Who owed South Carolina sales tax on the requesting company's peer-to-peer vehicle rentals?

Plain-English summary

South Carolina Private Letter Ruling #20-2 holds that the requesting peer-to-peer vehicle-rental platform was a marketplace facilitator, retailer, and seller responsible for remitting sales tax on its short-term South Carolina rentals.

Third-party vehicle owners supplied listing information and chose the base rental fee. Renters searched and selected vehicles through the platform's website or mobile app. The platform approved the transaction, collected rental fees and other charges, and remitted receipts to the owner after withholding taxes and charges for its additional services.

That arrangement satisfied South Carolina's marketplace-facilitator definition because the company both allowed another person's products to be listed or advertised in an electronic marketplace and collected or processed purchaser payments. A sale includes a rental or lease, and gross proceeds include marketplace transactions involving property owned by others.

The Department therefore placed the sales-tax remittance responsibility on the platform for all described peer-to-peer rentals of 30 days or less in South Carolina.

What this means for you

Rental marketplaces

If the platform lists third-party vehicles and controls or processes payment, it can be the retailer for South Carolina sales-tax purposes even though it does not own the vehicles or set the base price.

Vehicle owners

Under this PLR's facts, the marketplace—not each third-party owner—was responsible for remitting the sales tax on platform rentals.

Tax and product teams

Map all renter charges, including insurance, protection plans, fuel, damage waivers, and optional services. This ruling establishes who remits the tax and that the rental is taxable; it points to separate Department guidance for determining which ancillary charges enter gross proceeds.

Common questions

Q: Did the platform qualify even if it received no compensation?
A: The marketplace-facilitator statute quoted in the ruling says qualification does not depend on receiving compensation or other consideration.

Q: Does an electronic marketplace count?
A: Yes. The statutory definition includes a website and similar electronic forums.

Q: Which entity is responsible when related entities operate the marketplace?
A: The quoted statute places responsibility on the entity that lists or allows the listing or advertising of the products sold through the marketplace.

Citations and references

• S.C. Code Ann. §§ 12-36-70 and 12-36-71 — retailer and marketplace facilitator
• S.C. Code Ann. §§ 12-36-90 and 12-36-100 — gross proceeds and rentals as sales
• S.C. Code Ann. § 12-36-910 — sales tax
• SC Revenue Ruling #19-6 — marketplace-facilitator guidance cited by the ruling
• SC Revenue Ruling #93-1 — motor-vehicle-rental gross-proceeds guidance cited by the ruling

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: PLR20-2.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC PRIVATE LETTER RULING #20-2

SUBJECT:

Peer-to-Peer Motor Vehicle Rentals Through a Marketplace Facilitator
(Sales Tax)

REFERENCES:

S.C. Code Ann. Section 12-36-70 (2014; Supp. 2019)
S.C. Code Ann. Section 12-36-71 (Supp. 2019)
S.C. Code Ann. Section 12-36-90 (2014; Supp. 2019)
S.C. Code Ann. Section 12-36-100 (2014)
S.C. Code Ann. Section 12-36-910 (2014)

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:

A Private Letter Ruling is an advisory opinion issued to a specific
taxpayer by the Department to apply principles of law to a specific set of
facts or a particular tax situation. It is the Department’s opinion limited to
the specific facts set forth, and is binding on agency personnel only with
respect to the person to whom it was issued and only until superseded or
modified by a change in statute, regulation, court decision, or another
Departmental advisory opinion, providing the representations made in the
request reflect an accurate statement of the material facts and the
transaction was carried out as proposed.

QUESTION
Are charges by ABC, for peer-to-peer, short-term vehicle rentals, as described in the facts,
subject to sales tax?

CONCLUSION
Charges by ABC, for peer-to-peer, short-term vehicle rentals, as described in the facts, are
subject to sales tax. ABC, as a marketplace facilitator, is a retailer and, therefore, responsible for
remitting the sales tax on all peer-to-peer, short-term motor vehicle rentals in South Carolina.

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For further information regarding charges by a motor vehicle rental company includable in the
“gross proceeds of sales,” such as fuel, insurance, and damage waivers, see SC Revenue Ruling

93-1, “Charges by Automobile Rental Operation.”

FACTS
ABC, a motor vehicle rental company, acting through itself and through its various affiliates,
plans to operate an online peer-to-peer, short-term motor vehicle rental program (30 days or less)
in South Carolina.
In ABC’s peer-to-peer rental program, third party owners and lessors of motor vehicles provide
listing information to ABC and set the base rental fee for their vehicles. Prospective renters view
available vehicles on ABC’s website or mobile application. Once a renter selects a vehicle, ABC
approves the transaction and collects rental fees and any other charges (e.g., taxes, insurance,
protection plans, and other optional services) from the renter. ABC remits the total receipts to the
third party vehicle owner or lessor, less charges for taxes and additional services provided by
ABC.

LAW AND DISCUSSION
Code Section 12-36-910 imposes the sales tax and reads, in part:
(A) A sales tax, equal to [six] 1 percent of the gross proceeds of sales, is imposed
upon every person engaged or continuing within this State in the business of
selling tangible personal property at retail.
Code Section 12-36-90 defines “gross proceeds of sales,” in part, as follows:
Gross proceeds of sales, or any similar term, means the value proceeding or
accruing from the sale, lease, or rental of tangible personal property.
(1) The term includes:
(a) the proceeds from the sale of property sold on consignment by the taxpayer,
including property sold through a marketplace by a marketplace facilitator;
(b) the proceeds from the sale of tangible personal property without any deduction
for:
(i) the cost of goods sold;
(ii) the cost of materials, labor, or service;

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See Code Section 12-36-1110 which increased the sales tax rate to 6% from 5%.

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(iii) interest paid;
(iv) losses;
(v) transportation costs;
(vi) manufacturers or importers excise taxes imposed by the United States; or
(vii) any other expenses;
Code Section 12-36-100 defines “sale”:
“Sale” and “purchase” mean any transfer, exchange, or barter, conditional or
otherwise, of tangible personal property for a consideration including:

(2) a rental, lease, or other form of agreement.
Code Section 12-36-70 defines “retailer” and “seller”:
“Retailer” and “seller” include every person:
(1)(a) selling or auctioning tangible personal property whether owned by the
person or others;

(2)(a) maintaining a place of business or qualifying to do business in this State; or

(3) operating as a marketplace facilitator, as defined in Section 12-36-71.
Code Section 12-36-71 defines “marketplace facilitator” as follows:
(A)(1) ‘Marketplace facilitator’ means any person engaged in the business of
facilitating a retail sale of tangible personal property by:
(a) listing or advertising, or allowing the listing or advertising of, the
products of another person in any marketplace where sales at retail occur;
and
(b) collecting or processing payments from the purchaser, either directly
or indirectly through an agreement or arrangement with a third party.

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(2) If a person meets the criteria set forth in item (1), then that person is a
marketplace facilitator regardless of whether the person receives
compensation or other consideration in exchange for his services.
(B) A marketplace may be physical or electronic and includes, but is not limited
to, any space, store, booth, catalog, website, television or radio broadcast, or
similar place, medium, or forum.
(C) For purposes of subsection (A), a marketplace facilitator includes any related
entities assisting the marketplace facilitator in sales, storage, distribution, payment
collection, or in any other manner, with respect to the marketplace.
(D) When a marketplace facilitator is comprised of multiple entities, the entity
that lists or advertises, or allows the listing or advertising of, the products sold at
retail in the marketplace is the entity responsible for remitting the sales and use
tax to the State.
Based on the above, ABC, as a marketplace facilitator, is a retailer and, therefore, responsible for
remitting the sales tax on all peer-to-peer, short-term motor vehicle rentals in South Carolina.
Charges by ABC, for peer-to-peer, short-term vehicle rentals, as described in the facts, are
subject to sales tax. For additional guidance concerning the tax obligations of a marketplace
facilitator, see SC Revenue Ruling #19-6, “Marketplace Facilitators and Third Parties Whose
Products are Sold Via a Marketplace – Guidance and Tax Obligations.”
For further information regarding charges by a motor vehicle rental company includable in the
“gross proceeds of sales,” such as fuel, insurance, and damage waivers, see SC Revenue Ruling

93-1, “Charges by Automobile Rental Operation.”

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
March 31
, 2020
Columbia, South Carolina

CAVEAT: This advisory opinion is issued to the taxpayer requesting it on the assumption
that the taxpayer’s facts and circumstances, as stated, are correct. If the facts and
circumstances given are not correct, or if they change, then the taxpayer requesting the
advisory opinion may not rely on it. If the taxpayer relies on this advisory opinion, and the
Department discovers, upon examination, that the facts and circumstances are different in
any material respect from the facts and circumstances given in this advisory opinion, then
the advisory opinion will not afford the taxpayer any protection. It should be noted that
subsequent to the publication of this advisory opinion, changes in a statute, a regulation, or
case law could void the advisory opinion.
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