Which self-propelled vehicles qualify as motor vehicles for South Carolina's $500 maximum sales and use tax?

Plain-English summary

South Carolina Revenue Ruling #23-3 changes the Department's guidance after the Court of Appeals decision in Jack's Custom Cycles, Inc. v. South Carolina Department of Revenue. For the maximum-tax provisions in § 12-36-2110, a motor vehicle is any motorized, self-propelled, wheeled vehicle that does not run on rails.

The Department previously limited the term to engine-powered vehicles capable of highway use and looked to DMV licensing. The court rejected that limitation. Highway capability and a licensing requirement are not conditions for this specific partial sales-and-use-tax exemption.

As a result, effective April 26, 2023, all-terrain vehicles, utility task vehicles, golf carts, and legend race cars fall within the maximum-tax provisions. Their sale or use is taxed at 5% of gross proceeds or sales price, capped at $500. Applicable local sales and use taxes do not apply to an item covered by this rule.

What this means for you

Dealers

Classify a vehicle by the court's functional definition for § 12-36-2110: it must be motorized, self-propelled, wheeled, and not run on rails. Do not exclude it solely because it cannot be driven on a highway or is not licensed by the DMV.

Buyers

The ruling expressly includes ATVs, UTVs, golf carts, and legend race cars. For covered sales, the state tax calculation is 5% up to $500 rather than the ordinary 6% state rate plus applicable local tax.

Tax preparers and auditors

Apply this definition only to the maximum-tax provisions. The ruling expressly says its updated motor-vehicle guidance is limited to the partial exemption under § 12-36-2110.

Common questions

Q: Must the vehicle be legal for highway use?
A: No. The Court of Appeals held that the statute does not restrict the exemption to vehicles used on highways.

Q: Must the vehicle require DMV licensing?
A: No. The Department's prior licensing-based approach was displaced by the court's broader definition.

Q: Are ATVs and golf carts covered?
A: Yes. The ruling specifically lists all-terrain vehicles, utility task vehicles, golf carts, and legend race cars.

Q: What is the tax amount?
A: Five percent of gross proceeds or sales price, not exceeding $500. Local sales and use taxes do not apply.

Citations and references

• S.C. Code Ann. § 12-36-2110 — enumerated transportation items and maximum tax
• S.C. Code Ann. § 12-36-910(A) — sales tax
• S.C. Code Ann. § 12-36-1310(A) — use tax
• S.C. Code Ann. § 12-36-1110 — additional 1% sales and use tax rate
• Jack's Custom Cycles, Inc. v. South Carolina Department of Revenue, 439 S.C. 35, 885 S.E.2d 433 (Ct. App. 2023), rehearing denied April 26, 2023

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR23-3.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #23-3
SUBJECT:

Motor Vehicles, Motorcycles, Recreational Vehicles, and Self-Propelled
Light Construction Equipment
(Sales and Use Tax)

EFFECTIVE DATE: The Court of Appeals ruling was final on April 26, 2023. The change
described in this Revenue Ruling applies to all periods open under the
statute.
SUPERSEDES:

SC Revenue Advisory Bulletin #00-03 and all previous advisory
opinions, tax manuals, and any oral directives in conflict herewith.

MODIFIES:

SC Revenue Ruling #18-1 1

REFERENCES:

Title 12, Chapter 36 of the S.C. Code of Laws (2014, Supp. 2022)

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. 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 Department advisory opinion.

PURPOSE:
In Jack's Custom Cycles, Inc. v. S.C. Dep't of Revenue, 439 S.C. 35, 885 S.E.2d 433 (Ct. App.
2023), reh'g denied (Apr. 26, 2023), the South Carolina Court of Appeals held that the term
“motor vehicle” includes certain vehicles that the Department of Revenue previously excluded
from the maximum tax provisions in S.C. Code Ann. § 12-36-2110. The purpose of this advisory
opinion is to update guidance concerning which vehicles are motor vehicles subject to the partial
tax exemption pursuant to S.C. Code Ann. § 12-36-2110. 2
1

Supersedes Questions #4, 31, 32, and 33 of South Carolina Revenue Ruling #18-1.
This updated guidance concerning the term “motor vehicle” is limited solely to the partial tax
exemption under S.C. Code Ann. § 12-36-2110.
2

1

LAW AND DISCUSSION:
The sales and use taxes are transactional taxes imposed upon the privilege of the business of
selling at retail, or using, storing, or consuming personal property in South Carolina. The sales
and use tax is imposed at a rate of 6% of “gross proceeds of sales” or “sales price,” plus any
applicable local sales and use tax. 3
The sale of any means of transportation that is enumerated in S.C. Code Ann. § 12-362110(A)(1) is subject to a partial sales or use tax exemption, which limits the tax rate to 5% of
“gross proceeds of sales” or “sales price,” not to exceed $500. 4 Local sales and use taxes do not
apply.
A “motor vehicle” is one such means of transportation. 5 Historically, the Department of Revenue
restricted the term “motor vehicle” to only engine-powered vehicles capable of being driven
upon the highway. To determine which vehicles were capable of being driven on the highway,
the Department looked to those vehicles that were required to be licensed by the Department of
Motor Vehicles. However, in its opinion in Jack’s Custom Cycles, the Court of Appeals held that
the term “motor vehicle” does not “restrict or condition the exemption to motor vehicles that are
used on highways.” 6 Instead, the term includes “motorized, self-propelled, wheeled” vehicles
that “do not run on rails.” 7
CONCLUSION:
Effective April 26, 2023, for purposes of the maximum tax provisions of S.C. Code Ann. § 1236-2110, the term “motor vehicle” includes any motorized, self-propelled, and wheeled vehicle
that does not run on rails. Therefore, all-terrain vehicles, utility task vehicles, golf carts, and
legend race cars are subject to the maximum tax provisions.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
September 26
, 2023
Columbia, South Carolina
3

See S.C. Code §12-36-910(A) for the 5% sales tax, S.C. Code § 12-36-1310(A) for the 5% use
tax, and S.C. Code § 12-36-1110 for the additional 1% sales and use tax rate.
4
Effective after June 30, 2017, the maximum sales and use tax imposed pursuant to Chapter 36
of Title 12 on the sale, lease, or registration of an item enumerated in S.C. Code Ann. § 12-362110(A)(1) is increased from $300 to $500. S.C. Code Ann. § 12-36-2110(A)(4).
5
S.C. Code Ann. § 12-36-2110(A)(1)(b).
6
Jack’s Custom Cycles, Inc. v. S.C. Dep’t of Revenue, 439 S.C. 35, 47, 885 S.E.2d 433, 440 (Ct.
App. 2023), reh’g denied (Apr. 26, 2023).
7
Id. at 47, 885 S.E.2d at 440.
2