How do South Carolina sales and admissions taxes apply to brewery tours and beer samples?

Plain-English summary

South Carolina Revenue Ruling #19-2 uses the true object of the transaction to determine whether brewery-tour charges are sales of beer or taxable admissions. When beer is included in a paid tour, the Department says the true object is the beer—not entry into a place of amusement—so the full charge is subject to sales tax and not admissions tax.

If the brewery offers a free tour and charges $5 for samples, the $5 is taxable gross proceeds from beer. If it charges $10 for a tour and includes samples at no additional price, the entire $10 is taxable as the beer sale. A paid package including both beer and a t-shirt is likewise taxable in full as sales of tangible personal property.

A souvenir tasting glass included with the paid beer transaction is treated as a container used incident to the sale and delivery of tangible personal property. The ruling says the brewery's purchase and use of that glass is exempt under § 12-36-2120(14), although a glass sold separately in the gift shop remains taxable.

When both the tour and samples are free, there is no paid admission and no retail charge to the visitor. The brewery nevertheless owes sales tax on the fair market value of the beer it manufactured and consumed in providing samples. In the ruling's example, tax is measured by the $150 retail value of the keg used, not the $10 retail value assigned to the individual samples.

What this means for you

Breweries charging for tours or samples

Treat the full amount as taxable beer-sale gross proceeds when beer is part of the paid experience. Do not separately collect admissions tax on that same charge under the ruling's stated true-object conclusion.

Breweries offering free experiences

Track the retail fair market value of the brewery's own beer removed for free samples and report the manufacturer-use tax. A free tour creates no admissions tax because there is no paid admission.

Merchandise and gift-shop teams

Include t-shirts and other merchandise in taxable gross proceeds when bundled with the paid beer experience. Distinguish an included tasting glass used as the beer container from a separately sold gift-shop glass.

Common questions

Q: Is a $10 tour with free samples subject to admissions tax?
A: No. The ruling treats the true object as the beer sale and subjects the $10 to sales tax.

Q: Is a free tour with $5 samples taxable?
A: Yes. Sales tax applies to the $5 beer charge; admissions tax does not apply.

Q: Is a completely free tour and tasting tax-free to the brewery?
A: No. The brewery owes sales tax on the fair market value of beer manufactured and used for the samples.

Q: Does the ruling cover local hospitality taxes?
A: No. It notes that brewery sales are subject to local hospitality taxes and specified beer-license taxes but does not analyze them.

Citations and references

• S.C. Code Ann. §§ 12-36-90 and 12-36-910 — gross proceeds and sales tax
• S.C. Code Ann. § 12-36-2120(14) — containers used incident to sale and delivery
• S.C. Code Ann. §§ 12-21-2410 and 12-21-2420 — admissions and 5% admissions tax
• S.C. Code Ann. § 61-4-1515 — brewery sales, tours, and samples

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR19-2.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 REVENUE RULING #19-2

SUBJECT:

Brewery Tours and Beer Samples
(Sales Tax and Admissions Tax)

EFFECTIVE DATE:

July 1, 2019

SUPERSEDES:

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

REFERENCES:

S.C. Code Ann. Section 12-36-90 (2014; Supp. 2018)
S.C. Code Ann. Section 12-36-910 (2014)
S.C. Code Ann. Section 12-36-2120 (2014)
S.C. Code Ann. Section 12-21-2410 (2014)
S.C. Code Ann. Section 12-21-2420 (2014; Supp. 2018)
S.C. Code Ann. Section 61-4-1515 (Supp. 2018)

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:

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.

INTRODUCTION
A brewery is authorized to offer beer samples and to sell beer to consumers on its permitted
premises, provided the beer is brewed on the permitted premises with an alcoholic content of
12% by weight, or less. Code Section 61-4-1515(A). Among other requirements, sales must be
held in conjunction with a tour of the permitted premises and the entire brewing process utilized
at the permitted premises. Code Section 61-4-1515(A)(1).

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Questions have arisen concerning the application of the sales tax and the admissions tax to tours
and samples offered by breweries. This document explains how the sales tax and the admissions
tax apply to these tours and samples. 1
A discussion of the law is followed by examples.

LAW AND DISCUSSION
I. SALES TAX
A brewery may provide beer samples with or without cost. Code Section 61-4-1515(A)(3)(b).
However, a brewery’s beer sales are subject to the sales and use tax. Code Section 61-41515(A)(6) and (E)(6). 2
Code Section 12-36-910(A) imposes “a sales tax, equal to [six] 3 percent of gross proceeds of
sales, … upon every person engaged … within this State in the business of selling tangible
personal property at retail.”
The measure of the tax is the gross proceeds of the sale. “Gross proceeds of sales” means the
proceeds from the sale of tangible personal property without any deduction for the cost of
materials, labor, service, or any other expenses. Code Section 12-36-90(1)(b).
In short, the total amount charged in conjunction with the sale or purchase of tangible personal
property is subject to the tax.
Code Section 12-36-910(B)(4) also imposes the sales tax on the fair market value of tangible
personal property manufactured in South Carolina and used or consumed within South Carolina
by the manufacturer.
Breweries may conduct tours and provide samples in different ways. For example, breweries
may charge for a tour, which includes samples. Some may conduct a free tour and separately
charge for samples, while others may give a free tour and samples. Some may also provide
tangible personal property as part of the tour, such as souvenir glasses, t-shirts, etc.
The so-called “true object” test is generally used to delineate sales of services from sales of
tangible personal property. This test is one of determining the basic purpose of the buyer. 4 In
applying the principles of this test with respect to tours and samples, it must be determined
whether the buyer is purchasing tangible personal property (beer, t-shirt, glass, etc.) or
purchasing the right to enter into a place subject to the admissions tax.
1

Code Section 61-4-1515 establishes the requirements for beer samples and beer sales by a brewery. This document
does not address these requirements.
2
In addition, while not addressed in this document, Code Section 61-4-1515(A)(6) and (E)(6) provide that brewery
sales are subject to local hospitality taxes and the wholesaler beer license taxes in Code Sections 12-21-1020 and 1221-1030.
3
Code Section 12-36-1110 increased the general state sales and use tax rate from five percent to six percent
effective June 1, 2007.
4
9 Vanderbilt Law Review 231 (1956).

2

If the tangible personal property is the true object of the transaction (e.g., the beer), the tour
would be incidental to the sale of the tangible personal property, and the entire charge would be
subject to the sales tax. If the true object is to enter into a place subject to the admissions tax,
then any tangible personal property provided as part of the charge for the tour would be
incidental to the tour itself, and the charge for the tour would not be considered a sale of tangible
personal property. 5

II. ADMISSIONS TAX
A brewery’s beer sales to consumers must be held in conjunction with a tour by the consumer of
the permitted premises and the entire brewing process utilized at the permitted premises. Code
Section 61-4-1515(A)(1) and (E)(2). As such, the application of the admissions tax must be
addressed.
Under the admissions tax law, Code Section 12-21-2410 states:
For the purpose of this article and unless otherwise required by the context:
(1)

The word “admission” means the right or privilege to enter into or use a place or
location;

(2)

The word “place” means any definite enclosure or location; and

(3)

The word “person” means individual, partnership, corporation, association, or
organization of any kind whatsoever.

Code Section 12-21-2420 states: “There must be levied, assessed, collected, and paid upon paid
admissions to places of amusement within this State a license tax of five percent.” (Emphasis
added.) Code Section 12-21-2420 further requires that the tax “be paid by the person or persons
paying the admission price . . . .”
In summary, the tax is upon “paid admissions” and the person paying the admission is the
taxpayer with respect to the tax, whether that person is an individual, a partnership, or
corporation. Furthermore, “paid admissions” constitute the amounts paid by patrons to enter into
or use a place of amusement.

III. SALE OF BEER
For purposes of the laws regulating beer, wine, and alcoholic liquor, the Department has long
held that a sale is considered to take place if: 6
• There is a per drink charge;
5

However, the brewery would still be subject to the sales tax under Code Section 12-36-910(B)(4) for the fair
market value of tangible personal property manufactured in South Carolina (i.e., beer) and used by the brewery in
providing free samples.
6
SC Revenue Ruling #12-3.

3

• An admissions fee is charged to enter a place or event where these beverages are provided;
• A donation is accepted with respect to the event where these beverages are provided;
• Tickets are sold with respect to the event where these beverages are provided;
• Such beverages are provided as part of a meal for which consideration, direct or indirect,
is accepted or required; or
• Any consideration is accepted or required with respect to the event where these beverages
are provided.

CONCLUSION
Based on the above, when breweries provide beer as part of a paid tour, the true object of the
transaction is the sale of beer, and therefore the charge for the tour is not subject to the
admissions tax. However, the sales tax applies to the gross proceeds of the sale.
When breweries provide a free tour with free beer, the admissions tax does not apply. However,
sales tax applies to the fair market value of each keg of beer used for samples.
The following examples explain the application of the sales tax and admissions tax to tours and
samples offered by breweries. The application of these taxes is determined by the specific facts
and circumstances. Other facts and circumstances not addressed in this document must be
considered on a case-by-case basis. In addition, there are certain businesses in South Carolina
which sell tour packages where customers tour multiple breweries in a day. For purposes of the
examples below, the brewery receives payment either directly from a patron or from a tour
business.

Example 1 – Charge for Tour, No Charge for Samples:
Facts:
A brewery conducts a tour and provides samples in accordance with statutory requirements. The
cost of the tour is $10 and the samples are provided for no additional charge.
Answer:
Sales Tax: The true object of the transaction is the sale of beer. The brewery, as the retailer, is
liable for the sales tax on the “gross proceeds of sales” of the beer. In this example, the gross
proceeds of sales is $10.
Admissions Tax: Since the true object of the transaction is the sale of beer, the admissions tax is
not applicable.

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Example 2 – No Charge for Tour, Charge for Samples:
Facts:
A brewery conducts a tour and provides samples in accordance with statutory requirements. The
brewery does not charge for the tour, but charges $5 for the samples.
Answer:
Sales Tax: The brewery, as the retailer, is liable for the sales tax on the “gross proceeds of
sales” of the beer. In this example, the gross proceeds of sales is $5.
Admissions Tax: The admissions tax is not applicable.

Example 3 – Charge for Tour, Souvenir Glass Included:
Facts:
A brewery conducts a tour and provides samples in accordance with statutory requirements. The
cost of the tour is $10 and the samples are provided for no additional charge. The patron may
keep the glass used for the tasting.
Answer:
Sales Tax: The true object of the transaction is the sale of beer. The brewery, as the retailer, is
liable for the sales tax on the “gross proceeds of sales” of the beer. In this example, the gross
proceeds of sales is $10. The glass is considered a container used incident to the sale and
delivery of tangible personal property, and the brewery’s purchase and use of the glass for the
samples are exempt under Code Section 12-36-2120(14). 7
Admissions Tax: Since the true object of the transaction is the sale of beer, the admissions tax is
not applicable.

Example 4 – Charge for Tour, Souvenir T-Shirt Included:
Facts:
A brewery conducts a tour and provides samples in accordance with statutory requirements. The
cost of the tour is $15. This $15 includes a t-shirt and beer samples. The retail value of the
samples is $10, and the retail value of the t-shirt is $5.

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Code Section 12-36-2120(14) specifically exempts from the sales tax “…containers, used incident to the sale and
delivery of tangible personal property.” However, if the brewery sells a glass in its gift shop (or other retail outlet),
it is not being used incident to the sale and delivery of tangible personal property and is subject to the sales tax.

5

Answer:
Sales Tax: The true object of the transaction is the sale of beer and a t-shirt. The brewery, as
the retailer, is liable for the sales tax on the “gross proceeds of sales” of the beer and the t-shirt.
In this example, the gross proceeds of sales is $15.
Admissions Tax: Since the true object of the transaction is the sale of beer and a t-shirt, the
admissions tax is not applicable.

Example 5 – No Charge for Tour and Free Samples:
Facts:
A brewery conducts a tour and provides samples in accordance with statutory requirements.
There is no charge for the tour or samples. The retail value of the beer samples is $10. The
retail price of a keg of beer used in providing free samples is $150.
Answer:
Sales Tax: The State sales tax applies to the fair market value of tangible personal property
manufactured in South Carolina and used or consumed within South Carolina by the
manufacturer. Code Section 12-36-910(B)(4). The brewery, as the manufacturer of the beer, is
liable for the sales tax based on the fair market value of a keg of beer manufactured in South
Carolina by the brewery and used by the brewery to provide free samples. The fair market value
is the amount for which a keg of beer is sold at retail. In this example, the fair market value of a
keg of beer is $150.
Admissions Tax: The admissions tax is not applicable.

NOTE: While not addressed in this document, Code Section 61-4-1515(A)(6) and (E)(6)
provide that brewery sales are subject to local hospitality taxes and the wholesaler beer
license taxes in Code Sections 12-21-1020 and 12-21-1030.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Hartley Powell
W. Hartley Powell, Director
April 9
, 2019
Columbia, South Carolina

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