Were textbooks sold to students by two accredited South Carolina vocational business colleges exempt from sales tax?

Plain-English summary

South Carolina Private Letter Ruling 90-5 exempted textbook sales to students by ABC Business College and GHI Business College.

The historical statute exempted textbooks used in elementary schools, high schools, and institutions of higher learning. The issue was whether the two vocational business colleges fit the last category.

The Commission concluded that they did. Both schools provided vocational education, including accounting, secretarial service, data processing, and nursing-assistance subjects, and both were accredited by an agency recognized by the United States Commissioner of Education.

The schools' facts

Subsidiaries of XYZ Corporation owned and operated ABC Business College and GHI Business College in South Carolina.

The schools:

• were primarily engaged in vocational training;
• taught the listed business, data-processing, and nursing-assistance subjects;
• were accredited by the Association of Independent Colleges and Schools; and
• sold textbooks to their students.

The ruling tied its conclusion to those specific facts.

Institution of higher learning

The statute did not define the broad phrase "institution of higher learning." The PLR relied on a South Carolina Attorney General opinion construing the word "institution" in the textbook exemption.

That opinion limited the term to institutions of the class or character commonly recognized as schools, including technical schools, colleges, and universities.

The ruling also discussed Simpson v. Jones Business College, where an accredited educational institution teaching business-law, accounting, and secretarial subjects qualified as an educational institution.

The two XYZ schools shared those school, curriculum, and accreditation characteristics.

The holding

ABC Business College and GHI Business College qualified as institutions of higher learning for the historical exemption.

Their sales of textbooks to students were therefore exempt from South Carolina sales tax under § 12-35-550(2).

The PLR did not state that every vocational program or book sale was exempt; its result depended on the schools and textbook use described in the request.

What this means for you

Historical school bookstore sales

For the two named colleges, student textbook sales qualified under the 1990 exemption.

Vocational and technical schools

The ruling focused on whether the seller was genuinely an educational institution, including its curriculum and recognized accreditation. Those facts should be documented when analyzing a similar legacy transaction.

Current schools

Do not rely on this PLR for current sales. Check today's textbook exemption, qualifying-school definitions, and required exemption records.

Common questions

Q: Were the schools traditional four-year universities?

A: No. They were vocational business colleges, but the Commission still treated them as institutions of higher learning on the stated facts.

Q: What facts supported the result?

A: Their school character, vocational curriculum, and accreditation by a recognized accrediting agency.

Q: Did the ruling exempt every item the schools sold?

A: No. It addressed textbooks sold to students.

Q: Can another school rely on this PLR?

A: No. Its scope says it applies only to the requesting taxpayer's facts and has no precedential value.

Citations and references

• S.C. Code Ann. § 12-35-510 — historical retail sales tax
• S.C. Code Ann. § 12-35-550(2) — historical exemption for textbooks used in schools and institutions of higher learning
• South Carolina Attorney General Opinion 78-182 (October 31, 1978) — institution definition discussed
• Simpson v. Jones Business College, 118 So.2d 779 (Fla. 1960) — educational-institution analysis discussed

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR90-5.pdf

Original ruling text

SC PRIVATE LETTER RULING #90-5

TO:

XYZ

SUBJECT:

Textbooks
(Sales Tax)

REFERENCE:

S.C. Code Ann. Section 12-35-510 (1976)
S.C. Code Ann. Section 12-35-550(2) (1976)

AUTHORITY:

S.C. Code Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Private Letter Ruling is a temporary document issued to a taxpayer, upon
request, and it applies only to the specific facts or circumstances related in the
request. Private Letter Rulings have no precedential value and are not
intended for general distribution.

Question:
Are sales of textbooks to students by ABC and GHI Business College exempt from sales tax,
pursuant to Code Section 12-35-550(2)?
Facts:
Subsidiaries of XYZ Corporation own and operate schools in this state, specifically, ABC
Business College and GHI Business College. These schools are primarily engaged in vocational
training, and subjects include: accounting, secretarial service, data processing and nursing
assistance. Each school is accredited by the Association of Independent Colleges and Schools,
which is recognized by the United States Commission of Education. Their operations include
the sale of textbooks to students.
Discussion:
Code Section 12-35-510 imposes "upon every person engaged or continuing within this State in
the business of selling at retail any tangible personal property whatsoever, an amount equal to
[five] percent of the gross proceeds of sales of the business."

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Code Section 12-35-550(2) exempts from the tax "[t]he gross proceeds of the sale of textbooks
used in elementary schools, high schools and institutions of higher learning." (emphasis added).
In order to determine whether sales of textbooks by XYZ's schools are exempt from the tax, a
determination must be made as to whether they qualify under the broad term of an "institution of
higher learning."
In Opinion of the Attorney General 78-182 (October 31, 1978), the definition of "institution" was
addressed. The Opinion states:
We are advised that the Tax Commission has allowed the exemption only for textbooks
used in schools, colleges and universities and other such institutions. The word
"institution" has been narrowly construed in this respect. . .
. . . The statute clearly exempts textbooks used in elementary and high schools. The
words "elementary and high schools" need no further construction as their meanings are
clear. The word "institution" however is a broader term. Under the above rules and the
rule of ejusdem generis, it should be construed to include only institutions of the class or
character commonly recognized as schools. This would include technical schools,
colleges and universities.
This definition is supported by Simpson v. Jones Business College, 118 So.2d 779 (1960). In
this case the Supreme Court of Florida found that a nonprofit corporation which operated an
educational institution developing learning and skill in the fields of business law, accounting and
secretarial capacities, offering courses that substantially paralleled those offered in public
educational institutions, some of which were accepted by the state Department of Education, and
which was accredited by an accrediting agency recognized as such by the United States
Commissioner of Education, qualified for exemption from taxation as an "educational
institution".
Conclusion:
Sales of textbooks to students by ABC Business College and GHI Business College are exempt
from sales tax, pursuant to Code Section 12-35-550(2).
SOUTH CAROLINA TAX COMMISSION
s/S. Hunter Howard Jr.
S. Hunter Howard, Jr., Chairman
s/A. Crawford Clarkson Jr.
A. Crawford Clarkson, Jr., Commissioner
Columbia, South Carolina
February 21,
1990

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