tries to keep them competitive. But they’re making plenty of money, and I don’t think I’m asking for anything that is greedy.”

In addition, Powell is pushing the state legislature to make changes to modernize South Carolina’s sales tax laws.

“It’s called marketplace legislation,” he said. “I want to make sure that internet retailers truly are charging sales tax on all items.”

Powell reported that Arizona, Minnesota, Washington, New Jersey and North Dakota have enacted marketplace legislation.

“Amazon has agreed to collect it (sales tax) in all of those states,” Powell said. “But Amazon will not collect it until you either win in court or you enact legislation.”

Powell believes requiring online retailers to pay sales tax is important because not doing so penalizes brick-and-mortar stores.

“It’s important to maintain our brick-and-mortar stores here in the community,” he said. “We want to do everything we can to keep it a level, competitive playing field out there.”

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