How were boats, boat motors, and boat trailers taxed when sold separately or together under South Carolina's 2008 ruling?

Plain-English summary

The South Carolina Department of Revenue explained how the then-current sales and use tax and $300 maximum tax applied to boats, motors, and boat trailers. A boat sold alone was taxed at the lesser of 5% or $300. A motor or ordinary boat trailer sold alone was taxed at 6% with no $300 cap.

A motor could share the boat's maximum-tax treatment only when it was permanently attached. The ruling treated an inboard motor as permanently attached and also included an outboard motor sold mounted to the boat, connected to permanent steering, and included in the boat's price.

A boat trailer did not become part of the capped boat transaction merely because it was sold at the same time. The trailer remained taxable at 6%. If its price was not separately stated, or the stated allocation was unreasonable or unsupported, the trailer was taxed on its fair market value.

What this means for you

Boat dealers

The historical treatment required separating an ordinary boat trailer from the boat and attached motor. Records had to support any stated price allocation in a package sale.

Boat purchasers

The $300 maximum applied to the qualifying boat transaction, not automatically to every item in a boat package. Separate motors and trailers were taxed under the general rate described in the ruling.

Local-tax calculations

Transactions subject to the $300 maximum were not subject to Department-administered local sales and use taxes under this guidance. Items outside the maximum-tax treatment were subject to those local taxes.

Common questions

Q: Did a boat sold alone qualify for the maximum tax?
A: Yes. The ruling applied the lesser of 5% of gross proceeds or $300.

Q: Did a motor sold alone qualify?
A: No. It was taxed at the historical 6% general state rate.

Q: When did a motor share the boat's cap?
A: When it was permanently attached as defined by the ruling—an inboard motor, or a qualifying mounted outboard connected to permanent steering and included in the boat price.

Q: Did a boat trailer share the boat's $300 cap?
A: No. An ordinary boat trailer sold with the boat remained separately taxable at 6%.

Q: Is this still the operative guidance?
A: No. SC Revenue Ruling #18-11 expressly superseded this ruling effective July 1, 2017.

Citations and references

• S.C. Code § 12-36-2110 (historical $300 maximum tax)
• S.C. Code §§ 12-36-910(A) and 12-36-1310(A) (sales and use tax)
• S.C. Code § 12-36-1110 (June 1, 2007 rate change and maximum-tax exclusion)
• S.C. Code § 12-36-100 (sale and purchase definition)
• SC Revenue Ruling #18-11 (expressly superseding guidance)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR08-7.pdf
• Superseding guidance: SC Revenue Ruling #18-11

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 12265, Columbia, South Carolina 29211
Website Address: http://www.sctax.org

SC REVENUE RULING #08-7

SUBJECT:

Sales of Boats, Motors, and Boat Trailers
(Sales Tax)

EFFECTIVE DATE:

June 1, 2007

SUPERSEDES:

SC Revenue Ruling #92-12 and all previous advisory opinions
and any oral directives in conflict herewith.

REFERENCES:

S.C. Code Ann. Section 12-36-2110 (2000; Supp 2007)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 2000)
S. C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #05-2

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the
public and to Department personnel. It is an advisory opinion
issued to apply principles of tax law to a set of facts or general
category of taxpayers. It is the Department’s position until
superseded or modified by a change in statute, regulation, court
decision, or another Departmental advisory opinion.

Question:
What amount of sales and use tax should be imposed upon sales of boats, motors, and
boat trailers when sold individually or as a complete package?
Facts:
As a result of the increase in the general state sales and use tax rate beginning June 1,
2007, questions have arisen concerning the application of sales tax and use tax on sales of
boats, motors, and boat trailers. The purpose of this document is to update a previously
issued advisory opinion, SC Revenue Ruling #92-12, so as to address the imposition of
the state sales and use tax or the $300.00 maximum tax on such sales.

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Discussion:
Code Section 12-36-910(A) imposes a sales tax and reads, in part:
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.
Code Section 12-36-1310(A) imposes a use tax and reads, in part:
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, 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.
However, Code Section 12-36-1110, which increased the sales and use tax rates by 1%
beginning June 1, 2007, states:
Beginning June 1, 2007, an additional sales, use, and casual excise tax
equal to one percent is imposed on amounts taxable pursuant to this
chapter, except that this additional one percent tax does not apply to
amounts taxed pursuant to Section 12-36-920(A), the tax on
accommodations for transients, nor does this additional tax apply to items
subject to a maximum sales and use tax pursuant to Section 12-36-2110
nor to the sale of unprepared food which may be lawfully purchased with
United States Department of Agriculture food coupons. (Emphasis added.)
Based on the above, the general state sales and use tax rate increased from 5% to 6%
effective June 1, 2007. However, the state sales and use tax rate for items subject to a
maximum tax remained 5%.
In addition, for the sales or use taxes to apply there must be a retail sale or purchase of
tangible personal property.
Code Section 12-36-100 defines the terms "sale" and "purchase", in part, as:
...any transfer, exchange, or barter, conditional or otherwise, of tangible personal
property for a consideration...
Therefore, the sales tax and use tax are transactional taxes imposed upon the privilege of
the business of selling at retail, or using, storing, or consuming tangible personal property
in South Carolina.

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Code Section 12-36-2110(A), however, provides an exception to the state tax rate. This
section establishes a maximum tax on the sale, use, storage, or consumption of certain
items and reads, in part:
The maximum tax imposed by this chapter is three hundred dollars for each
sale...of each:

(4) boat;
(5) trailer or semitrailer, pulled by a truck tractor...
In summary, Code Section 12-36-2110(A) establishes a maximum tax on boats, and a
maximum tax on trailers and semitrailers capable of being pulled only by a truck tractor.
A maximum tax, however, is not provided for boat motors. In addition, the maximum tax
is not provided for boat trailers since they are capable of being pulled by vehicles other
than a truck tractor. 1 Consequently, when Code Section 12-36-2110(A) is applicable, we
must look at the specific transaction involved as well as the type of property involved in
the transaction.
Conclusion:
The following outlines the proper State sales or use tax to be imposed upon sales of
boats, motors, and boat trailers:

1. A boat sold alone is subject to the state sales and use tax at the lesser of 5% of the
   gross proceeds from the sale or $300.
2. A motor sold alone is subject to the state sales and use tax at the rate of 6% of the
   gross proceeds from the sale.
3. A boat trailer sold alone is subject to the state sales and use tax at the rate of 6%
   of the gross proceeds from the sale.
4. A boat sold with a motor permanently attached to it is subject to the state sales
   and use tax at the lesser of 5% of the gross proceeds from the sale of the boat and
   motor or $300. 2
5. A boat trailer sold in conjunction with the sale of a boat is subject to the state
   sales and use tax at the rate of 6% of the gross proceeds from the sale of the boat
   trailer. The boat is subject to the state sales and use tax at the lesser of 5% of the
   gross proceeds from the sale of the boat or $300.
   1

For purposes of this ruling, boat trailers do not include trailers which must be pulled by truck tractors or
boat trailers which are used by manufacturers to transport boats to dealerships.
2
A boat motor is considered permanently attached to a boat if it is (1) an inboard motor or (2) an outboard
motor sold mounted to the boat, connected to a permanent steering mechanism, and included in the price of
the boat.

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6. A boat trailer sold in conjunction with the sale of a boat that has a permanently
attached motor is subject to the state sales and use tax at the rate of 6% of the
gross proceeds from the sale of the boat trailer. The boat with a permanently
attached motor is subject to the state sales and use tax at the lesser of 5% of the
gross proceeds from the sale of the boat and motor or $300. (Note: If the price of
the boat trailer is not separately stated from the price of the boat and motor, the
boat trailer is subject to the state sales and use tax at 6% of the fair market value
of the boat trailer. If the price of the boat trailer is separately stated from the price
of the boat and motor, the price breakdown must be reasonable and supported by
the records of the taxpayer, otherwise the trailer will be taxed at 6% of its fair
market value.)
Note: All transactions listed above that are subject to the maximum tax of $300 are not
subject to local sales and use taxes administered and collected by the SC Department of
Revenue on behalf of local jurisdictions. All transactions listed above that are not subject
to the maximum tax (and therefore taxed at 6% for state sales and use tax purposes) are
subject to local sales and use taxes administered and collected by the SC Department of
Revenue on behalf of local jurisdictions.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Ray N. Stevens
Ray N. Stevens, Director
June 30
, 2008
Columbia, South Carolina

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