Did South Carolina charge a vehicle infrastructure fee when a rental company registered its fleet?

Plain-English summary

In 2021, the Attorney General concluded that South Carolina's DMV could collect an infrastructure maintenance fee when an owner or lessee first titled or registered a vehicle intended for short-term rentals. The fee followed the title or registration of a vehicle required to be registered; the owner's plan to rent it did not create an exemption.

The opinion distinguished the rental-company transaction from the customer's later rental. It read a Department of Revenue advisory opinion as saying a short-term customer did not owe the vehicle infrastructure fee on rental payments because that customer did not register the vehicle. That did not excuse the owner or lessee from the fee at initial titling or registration.

Currency note

This opinion was issued in 2021. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did a rental-car company owe the fee when it registered a new fleet vehicle?
A: The opinion said an owner or lessee of a vehicle required to be registered owed the fee at first titling or registration, even when it intended to use the vehicle for short-term rentals.

Q: Did a customer pay the infrastructure fee on each short-term rental?
A: The opinion said the customer did not register the vehicle and therefore did not owe that registration-related fee on the rental payment; it separately discussed sales tax on rental payments.

Q: Did the vehicle's rental use change whether the DMV could collect the fee?
A: No. The office said the decisive event was initial titling or registration of a required-to-register vehicle, not its later rental use.

Background and statutory framework

The opinion reviewed South Carolina's vehicle registration rule and exemptions, including S.C. Code Ann. § 56-3-120. It then applied S.C. Code Ann. § 56-3-627, which imposed the infrastructure maintenance fee upon first titling or registering a covered vehicle. It reconciled that owner-level fee with a revenue ruling addressing taxes on a customer's short-term rental payment.

Citations and references

The official PDF quotes S.C. Code Ann. § 56-3-627 and S.C. Code Ann. § 56-3-120 and discusses the Department of Revenue advisory ruling on short-term rentals.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/whether-the-sc-dmv-can-collect-infrastructure-maintenance-fees-from-entities-that-title-or-register-vehicles-with-the-intent-of-using-them-for-short-term-rentals/
• Original PDF: https://www.scag.gov/media/1ifhistv/02730071.pdf

Original opinion text

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Alan Wilson
ATTORNEY GENERAL

September 30, 2021

Mr. Kevin A. Shwedo, Executive Director

South Carolina Department of Motor Vehicles
PO Box 1498
Blythewood, SC 29016
Dear Mr. Shwedo:

You have requested an opinion from this Office regarding whether the South Carolina Department of Motor Vehicles ("DMV") can collect infrastructure maintenance fees from

entities that title or register vehicles in South Carolina with the intent of using them for shortterm rentals. LAW/ANALYSIS

To provide some background, motor vehicles utilizing the highways in South Carolina are required to be registered and licensed: Every motor vehicle, trailer, semitrailer, pole trailer and special mobile equipment vehicle driven, operated or moved upon a

highway1

in this State shall be registered and licensed in

accordance with the provisions of this chapter. It shall be a misdemeanor for any person to drive, operate or move upon a highway or for the owner knowingly to permit to be driven, operated or moved upon a highway any such vehicle which is not registered and licensed and the required fee paid as provided for in this chapter.

S.C. Code Ann. § 56-3-1 10 (1976 Code, as amended) (emphasis added). However, some motor vehicles are exempt from registration and licensing:

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Street' or 'highway' means the entire width between boundary lines of every way publicly maintained when any part of it is open to the use of the public for vehicular travel." S.C. Code Ann. § 56-3-20 (1976 Code, as amended).

REMBERTC. DENNIS BUILDING

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POST OFFICE 30X 1 1 549

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COLUMBIA, SC 2921 1- 1 549

• TELEPHONE 803-734-3970

•

FACSIMILE 803-253-6283

Mr. Kevin A. Shwedo
Page 2

September 30, 2021

(1) a vehicle driven, operated, or moved upon a highway pursuant to the provisions of this chapter relating to nonresidents or under temporary permits issued by the department as authorized; (2) any implement of husbandry, including a knuckleboom loader

mounted on a trailer or straight truck, whether of a type otherwise subject to registration and license which only incidentally is operated or moved upon a highway; (3) a special mobile equipment vehicle which only occasionally is

moved over a highway and special mobile equipment vehicle of the State or its departments, agencies, or political subdivisions; (4) a vehicle owned and operated by the government of the United States; and (5) a trailer or semitrailer commonly used in combination with a large commercial motor vehicle, as defined in Section 12-37-2810,

for which trailer or semitrailer the fee imposed pursuant to Section 12-37-2860 is paid and applicable registration requirements provided pursuant to Article 23, Chapter 37, Title 12, are met, and

a distinctive permanent plate has been issued pursuant to Section 12-37-2860. (6) firefighting vehicles that are publicly owned by the state or a county, municipality, or special purpose district . . .

S.C. Code Ann. § 56-3-120 (1976 Code, as amended).
DMV "may register and license vehicles .... upon application being made therefor by the owner

and the required fees paid . . ." S.C. Code Ann. § 56-3-190 (1976 Code, as amended) (emphasis added). The owner of a motor vehicle required to be registered and licensed in this State must pay registration and license fees when registering and licensing the vehicle and biennially after that. See S.C. Code Ann. § 56-3-610 (1976 Code, as amended). In addition to registration and license fees, the owner or lessee of a motor vehicle required to be registered is initially responsible for paying an infrastructure maintenance fee: (A) In order to account for the necessary road maintenance caused by each item traversing the roads of this State, in addition to the registration fees imposed by this chapter, the owner or lessee of

each vehicle or other item that is required to be registered pursuant to this chapter must oav an infrastructure maintenance fee upon first titling or registering the vehicle or other item. Also, the owner

Mr. Kevin A. Shwedo
Page 3

September 30, 2021

or lessee of each trailer or semitrailer must pay the fee upon first titling or registering the trailer or semitrailer. The Department of Motor Vehicles may not issue a title or registration until the infrastructure maintenance fee has been collected .... (B) If upon purchasing or leasing the item from a dealer, the owner or lessee first registers the item in this State, then the fee equals

five percent, not to exceed five hundred dollars, of the gross proceeds of sales, or sales price, as those terms are defined in Chapter 36, Title 12. If the dealer holds a South Carolina retail license or offers to license, title, or register the item, then the dealer must collect the fee and remit it to the Department of Motor Vehicles. If the dealer does not license, title, or register the item, the customer must pay the infrastructure maintenance fee to the

department when titling or registering the vehicle.
(C)(1) If upon purchasing or leasing the item from a person other than a dealer, the owner or lessee first registers the item in this State, then the fee equals five percent, not to exceed five hundred dollars, of the fair market value of the item. If the lessee purchases the vehicle he originally leased and the registrant of the vehicle

remains

the

same,

the person
infrastructure maintenance fee.

does

not

owe

an

additional

(2) Excluded from the fee imposed pursuant to this subsection are:

(a) items transferred:
(i) to members of the immediate
family;
(ii)

to

a

legal

heir,

legatee,

or

distributee;
(iii)

from

partnership

an

individual

upon

formation

to

a

of a

partnership, or from a stockholder to

a corporation upon formation of a
corporation;
(iv) to a licensed motor vehicle or

motorcycle dealer for the purpose of
resale;

Mr. Kevin A. Shwedo
Page 4
September 30, 2021

(v) to a financial institution for the
purpose of resale;
(vi) as a result of repossession to any
other secured party, for the purpose
of resale;
(vii) to an insurer for the purpose of
applying for a salvage title;
(b) the fair market value of an item transferred to
the seller or secured party in partial payment;
(c) gross proceeds of transfers of items specifically
exempted by Section 12-36-2120 from the sales or
use tax;

(d) items where a sales or use tax has been paid on

the transaction necessitating the transfer ....
(D)(1) If upon purchasing or leasing the item, the owner or lessee first titles or registers the item in another state, and subsequently registers the item in this State, then the fee equals two hundred fifty dollars. (2) This subsection does not apply if the owner or lessee of the item is serving on active duty in the Armed Forces of the United States. The exclusion allowed by this item also extends to items

owned by the spouse or dependent of a person serving on active duty in the Armed Forces of the United States .... (H) Notwithstanding any other provision of this section, any transaction exempt pursuant to Section 12-36-2120(25), is also

exempt from the infrastructure maintenance fee.2
S.C. Code Ann. § 56-3-627 (1976 Code, as amended) (emphasis added).

2 According to S.C. Code Ann. § 12-36-2120(25) (1976 Code, as amended), "motor vehicles (excluding trucks) or motorcycles, which are required to be licensed to be used on the highways, sold to a resident of another state, but who is located in South Carolina by reason of orders of the United States Armed Forces . . ." are exempt from sales tax.

Mr. Kevin A. Shwedo
Page 5

September 30, 2021

In our opinion, DMV can collect infrastructure maintenance fees from owners and lessees of motor vehicles that are titled or registered in South Carolina for use as short-term rentals.

Pursuant to the plain language3 of the statutes discussed above, motor vehicles that utilize the highways of this State are required to be registered and licensed, and motor vehicles used as short-term rentals are not exempt. Therefore, owners and lessees of short-term rentals must pay the required fees, which include registration and license fees and an infrastructure maintenance fee.

Like any other vehicle that is required to be registered, a title or registration will not be

issued for a short-term rental until the infrastructure maintenance fee has been paid. Additionally, the use of a vehicle, such as for rental purposes, appears to be irrelevant to payment of an infrastructure maintenance fee. The language of section 56-3-627 plainly requires the owner or lessee of a vehicle that is required to be registered to pay an infrastructure maintenance fee when first titling or registering the vehicle.

The statute does not account for
short-term rentals of motor vehicles. Furthermore, an infrastructure maintenance fee is imposed under three circumstances: purchases or leases from a dealer, purchases or leases from a person other than a dealer, and purchased or leased vehicles which were first registered out-of-state and later registered in South Carolina by the same owner.

This shows that the initial titling or

registration of a vehicle that has been purchased or leased, and not its use for rental purposes, is

significant when it comes to payment of an infrastructure maintenance fee. Finally, the purpose of the infrastructure maintenance fee is to "account for the necessary road

maintenance caused by each item traversing the roads of this State." S.C. Code Ann. § 56-3-627 (emphasis added).

All of these factors indicate that infrastructure maintenance fees can be

collected from owners and lessees of motor vehicles used as short-term rentals. You draw our attention to an advisory opinion of the South Carolina Department of Revenue ("DOR"), SC Revenue Ruling #18-1, in which DOR discussed whether an infrastructure maintenance fee or a sales and use tax applied to the sale or purchase of a vehicle. DOR stated that the general rule was:

3 In Op. S.C. Attv. Gen.. 2013 WL 5494616 (September 18, 2013), we stated: "[t]he cardinal rule of statutory construction is to ascertain and effectuate the intent of the legislature." Hodges v. Rainev. 341 S.C. 79, 86, 533 S.E.2d 578,

581 (2000). "[Courts] will give words their plain and ordinary meaning, and will not resort to a subtle or forced construction that would limit or expand the statute's operation." Harris v. Anderson County Sheriffs Office. 381 S.C. 357, 362, 673 S.E.2d 423, 425 (2009). "If a statute's language is plain, unambiguous, and conveys a clear meaning, then the rules of statutory interpretation are not needed and a court has no right to impose another meaning." Strickland v. Strickland. 375 S.C. 76, 85, 650 S.E.2d 465, 472 (2007) . . .

Mr. Kevin A. Shwedo
Page 6
September 30, 2021

If the vehicle is required to be registered under Chapter 3 of Title 56 and is registered with the SCDMV, the infrastructure maintenance fee applies and is remitted to the SCDMV. The sale or purchase of a vehicle that is subject to the infrastructure maintenance fee is exempt from state and local sales and use taxes

Id.

In the advisory opinion, DOR was asked if short-term rentals (e.g., daily, weekly) of motor vehicles were subject to the sales tax. DOR responded: Yes. The exemption for sales of motor vehicles subject to an IMF upon registration of the motor vehicle at the SCDMV does not apply since short-term rentals are not registered by the customer

and therefore are not subject to an IMF.
For example, if a person rents a motor vehicle for a week while in South Carolina on business, or a person rents a motor vehicle to move furniture from one location to another, then the rental payments are subject to the sales tax and not subject to the IMF. Id (emphasis added).

We believe that DOR's advisory opinion does not contradict our conclusion. The advisory opinion determines that customers of short-term rentals do not pay infrastructure maintenance fees, because they do not register the vehicles.

It does not prohibit owners and lessees from

paying infrastructure maintenance fees when registering or titling motor vehicles that will be used as short-term rentals. CONCLUSION

It is our opinion that DMV can collect infrastructure maintenance fees from owners and lessees of motor vehicles that are titled or registered in South Carolina for use as short-term rentals. Motor vehicles that utilize the highways of this State are required to be registered and licensed, and motor vehicles used as short-term rentals are not exempt. See S.C. Code Ann. §§ 56-3-1 10, 56-3-120. The initial titling or registration of a vehicle that has been purchased or leased, and not its use for rental purposes, is significant when it comes to payment of an infrastructure

maintenance fee. See S.C. Code Ann. § 56-3-627. Finally, the purpose of the infrastructure maintenance fee is to "account for the necessary road maintenance caused by each item traversing the roads of this State." Id (emphasis added).

Mr. Kevin A. Shwedo
Page 7

September 30, 2021

Sincerely,

s

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Elinor V. Lister
Assistant Attorney General

REVIEWED AND APPROVED BY:

/

Robert D. Cook

Solicitor General

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