Does South Carolina sales and use tax apply to a fuel surcharge a retailer charges when it delivers merchandise to the customer in its own vehicle?

Plain-English summary

When fuel prices spike, retailers that deliver in their own trucks often add a fuel surcharge. SC Revenue Ruling #22-12 confirms that the surcharge is part of the taxable sale when the merchandise is taxable. It updates and supersedes RR #05-1 with more examples, and is the delivery-side companion to RR #22-10 (which covered inflation and credit-card fees).

The rule follows straight from how South Carolina measures the tax. The sales tax is on "gross proceeds of sales" (§ 12-36-90) and the use tax on "sales price" (§ 12-36-130) — both the total consideration for the sale, with no deduction for the seller's cost of materials, labor, service, or any other expense. The definition of "sales price" specifically includes "any services or transportation costs that are a part of the sale." And SC Regulation 117-310(d) removes any doubt: no practice of invoicing or billing lets a seller deduct its own-delivery costs when it uses its own means of transportation.

The Department also cited Meyers Arnold, Inc. v. South Carolina Tax Commission, where the court taxed a layaway service fee as part of the sale under a "but for the sale, there'd be no fee" test. Same logic here: but for the retail sale and delivery, there'd be no fuel surcharge.

Worked examples from the ruling (own-vehicle delivery):

• Ex 1: $1,000 goods + $50 delivery + $30 fuel surcharge → tax on $1,080.
• Ex 2: $1,000 goods + $30 fuel surcharge, no delivery charge → tax on $1,030.
• Ex 3: Two $500 sales, each with a $25 delivery charge, plus a separate $60 fuel-surcharge invoice for the month → tax on $1,110. Same-invoice or separate-invoice, same-month or next-month billing — no difference.
• Ex 4 (exempt goods): $1,000 of residential propane (exempt under § 12-36-2120(33)) + $50 delivery + $30 fuel surcharge → the entire $1,080 is exempt. The charges follow the taxability of the item.

What this means for you

Retailers who deliver in their own vehicles

If the merchandise is taxable, charge sales tax on the goods plus any delivery charge plus the fuel surcharge. You can't carve out the fuel surcharge by putting it on a separate line or a separate invoice — Regulation 117-310(d) forecloses that. Configure your billing so the surcharge is in the tax base for taxable sales.

Sellers of exempt goods

If the item itself is exempt (e.g., residential propane under § 12-36-2120(33)), the delivery charge and fuel surcharge are exempt too. The charges take on the tax status of the underlying sale.

Mixed and multi-item deliveries

For loads that mix taxable and exempt items, apply the same allocation logic the Department uses for delivery charges in RR #19-9 (which this ruling says applies to fuel surcharges as well) — the taxable portion drives the taxable share of the charge.

Common questions

Q: I add a fuel surcharge for delivering in my own truck. Is it taxable?
A: Yes, if the goods are taxable. The surcharge is part of gross proceeds / sales price and is taxed like the merchandise.

Q: Can I avoid the tax by billing the fuel surcharge on a separate invoice, or next month?
A: No. The ruling is explicit that same-invoice vs. separate-invoice and same-month vs. later-month billing make no difference; SC Regulation 117-310(d) bars deducting own-delivery costs by any invoicing method.

Q: What if what I'm delivering is exempt?
A: Then the delivery charge and fuel surcharge are exempt too. In the ruling's example, residential propane exempt under § 12-36-2120(33) carried its delivery and fuel charges into exemption.

Q: How is this different from RR 22-10?
A: RR 22-10 covered inflation fees and credit-card ("non-cash adjustment") surcharges generally; RR 22-12 focuses on fuel surcharges tied to a retailer's own-vehicle deliveries. Both reach the same result: the fee is in the tax base when the sale is taxable.

Citations and references

Statutes and regulations:

• S.C. Code Ann. § 12-36-90 — "gross proceeds of sales" (no deduction for the seller's expenses)
• S.C. Code Ann. § 12-36-130 — "sales price," including services and transportation costs that are part of the sale
• S.C. Code Ann. § 12-36-2120(33) — exemption illustrated in the ruling (residential propane/fuel)
• SC Regulation 117-310(d) — freight and delivery charges; no invoicing practice permits deducting own-transportation cost

Case: Meyers Arnold, Inc. v. South Carolina Tax Commission, 285 S.C. 303, 328 S.E.2d 920 (Ct. App. 1985) — a service fee is taxable as part of the sale of tangible personal property.

Related Department guidance (described in prose, not linked): RR #22-12 supersedes RR #05-1; the Department directs that the delivery-charge guidance in SC Revenue Ruling #19-9 applies to the fuel surcharges addressed here.

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR22-12.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

SC REVENUE RULING #22-12
SUBJECT:

Fuel Surcharges by Retailers Delivering Tangible Personal Property
(Sales and Use Tax)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

SC Revenue Ruling #05-1, and all previous advisory opinions and any
oral directives in conflict herewith.

REFERENCES:

S.C. Code Ann. Section 12-36-90 (2014; Supp. 2021)
S.C. Code Ann. Section 12-36-130 (2014; Supp. 2021)
SC Regulation 117-310(d) (Supp. 2003)

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 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.

Purpose:
The purpose of this advisory opinion is to update SC Revenue Ruling #05-1, “Fuel Surcharges by
Retailers Delivering Tangible Personal Property,” to include additional examples illustrating the
application of the sales and use tax when retailers charge fuel surcharges to their customers when
delivering taxable or exempt tangible personal property via their own vehicles.
Question:
Are fuel surcharges, as described in the facts, charged by a retailer to the customer when delivering
merchandise via its own vehicles includable in “gross proceeds of sales” or “sales price” and
therefore subject to the sales and use tax?

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Conclusion:
Fuel surcharges, as described in the facts, charged by a retailer to the customer when delivering
merchandise via its own vehicles are includable in “gross proceeds of sales” or “sales price” and
therefore subject to the sales and use tax, unless the transaction is otherwise exempt.
The following examples assist in explaining the taxability of a fuel surcharge where a retailer sells
and delivers tangible personal property via its own vehicle and charges a fuel surcharge.
Example 1. Retailer “A” sells $1,000 in merchandise and charges the customer a $50 delivery
charge for delivery via its own vehicle and a $30 fuel surcharge due to the rising cost of motor fuel.
The basis for calculating the tax is $1,080.
Example 2. Retailer “B” sells $1,000 in merchandise, and does not charge the customer for delivery
via its own vehicle but does charge a $30 fuel surcharge due to the rising cost of motor fuel. The
basis for calculating the tax is $1,030.
Example 3. Retailer “C” sells $500 in merchandise and charges the customer a $25 delivery charge
for delivery via its own vehicle. Later in the month, Retailer “C” sells another $500 in merchandise
and charges the customer a $25 delivery charge for delivery via its own vehicle. Each delivery is
billed separately. In a separate invoice, the retailer bills the customer $60 in fuel surcharges for the
two deliveries made during the month ($30 for each delivery). The basis for calculating the tax on
the monthly deliveries is $1,110 ($525 + $525 + $60), since all charges are a part of the retail sale of
tangible personal property. The answer is the same whether the fuel surcharge is billed on the
same invoice as the merchandise or billed on a separate invoice (e.g., billed the month of
delivery or billed the month following delivery).
Example 4. Retailer “D” sells $1,000 in exempt tangible personal property (e.g., propane used
for residential purposes exempt under Code Section 12-36-2120(33)) and charges a $50 delivery
charge for delivery via its own vehicle and a $30 fuel surcharge due to the rising cost of motor
fuel. Since the transaction is exempt from the sales and use tax, the entire $1,080 “gross proceeds
of sales” or “sales price” ($1,000 propane plus $50 delivery charge and $30 fuel surcharge) is
exempt from sales and use tax. The answer is the same whether the delivery charge or the fuel
surcharge is separately stated or included in the sales price of the exempt item.
Note: SC Revenue Ruling #19-9, “Delivery Charges” addresses questions regarding the
applicability of the sales and use tax to delivery charges when the tangible personal property
being sold and delivered is not taxable or when the tangible personal property being sold and
delivered includes both taxable and nontaxable items. The guidance in SC Revenue Ruling #19-9
is applicable to the fuel surcharges discussed in this advisory opinion.

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Facts:
Retailers selling tangible personal property at retail may or may not charge their customers for
delivering merchandise via their own vehicle. However, when fuel costs increase dramatically for
various reasons (e.g., natural disasters, inflation, or supply chain issues), retailers may either
increase the sales price of tangible personal property sold to customers or charge the customer a
separate fuel surcharge to recover some or all of the increased cost of fuel. The fuel surcharge may
be charged as a separate line item on the same invoice as the merchandise or on a separate invoice.
Questions have arisen as to the applicability of sales and use taxes to “fuel surcharge fees” collected
by retailers making a delivery via their own vehicle, including the applicability of the tax when the
delivery includes taxable merchandise, exempt merchandise, or a combination of both.
Law and Discussion:
The sales tax is imposed upon a retailer’s “gross proceeds of sales” which is defined at Code
Section 12-36-90, in part, as:
...the value proceeding or accruing from the sale, lease, or rental of tangible
personal property... without any deduction for... the cost of materials, labor, or
service... [or] any other expenses....
The use tax is based upon the “sales price” of tangible personal property. The term “sales price”
is defined at Code Section 12-36-130, in part, as:
...the total amount for which tangible personal property is sold, without any
deduction for the cost of the property sold, the cost of the materials used,
labor or service cost, interest paid, losses, or any other expenses.
(1)

The term includes:
(a)

any services or transportation costs that are a part of the sale,
whether paid in money or otherwise[.]

In Meyers Arnold, Inc. v. South Carolina Tax Commission, 285 S.C. 303, 328 S.E.2d 920, 923
(1985), the Court of Appeals of South Carolina held the element of service involved in a lay
away sale was subject to tax as being part of the sale of tangible personal property. The test used
by the court was as follows:
...But for the lay away sales, Meyers Arnold would not receive the lay away
fees. The fees are obviously charged for the service rendered in making lay
away sales. For these reasons, this court holds the lay away fees are part of
the gross proceeds and subject to the sales tax.
Accordingly, the total amount charged in conjunction with, or as part of, the retail sale or
purchase of tangible personal property is subject to the tax, unless otherwise exempt.

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Further, SC Regulation 117-310, concerning “Freight and Delivery Charges,” states in part:
(d) No practice of invoicing or billing will entitle the seller to deduct from
gross proceeds of sale any cost or expense, actual or estimated, in cases
where the seller, by use of his own means of transportation, effects such
delivery.
Therefore, the “measure” of the sales and use tax is the total proceeds of a sale (i.e., it is the sum
total of all consideration received in conjunction with, or as part of, the retail sale of tangible
personal property, without any deductions, unless specifically provided. The source of the
amount received or earned is irrelevant. What matters is whether the amount received or earned
is the result of a retail sale (i.e., the value proceeding or accruing from the sale, lease, or rental of
tangible personal property at retail (sales tax) or the total amount for which tangible personal
property is sold including any services or transportation costs that are a part of the sale, whether
paid in money or otherwise (use tax)).
Based on the above, it is the opinion of the Department that fuel surcharges, as described in the
facts, charged by a retailer to the customer when delivering merchandise via its own vehicles are
includable in “gross proceeds of sales” or “sales price” and therefore subject to the sales and use tax,
unless the transaction is otherwise exempt.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
November 17
, 2022
Columbia, South Carolina

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