SUBJECT:
Individual Income Tax Relief — Tax Year 2020 and
South Carolina Internal Revenue Code Tax Conformity Update
(Individual Income Taxes)
DATE:
March 31, 2021
AUTHORITY:
S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3
SCOPE:
An Information Letter is a written statement issued to the public to announce general information useful in complying with the laws administered by the Department. An Information Letter has no precedential value.
Part I — Individual Income Tax Relief for Tax Year 2020:
Internal Revenue Individual Income Tax Relief. On March 17 and 29, 2021, the Internal Revenue Service announced special individual income tax filing and payment relief for Form 1040 filers affected by the ongoing COVID-19 pandemic. The tax relief automatically extends until May 17, 2021 the following:
1. The due date for filing Federal individual income tax returns and income tax payments for the 2020 tax year that are originally due on April 15, 2021.
2. The time for affected taxpayers to make 2020 contributions to their individual retirement arrangements (IRAs and Roth IRAs), health savings accounts, Archer Medical Savings Accounts, and Coverdell education savings accounts.
3. The time for individuals with a period of limitations to file a claim for credit or refund of Federal income tax expiring on or after April 15, 2021, and before May 17, 2021 to file those claims for credit or refund. This postponement is limited to claims for credit or refund properly filed on the Form 1040 series or on a Form 1040-X.
Note: The Federal tax relief does not apply to:
1. Estimated tax payments that are due on April 15, 2021.
2. Businesses and any other type of taxpayer who file Federal income tax returns on forms outside of the Form 1040 series.
See Internal Revenue Service Information Release 2021-59 and Notice 2021-21 attached for more information.
South Carolina Department of Revenue Individual Income Tax Relief. In response to the tax relief provided by the Internal Revenue Service, the Department is providing the same tax filing and payment relief granted by the Internal Revenue Service for individual income tax returns originally due April 15, 2021.1
Accordingly, taxpayers will have until May 17, 2021 to perform the following:
1. File their 2020 South Carolina individual income tax returns (i.e., Form SC 1040 or SC 1040 composite individual income tax return2) and make South Carolina income tax payments in connection with these returns originally due on April 15, 2021, without penalties and interest, regardless of the amount owed.
Note: This relief is automatic. Individual taxpayers do not need to file any forms or call the Department to qualify for this South Carolina tax filing and payment relief.
2. Make a 2020 contribution to the South Carolina College Investment Program (commonly known as Future Scholar, South Carolina's 529 College Savings Plan)3 or rollover from another qualified 529 plan to the South Carolina College Investment Program,4 or make a 2020 contribution to individual retirement arrangements (IRAs and Roth IRAs) and health savings accounts as specified by the Internal Revenue Service.
3. File a claim for credit or refund of South Carolina individual income tax that was due to be filed on or after April 15, 2021, and before May 17, 2021.5
Note: The South Carolina tax relief does not apply to:
1. Estimated tax payments that are due on April 15, 2021.
2. Other South Carolina tax returns originally due April 15, 2021, including trust and estate returns filed on a SC 1041, C corporation returns filed on a SC 1120, and bank tax returns filed on a SC 1101B.
Additional Extension of Time to File Individual Income Tax Returns beyond May 17, 2021. Individual taxpayers who need additional time to file beyond the May 17, 2021 deadline can request an extension of time to file on or before May 17, 2021, which will be effective until October 15, 2021. The extension will not extend the time to pay South Carolina individual income tax beyond May 17, 2021.
If the taxpayer files an extension with the Internal Revenue Service, then the Department accepts the federal extension and will grant an automatic extension of time to file the South Carolina return. In such instance, a separate South Carolina extension (Form SC 4868, “Request for Extension of Time to File South Carolina Individual Income Tax Return”) needs to be filed only if the taxpayer is required to make a South Carolina tax payment with the extension.
Part II — South Carolina Internal Revenue Code Conformity Update and Individual Filing Information for Tax Year 2020:
South Carolina Internal Revenue Code Conformity. To date, South Carolina has conformed to the Internal Revenue Code as of December 31, 2019. During the 2020 Legislative Session, the General Assembly enacted Act No. 147 to amend Code Section 12-6-40(A)(1)(a) to conform to the Internal Revenue Code as of December 31, 2019, but did not adopt the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act).6 After the General Assembly adjourned in September 2020, Congress passed the Taxpayer Certainty and Disaster Tax Relief Act of 20207 and the American Rescue Plan Act of 20218 (which excludes from Federal taxable income the first $10,200 of unemployment compensation for those taxpayers with less than $150,000 in adjusted gross income)9.
Currently, the General Assembly is considering legislation to address Internal Revenue Code conformity for 2020 along with adoption of specific tax provisions enacted in March 2021 by Congress in the American Rescue Plan Act. If the General Assembly conforms to these Federal Acts in the 2021 Legislative Session, South Carolina would retroactively conform. The Department will issue updated guidance once the General Assembly finalizes its adoption of specific tax provisions. If you would like to receive notice of future Federal conformity or Policy updates, sign up on the Policy Division's web page at dor.sc.gov/policy/index.
FOOTNOTES
1Code Section 12-4-320(6).
2A composite return is filed on a “modified” Form SC 1040 and allows an S-corporation or partnership to compute and report the South Carolina income and tax attributable to two or more nonresident shareholders or partners on a single tax return. The taxpayer name, address, and identifying number used on the SC 1040 composite return should be the S-corporation's or partnership's. See Code Section 12-6-5030.
3South Carolina's 529 plan is administered by the State Treasurer's Office as provided for in Title 59, Chapter 2.
4See Code Sections 12-6-1140(11) and 59-2-80. Code Section 59-2-80(D) provides the tax deduction may be taken in any tax year for contributions and rollovers made during that tax year, and up to April 15th of the succeeding year, or the due date of a taxpayer's state income tax return excluding extensions, whichever is longer.
5See Code Section 12-54-85 for the statutory time limitation for filing claims for refunds and SC Revenue Ruling #13-1 for general rules for limitation on filing a claim for refund.
6Public Law 116-136, March 27, 2020.
7Public Law 116-260, Div. EE, December 27, 2020. This Act is part of the Consolidated Appropriations Act of 2021.
8Public Law 117-2, March 11, 2021.
9Currently, unemployment income is taxable for South Carolina income tax purposes. See Code Sections 12-6-50 and 41-39-40(A), and Internal Revenue Code Section 85(a).
END FOOTNOTES