Which communications and online services did South Carolina treat as taxable under RR 04-15?

Plain-English summary

South Carolina Revenue Ruling #04-15 was the Department's 2004 catalog of taxable and nontaxable communication services.

Its general rule treated charges for access to or use of a system transmitting voice or messages as taxable. The taxable list included most telephone service, teleconferencing, paging, answering service, cable and satellite programming, fax, voicemail, email, certain tax-return electronic filing, and access to an individual website or database, including application-service-provider offerings.

The ruling distinguished general Internet access from access to a particular online product. Although it characterized ISP Internet access as a communication service, it said the Department would not impose tax because of the federal moratorium and its administrative history. A third party's charge to access its own website or database remained taxable.

Nontaxable categories included specified telephone and telegraph charges, ATM communications, qualifying data processing, cooperative-member databases, tax-return e-filing by the preparer, and certain electronic burglary and fire monitoring. An unitemized bundle could pull a nontaxable component into the tax base unless the provider could reasonably identify it from ordinary business records.

RR 06-8 expressly superseded this ruling, and RR 17-2 later superseded RR 06-8.

What this means for you

Online-service providers

The ruling did not equate every Internet-delivered service with Internet access. Access to a seller's specific website, database, or hosted application could be taxable.

Telecommunications and media providers

Service classification, statutory exemptions, sourcing, and itemization all mattered. The ruling separately addressed prepaid wireless and 900/976 services.

Tax professionals

Use this page only for the historical development of South Carolina's communications-tax doctrine. Later rulings replaced and modified the service catalog.

Common questions

Q: Did RR 04-15 tax access to an individual website or database?
A: Yes. It treated those charges as taxable database access transmissions unless a specific exclusion applied.

Q: Did it tax an ISP's general Internet-access charge?
A: No in practice. The ruling said the Department would not impose the tax under the federal moratorium and its administrative policy.

Q: Were data-processing charges taxable?
A: Not when they met the statutory definition involving manipulation of customer-furnished information.

Q: Is RR 04-15 current?
A: No. RR 06-8 expressly superseded it, and RR 17-2 later superseded RR 06-8.

Citations and references

• S.C. Code Ann. §§ 12-36-910(B)(3) and 12-36-1310(B)(3) — transmission of voice or messages
• S.C. Code Ann. § 12-36-60 — communications and cooperative databases
• S.C. Code Ann. § 12-36-910(C) — data-processing exclusion
• S.C. Code Ann. § 12-36-2120(11) — specified communication exemptions
• S.C. Code Ann. §§ 12-36-910(B)(5) and 12-36-2645 — prepaid wireless and 900/976 service
• SC Revenue Ruling 06-8 — expressly superseded RR 04-15
• SC Revenue Ruling 16-5 — later modified RR 06-8 for streaming
• SC Revenue Ruling 17-2 — expressly superseded RR 06-8

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR04-15.pdf
• Official superseding RR 06-8 PDF: RR06-8.pdf
• Official modifying RR 16-5 PDF: RR16-5.pdf
• Official later RR 17-2 PDF: RR17-2.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214
Website Address: http://www.sctax.org

SC REVENUE RULING #04-15

SUBJECT:

Communications – Ways or Means for the Transmission of the Voice or
Messages and Other Communications
(Sales & Use Tax)

EFFECTIVE DATE: Applies to all periods open under the statute.
SUPERSEDES:

All previous advisory opinions and any oral directives in conflict
herewith.

REFERENCES:

Chapter 36 of Title 12 (2000 and Supp. 2003)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2000)
S. C. Code Ann. Section 1-23-10(4) (Supp. 2003)
SC Revenue Procedure #03-1

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public and
to Department personnel. It is a written statement issued to apply
principles of tax law to a specific set of facts or a general category of
taxpayers. A Revenue Ruling does not have the force or effect of law, and
is not binding on the public. It is, however, the Department’s position and
is binding on agency personnel until superseded or modified by a change
in statute, regulation, court decision, or advisory opinion.

INTRODUCTION:
The purpose of this advisory opinion is to provide a comprehensive discussion of the application
of the sales and use tax to the wide variety of communication services available to individual
consumers and to businesses. The opinion will “summarize” longstanding Department opinion
concerning the taxability of various communication services and will attempt to list as many
communication services as possible that the Department has held in the past as subject to the tax,
whether through formal advisory opinions, audits or informal advice provided to taxpayers.
Communication technology is expanding every day. As such, new and emerging technologies
will make available to consumers many new communication services in the future. The
Department will review such communication services on a case-by-case basis, whether through
formal advisory opinions, audit or informal advice provided to taxpayers requesting such advice.

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Note: Charges for the ways or means for the transmission of the voice or messages are
subject to the sales and use tax under Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3).)
Charges by an Internet Service Provider (“ISP”) that allow a customer to access the
Internet (“Internet Access”) are charges for the ways and means for the transmission of the
voice or messages. However, as discussed below, the Department has not imposed the sales
and use tax on Internet Access.
In 1998 Congress established a tax moratorium in the Internet Tax Freedom Act The
moratorium was later extended in the Internet Nondiscrimination Act. The moratorium
prohibited the taxation of Internet Access, unless the tax was generally imposed and
actually enforced prior to October 1, 1998. Although a few taxpayers were paying sales and
use tax on Internet Access, the Department reviewed its enforcement of the tax with respect
to Internet Access and determined in 1998 that it had not issued an advisory opinion
specifically stating that charges for Internet Access were taxable, and did not have an audit
policy to enforce the assessment and collection of the tax on Internet Access. Therefore, the
Department determined that the imposition of the sales and use tax was not grandfathered
under the Congressional moratorium and therefore it could not tax Internet Access. Since
charges to access or use an individual database, such as website, did not constitute an
access to the Internet, the Department held that these charges did not come within the
moratorium and were subject to the tax. In addition, charges to access or use an individual
database, such as website, were previously held subject to the tax in SC Revenue Ruling

89-14 as a “database access transmission.”

Even though the moratorium has expired, Congress is working on legislation to extend, or
make permanent, the moratorium on the taxation of Internet Access. In addition, the
combination of past Department policies and the Congressional moratorium has created
the equivalent of a longstanding administrative policy not to impose the sales and use tax
on Internet Access. Therefore, the Department will not, at this time, impose the sales and
use tax upon Internet Access and will only impose the sales and use tax prospectively on
Internet Access if Congress does not re-enact the moratorium and the General Assembly
enacts legislation or approves a regulation to impose the sales and use tax upon Internet
Access. However, charges by a third party to access or use that third party’s individual
website will continue to be subject to the sales and use tax (e.g. monthly charges to access a
sports website).
LAW AND DISCUSSION:
Code Section 12-36-910(A) states:
A sales tax, equal to five 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. (Emphasis added.)
Code Section 12-36-1310(A) reads:
A use tax is imposed on the storage, use, or other consumption in this State of tangible
personal property purchased at retail for storage, use, or other consumption in this State,

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at the rate of five percent of the sales price of the property, regardless of whether the
retailer is or is not engaged in business in this State. (Emphasis added.)
Code Section 12-36-60 defines the term "tangible personal property" to mean:
...personal property which may be seen, weighed, measured, felt, touched, or
which is in any other manner perceptible to the senses. It also includes services
and intangibles, including communications, laundry and related services,
furnishing of accommodations and sales of electricity, the sale or use of which is
subject to tax under this chapter and does not include stocks, notes, bonds,
mortgages, or other evidences of debt. … (Emphasis added).
Therefore, the term tangible personal property includes the sale or use of intangibles, including
communications, that are subject to South Carolina sales or use taxes under Chapter 36 of Title
12.
Communications are subject to sales and use taxes under Chapter 36 of Title 12 pursuant to Code
Sections 12-36-910(B)(3) and 12-36-1310(B)(3), which impose the tax on the:
gross proceeds accruing or proceeding from the charges for the ways or means for the
transmission of the voice or messages, including the charges for use of equipment
furnished by the seller or supplier of the ways or means for the transmission of the voice
or messages. Gross proceeds from the sale of prepaid wireless calling arrangements
subject to tax at retail pursuant to item (5) of this subsection are not subject to tax
pursuant to this item. Effective for bills rendered after August 1, 2002, charges for mobile
telecommunications services subject to the tax under this item must be sourced in
accordance with the Mobile Telecommunications Sourcing Act as provided in Title 4 of
the United States Code. The term “charges for mobile telecommunications services” is
defined for purposes of this section the same as it is defined in the Mobile
Telecommunications Sourcing Act. All other definitions and provisions of the Mobile
Telecommunications Sourcing Act as provided in Title 4 of the United States Code are
adopted; (Emphasis added.)
Furthermore, Code Section 12-36-910(B)(3), pursuant to Act 69 of 2003, addresses the taxation
of “bundled transactions.” A “bundled transaction” is “a transaction consisting of distinct and
identifiable properties or services, which are sold for one nonitemized price but which are treated
differently for [sales] tax purposes.” Under the amendment, for customer bills that include
telecommunications services in a bundled transaction, where the nonitemized price is attributable
to properties or services that are taxable and nontaxable, the portion of the price attributable to
any nontaxable property or service is subject to tax unless the provider can reasonably identify
that portion from its books and records kept in the regular course of business for purposes other
than sales taxes. This amendment concerning “bundled transactions” is effective for bills
rendered on or after January 1, 2004.
The Code does not provide definitions for various terms or phrases found in Code Sections
12-36-910(B)(3) and 12-36-1310(B)(3); therefore, it is necessary to determine their "ordinary
and popular meaning." The Department, in interpreting Code Sections 12-36-910(B)(3) and 12-

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36-1310(B)(3) (and their predecessors), has long used the definitions found in the Second
College Edition of the American Heritage Dictionary for defining these terms and phrases.
The Second College Edition of the American Heritage Dictionary provides the following
definitions:
"Gross"

• Exclusive of deductions; total

"Proceeds"

• The amount of money derived from a commercial
  or fund-raising venture; yield

"Way"

• A manner of doing something

"Means"

• A method, course of action, or instrument by which
  an act can be accomplished or some end achieved.

"Transmission"

• The act or process of transmitting; The state of being
  transmitted; Something transmitted, as a voice or
  message

"Transmit"

• Electronics: To send (a signal) as by wire or radio

Substituting the definitions in the Second College Edition of the American Heritage Dictionary
for terms found in Sections 12-36-910(B)(3) and 12-36-1310(B)(3), the literal meaning becomes

• the total amount of money derived, exclusive of deductions, from a commercial venture and
  accruing or proceeding from charges for the manner, method or instruments for sending a signal
  of the voice or of messages is subject to the sales and use tax. See SC Revenue Ruling #89-14.
  Furthermore, the definition of tangible personal property, as defined in Code Section 12-36-60,
  includes services and intangibles "the sale or use of which is subject to tax under [Chapter 36],”
  such as "communications." The Second College Edition of the American Heritage Dictionary
  defines "communication,” in part, as "[t]he exchange of thoughts, messages or information, as by
  speech, signals or writing." "Communications" is defined, in part, as, "a means of
  communicating esp.: a system of sending and receiving messages, such as mail, telephone and
  television." As with the above definitions, the Department has long used the definition found in
  the Second College Edition of the American Heritage Dictionary for the term “communications.”
  Based on the above discussion, it is the Department’s position that charges for the ways or means
  of communication include charges for access to, or use of, a communication system (the manner,
  method or instruments for sending or receiving a signal of the voice or of messages), whether
  this charge is based on a fee per a specific time period or per transmission. This is further
  supported by the definition of the terms "sale" and "purchase," which are defined in Code
  Section 12-36-100 to include "a license to use or consume."
  The Department of Revenue has taxed communication services such as telephone services,
  paging services, answering services, cable television services, satellite programming services,
  fax transmission services, voice mail messaging services, e-mail services, and database access

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transmission services (on-line information services), such as legal research services, credit
reporting/research services, and charges to access an individual website.
In SC Revenue Ruling #89-14, the Department defined several of these services as follows:
Facsimile:
Process of transmitting exact copies of written, printed and pictorial material over
telephone lines (or optical fiber cables). Images are converted by photoelectric cells,
which read the amount of light reflected from or transmitted through a document, into
electric signals, which are sent through the transmission network. Signals are picked up
by a facsimile receiver, which reproduces the original document by the reverse process.
Database Access Transmission:
Transmission of computer database information and programs by and through a modem
and telephone lines, whether automatically transmitted or transmitted as a result of a
subscriber accessing a computer. Charges may be based on the amount of time the
transmission is utilized.
Electronic Mail:
Messages that are transmitted from computer to computer over telephone lines under the
direction of an intermediate service. This service is a "host" computer that receives
messages, holds them and sends them to the proper destination. Users need a
microcomputer, or any computer, a modem, a printer, a telephone line and an electronic
mail service.
Credit Reporting:
Transmission of credit data using electronic means and/or computers, communication
networks, CRT's and printers.
Voice Messaging:
Process of recording messages for a particular person or firm into a central computer
database and activating the message to that person or firm when the computer is accessed
for the messages.
All of these communication services and others currently taxed by the Department of Revenue
constitute communication systems that the purchaser pays to access or use. (See Commission
Decision #89-77 and SC Revenue Ruling #89-14.)
The statute provides several exemptions and exclusions for the charges taxed under Sections
12-36-910(B)(3) and 12-36-1310(B)(3).

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Code Section 12-36-2120(11) exempts:
(a) toll charges for the transmission of voice or messages between telephone exchanges;
(b) charges for telegraph messages;
(c) carrier access charges and customers access line charges established by the Federal
Communications Commission or the South Carolina Public Service Commission; and
(d) transactions involving automatic teller machines;
Code Section 12-36-60, the definition of “tangible personal property” which by statute includes
communications, states in part:
Tangible personal property does not include the transmission of computer database
information by a cooperative service when the database information has been assembled
by and for the exclusive use of the members of the cooperative service. (Emphasis
added.)
Code Section 12-36-910(C) states:
Notwithstanding any other provisions of this article or Article 13, Chapter 36 of this title,
the sales or use tax imposed by those articles does not apply to the gross proceeds
accruing or proceeding from charges for or use of data processing. As used in this
subsection, “data processing” means the manipulation of information furnished by a
customer through all or part of a series of operations involving an interaction of
procedures, processes, methods, personnel, and computers. It also means the electronic
transfer of or access to that information. Examples of the processing include, without
limitation, summarizing, computing, extracting, storing, retrieving, sorting, sequencing,
and the use of computers. (Emphasis added.)
Code Section 12-36-2120(3) exempts from the tax:
(a) textbooks, books, magazines, periodicals, newspapers, and access to on-line
information systems used in a course of study in primary and secondary schools and
institutions of higher learning or for students’ use in the school library of these schools
and institutions;
(b) books, magazines, periodicals, newspapers, and access to on-line information systems
sold to publicly supported state, county, or regional libraries;
Items in this category may be in any form, including microfilm, microfiche, and
CD ROM; however, transactions subject to tax under Sections 12-36-910(B)(3)
and 12-36-1310(B)(3) do not fall within this exemption; (Emphasis added.)
It should be noted that the above exemptions also provide further support that “database access
transmissions” are subject to the tax since the above exemptions for on-line information systems,
the transmission of computer database information by a cooperative service, and the electronic
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transfer of or access to data processing information would not have been necessary if such
communication services were not subject to the tax under Code Sections 12-36-910(B)(3) and
12-36-1310(B)(3).
Furthermore, SC Regulation 117-328, which concerns radio and television stations 1, states in
part:
A tax is due, measured by the purchase price of all items of tangible personal
property used in furnishing wired music, including, but not limited to, songs,
speeches, and recordings of music. Also, properties used for closed circuit
television. Proceeds derived from the furnishing of such services are not subject
to the tax.
In addition, charges by services that charge monthly fee for radio programming services or other
communication services a person may receive in their automobile or otherwise are “charges for
the ways or means for the transmission of the voice or messages” and subject to the tax under
Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3).
The South Carolina sales and use tax also address two other types of communication services by
special imposition. Code Section 12-36-910(B)(5) imposes the sales and use tax on the:
gross proceeds accruing or proceeding from the sale or recharge at retail for
prepaid wireless calling arrangements.
(a) “Prepaid wireless calling arrangements” means communication services
that:
(i) are used exclusively to purchase wireless telecommunications;
(ii) are purchased in advance;
(iii) allow the purchaser to originate telephone calls by using an access
number, authorization code, or other means entered manually or
electronically; and
(iv) are sold in units or dollars which decline with use in a known amount.
(b) All charges for prepaid wireless calling arrangements must be sourced to
the:

1

SC Regulation 117-328 defines an AM radio station as a broadcasting station licensed by the Federal
Communications Commission for the transmission of radiotelephone emissions primarily intended to be received by
the general public and operated on a channel in the band 535-1605 kc/s); an FM radio station as a broadcasting
station licensed by the Federal Communications Commission for the transmission of radiotelephone emissions
primarily intended to be received by the general public and operated on a channel in the band 88.1-107.9 mc/s); and
a television broadcasting station as a broadcasting station licensed by the Federal Communications Commission for
the transmission of both visual and aural radiotelephone emissions and is to be operated in the 54-890 mc/s
frequency.

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(i) location in this State where the over-the-counter sale took place;
(ii) shipping address if the sale did not take place at the seller’s location and
an item is shipped; or
(iii) either the billing address or location associated with the mobile
telephone number if the sale did not take place at the seller’s location and
no item is shipped.
Code Section 12-36-2645 imposes the sales and use tax on:
gross proceeds accruing or proceeding from the business of providing 900/976
telephone service except that the applicable rate of the tax is ten percent.
Note: Charges for the ways or means for the transmission of the voice or messages are
subject to the sales and use tax under Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3).)
Charges by an Internet Service Provider (“ISP”) that allow a customer to access the
Internet (“Internet Access”) are charges for the ways and means for the transmission of the
voice or messages. However, as discussed below, the Department has not imposed the sales
and use tax on Internet Access.
In 1998 Congress established a tax moratorium in the Internet Tax Freedom Act The
moratorium was later extended in the Internet Nondiscrimination Act. The moratorium
prohibited the taxation of Internet Access, unless the tax was generally imposed and
actually enforced prior to October 1, 1998. Although a few taxpayers were paying sales and
use tax on Internet Access, the Department reviewed its enforcement of the tax with respect
to Internet Access and determined in 1998 that it had not issued an advisory opinion
specifically stating that charges for Internet Access were taxable, and did not have an audit
policy to enforce the assessment and collection of the tax on Internet Access. Therefore, the
Department determined that the imposition of the sales and use tax was not grandfathered
under the Congressional moratorium and therefore it could not tax Internet Access. Since
charges to access or use an individual database, such as website, did not constitute an
access to the Internet, the Department held that these charges did not come within the
moratorium and were subject to the tax. In addition, charges to access or use an individual
database, such as website, were previously held subject to the tax in SC Revenue Ruling

89-14 as a “database access transmission.”

Even though the moratorium has expired, Congress is working on legislation to extend, or
make permanent, the moratorium on the taxation of Internet Access. In addition, the
combination of past Department policies and the Congressional moratorium has created
the equivalent of a longstanding administrative policy not to impose the sales and use tax
on Internet Access. Therefore, the Department will not, at this time, impose the sales and
use tax upon Internet Access and will only impose the sales and use tax prospectively on
Internet Access if Congress does not re-enact the moratorium and the General Assembly
enacts legislation or approves a regulation to impose the sales and use tax upon Internet
Access. However, charges by a third party to access or use that third party’s individual
website will continue to be subject to the sales and use tax (e.g. monthly charges to access a
sports website).
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CONCLUSION:
Taxable Communication Services:

1. Based on the above, it has been the Department’s longstanding opinion that charges for the
   following communication services are subject to the sales and use tax pursuant to Code Sections
   12-36-910(B)(3) and 12-36-1310(B)(3):
   Telephone services (not specifically exempted under Code Section 12-36-2120(11)),
   including telephone services provided via the traditional circuit-committed protocols of
   the public switched telephone network (PSTN), a wireless transmission system, a voice
   over Internet protocol ("VoIP"), or any of other method
   Teleconferencing Services
   Paging Services (See SC Information Letter #89-28.)
   Answering Services (See SC Information Letter #89-28.)
   Cable Television Services
   Satellite Programming Services (includes, but is not limited to, emergency
   communication services and television, radio, or other programming services)
   Fax Transmission Services (See SC Revenue Ruling #89-14.)
   Voice Mail Messaging Services (See SC Revenue Ruling #89-14.)
   E-Mail Services (See SC Revenue Ruling #89-14.)
   Electronic Filing of Tax Returns when the return is electronically filed by a person who
   did not prepare the tax return (See SC Revenue Ruling #91-20.)
   Database Access Transmission Services (On-Line Information Services), such as legal
   research services, credit reporting/research services, charges to access an
   individual website 2 (including Application Service Providers), etc. (not including
   computer database information services provided by a cooperative service when the
   2

Charges for the ways or means for the transmission of the voice or messages are subject to the sales and use tax
under Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3).) Charges by an Internet Service Provider (“ISP”) that
allow a customer to access the Internet (“Internet Access”) are charges for the ways and means for the transmission
of the voice or messages. However, as discussed below, the Department has not imposed the sales and use tax on
Internet Access.
In 1998 Congress established a tax moratorium in the Internet Tax Freedom Act The moratorium was later extended
in the Internet Nondiscrimination Act. The moratorium prohibited the taxation of Internet Access, unless the tax was
generally imposed and actually enforced prior to October 1, 1998. Although a few taxpayers were paying sales and
use tax on Internet Access, the Department reviewed its enforcement of the tax with respect to Internet Access and
determined in 1998 that it had not issued an advisory opinion specifically stating that charges for Internet Access

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database information has been assembled by and for the exclusive use of the members of
the cooperative services) (See SC Revenue Ruling #89-14 and SC Private Letter Ruling

89-21.)

Note: It is the Department’s opinion charges for mobile satellite communication services, such
as automobile satellite radio programming or other mobile communication services, are sourced
to the primary place of use of the customer (e.g., the residence of an individual customer) as
defined in the Mobile Telecommunications Sourcing Act. (Pursuant to Code Section 12-36910(B(3) and 12-36-1310(B)(3), “charges for mobile telecommunications services … must be
sourced in accordance with the Mobile Telecommunications Sourcing Act as provided in Title
4 of the United States Code.)

2. Based on the above, it has been the Department’s longstanding opinion that charges for the
   following communication services are subject to the sales and use tax pursuant to Code Section
   12-36-910(B)(5) or Code Section 12-36-2645:
   Prepaid Wireless Calling Arrangements (sale or recharge at retail) as defined in
   Code Section 12-36-910(B)(5) (For information on prepaid telephone calling
   cards that do not come within the definition of prepaid wireless calling
   arrangements, see SC Revenue Ruling #04-4.)
   900/976 Telephone Service (The State tax rate on this type of communication
   service is 10%, not 5%.)
   Non-Taxable Communication Services:
   Based on the above, it has been the Department’s longstanding opinion that charges for the
   following communication services are not subject to the sales and use tax pursuant to Code
   Sections 12-36-910(B)(3) and 12-36-1310(B)(3):

were taxable, and did not have an audit policy to enforce the assessment and collection of the tax on Internet Access.
Therefore, the Department determined that the imposition of the sales and use tax was not grandfathered under the
Congressional moratorium and therefore it could not tax Internet Access. Since charges to access or use an
individual database, such as website, did not constitute an access to the Internet, the Department held that these
charges did not come within the moratorium and were subject to the tax. In addition, charges to access or use an
individual database, such as website, were previously held subject to the tax in SC Revenue Ruling #89-14 as a
“database access transmission.”
Even though the moratorium has expired, Congress is working on legislation to extend, or make permanent, the
moratorium on the taxation of Internet Access. In addition, the combination of past Department policies and the
Congressional moratorium has created the equivalent of a longstanding administrative policy not to impose the sales
and use tax on Internet Access. Therefore, the Department will not, at this time, impose the sales and use tax upon
Internet Access and will only impose the sales and use tax prospectively on Internet Access if Congress does not reenact the moratorium and the General Assembly enacts legislation or approves a regulation to impose the sales and
use tax upon Internet Access. However, charges by a third party to access or use that third party’s individual
website will continue to be subject to the sales and use tax (e.g. monthly charges to access a sports website).

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Telephone services specifically exempted under Code Section 12-36-2120(11), such as
toll charges between telephone exchanges and carrier access charges and customers
access line charges established by the Federal Communications Commission or the South
Carolina Public Service Commission
Telegraph Messages (Code Section 12-36-2120(11))
Communication Services involving Automatic Teller Machines (Code Section 12-362120(11))
Data Processing Services as defined under Code Section 12-36-910(C)
Computer Database Information Services provided by a cooperative service when the
database information has been assembled by and for the exclusive use of the members of
the cooperative services (Code Section 12-36-60)
Electronic Filing of Tax Returns when the return is electronically filed by a person who
prepared the tax return (See SC Revenue Ruling #91-20.)
Wired Music provided by an AM radio station (defined as a broadcasting station licensed
by the Federal Communications Commission for the transmission of radiotelephone
emissions primarily intended to be received by the general public and operated on a
channel in the band 535-1605 kc/s) or an FM radio station (defined as a broadcasting
station licensed by the Federal Communications Commission for the transmission of
radiotelephone emissions primarily intended to be received by the general public and
operated on a channel in the band 88.1-107.9 mc/s). (See SC Regulation 117-328.)
Closed Circuit Television provided by television broadcasting station (defined as a
broadcasting station licensed by the Federal Communications Commission for the
transmission of both visual and aural radiotelephone emissions and is to be operated in
the 54-890 mc/s frequency) (See SC Regulation 117-328.)
In SC Private Letter Ruling #97-4 and SC Technical Advice Memorandum #95-1 the
Department determined that charges for electronically monitoring a customer's home or business
for the purpose of burglary and fire protection were not subject to the sales and use taxes since
such charges were not charges for access to, or use of, a communication system (ways or means
for the transmission of the voice or messages). The sale or lease of equipment to the customer, or
the use of the equipment by the monitoring company, were held subject to the tax based on the
specific facts and circumstances.
“Bundled Transactions:”
Based on the above, it is the Department’s opinion that for a customer bill rendered on or after
January 1, 2004 that includes telecommunications services in a bundled transaction, where the
nonitemized price is attributable to properties or services that are taxable and nontaxable, the
portion of the price attributable to any nontaxable property or service is subject to tax unless the
provider can reasonably identify that portion from its books and records kept in the regular
course of business for purposes other than sales taxes.
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Note: A “bundled transaction” is “a transaction consisting of distinct and identifiable properties
or services, which are sold for one nonitemized price but which are treated differently for [sales]
tax purposes.”
Note: This advisory opinion attempts to list as many communication services as possible
that the Department has held in the past as subject to the tax, whether through formal
advisory opinions, audits or informal advice provided to taxpayers. Charges for other
communication services not listed in this advisory opinion are still subject to the tax if they
constitute charges for the ways or means for the transmission of the voice or messages and
are not otherwise exempted under the law.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank III, Director

October 26
, 2004
Columbia, South Carolina

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