Did PLR 97-1 require a golf-cart manufacturer to collect sales tax when selling carts and dedicated chargers to golf courses that rented the carts?

Plain-English summary

South Carolina Private Letter Ruling 97-1 treated a manufacturer's sale of electric golf carts and their dedicated battery chargers to a golf course or country club as a wholesale sale when the facility bought them to rent to patrons for a fee.

The charger was included in the cart's sales price, designed solely for that particular cart model, unable to charge other golf-cart or vehicle batteries, and not ordinarily sold separately. Although it was shelf-mounted rather than physically attached, the Department treated it as incidental to the golf cart in the wholesale transaction.

The ruling separated two transactions. The manufacturer's sale to a licensed retail facility for later rental was a sale for resale and was not taxed at that stage. The golf course or country club then acted as the retailer and owed sales tax on the total fee charged to rent the cart to a patron.

If the facility instead provided the carts to patrons at no charge, there was no later taxable rental. In that situation, the ruling said the manufacturer was liable for sales tax on its sale of the carts and chargers to the facility.

Common questions

Q: Did it matter that the charger was not attached to the cart? No under the stated facts. Its dedicated design, inclusion in the cart price, and necessity for operation made it incidental to the cart sale.

Q: Who owed tax when patrons paid to rent the carts? The golf course or country club owed tax on the total rental fee.

Q: What if patrons used the carts without a separate rental charge? The ruling treated the manufacturer's sale to the facility as taxable.

Q: Can another golf-cart seller rely on PLR 97-1? No. The ruling says only the taxpayer to whom it was issued may rely on it, only for the described transactions, and that it has no precedential value.

Citations and references

• S.C. Code Ann. § 12-36-910 (sales tax on retail sales)
• S.C. Code Ann. § 12-36-100 (sale includes rental)
• S.C. Code Ann. § 12-36-120 (wholesale sale to a licensed retailer for resale)
• SC Revenue Procedure #94-1 (cited authority for the private letter ruling)

Subject

Golf Carts with Electric Battery Chargers

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR97-1.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC PRIVATE LETTER RULING #97-1

TO:

ABC, Inc.

SUBJECT:

Golf Carts with Electric Battery Chargers
(Sales Tax)

REFERENCE:

S. C. Code Ann. Section 12-36-910 (Supp. 1996)
S. C. Code Ann. Section 12-36-100 (Supp. 1996)
S. C. Code Ann. Section 12-36-120 (Supp. 1996)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 1996)
SC Revenue Procedure #94-1

SCOPE:

A Private Letter Ruling is an official advisory opinion issued by the
Department of Revenue to a specific person.

NOTE:

Private Letter Ruling may only be relied upon by the person to whom it is
issued and only for the transaction or transactions to which it relates. A
Private Letter Ruling has no precedential value.

Question:
Is ABC, Inc. liable for sales tax on the sale of golf carts and electric battery chargers to golf
courses and country clubs for rental?
Conclusion:
ABC, Inc., is making a wholesale sale. An ABC golf cart cannot operate without a particular
volt ABC electric battery charger. The electric battery charger that is designed solely for
charging a particular model ABC golf cart is included in the sales price of the golf cart. The
electric battery charger cannot recharge other golf cart batteries and cannot recharge batteries
used in other types of vehicles or machinery. The electric battery charger is not sold separately
by ABC, Inc. Accordingly, ABC, Inc. is not liable for sales tax on sales of its golf carts sold
with an electric battery charger to golf courses or country clubs for rental to patrons for a fee.
The golf course or country club is liable for the sales tax upon rental of the golf carts for a fee.
ABC, Inc., is, however, liable for sales tax on sales of golf carts and electric battery chargers to
golf courses or country clubs who provide the golf carts to their patrons at no charge.

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Facts:
ABC, Inc., is a manufacturer and seller of electric golf carts. These carts are battery powered.
The battery must be recharged after every use with an electric charger. The charger is not
physically attached to the golf cart. The sales price of the golf cart includes the cost of the battery
charger.
The charger is not sold separately to customers (it may rarely be sold as a replacement for an
identical ABC charger which has been broken, lost, etc.) The charger is designed solely for
charging the particular model of ABC golf cart purchased. The electric golf cart cannot operate
without a battery charger. The electric battery charger cannot recharge other golf cart batteries
and cannot recharge batteries used in other types of vehicles or machinery. Because of the cart
design, most chargers are shelf mounted since they cannot be physically attached to the golf carts.
The majority of the golf carts are sold to golf courses and country clubs for rental to others for a
fee. Golf facilities store the ABC golf carts in a central location each evening for recharging. This
central facility is specially wired and ventilated to handle this function.
Discussion:
South Carolina imposes a 5% sales tax upon every person engaged in the business of selling
tangible personal property. The tax is a transactional tax imposed when there is a retail sale or
rental. It is imposed on the person selling or renting the tangible personal property, unless the
transaction is otherwise exempt or excluded.
Based upon the facts presented, there are two transactions taking place. The first transaction is
the sale of a golf cart (i.e., the cart and the electric battery charger) by ABC, Inc., to a golf course
or country club. The second transaction is the golf course or country club's rental of the golf cart
to patrons for a fee.
As explained above, the sales tax is imposed on the person selling or renting tangible personal
property at retail, unless the transaction is otherwise exempt or excluded. A sale at retail does not
include a wholesale sale. Code Section 12-36-120 provides for the meaning of the term
wholesale sale as a sale of "tangible personal property to licensed retail merchants...for resale...."
The term "sale" means any transfer of tangible personal property for a consideration - including a
rental. (See Code Section 12-36-100.) Accordingly, a golf cart sold by ABC, Inc., to a golf
course or country club for rental to a golf patron for a fee is a wholesale sale. The electric battery
charger included in the wholesale sale is incidental to the purchase of the golf cart. The
wholesale transaction is not subject to sales tax.
The subsequent rental of the golf cart to the golf patron for a fee is a separate transaction. In this
transaction, the golf course or country club is considered a retailer. The rental of the golf cart is a
"retail sale" subject to sales tax. The measure of the sales tax is 5% of the total rental fee.

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