The SC Department of Revenue has issued an advisory opinion to inform taxpayers that a proposed Treasury Regulation might have an impact on South Carolina taxpayers’ charitable contribution deductions where taxpayers receive or expect to receive a corresponding South Carolina income tax credit.

Information Letter 19-10 specifies four South Carolina tax credits that can be affected by the proposed regulation, including the Exceptional Needs Children’s Fund and the Industry Partnership Fund Credit.

Internal Revenue Code Section 170 allows a federal tax deduction for charitable contributions, including donations to a state. For charitable contributions made after Aug. 27, 2018, Proposed Treasury Regulation 1.170A-1(h)(3) provides for taxpayers who contribute to an entity listed in IRC Section 170(c), “the amount of the taxpayer’s charitable contribution deduction under IRC Section 170(a) is reduced by the amount of any state or local tax credit that the taxpayer receives or expects to receive in consideration for the taxpayer’s payment or transfer.”

The Information Letter includes an example of a charitable contribution to the South Carolina Conservation Credit to illustrate possible impacts in cases where Proposed Treasury Regulation 1.170A-1 is applied and is not applied.

The DOR also notes that the IRS’s legal interpretation on Proposed Treasury Regulation 1.170A-1 could apply even before the proposed regulation is final. The DOR urges state taxpayers to consult a tax professional on the application of Proposed Treasury Regulation 1.170A-1.

You can read the DOR’s four-page Information Letter 19-10 here.

If you have further questions, please contact the DOR’s policy division at

For an explanation of what the Industry Partnership Fund is and how it works, read this description that was written for SCACPA by the South Carolina Research Authority’s Director of Finance and Administration.