If I rent out equipment — an inflatable, a mechanical bull, construction equipment, a gaming trailer — and my staff stays with it, is that a taxable rental or a nontaxable service in South Carolina?

Plain-English summary

Renting or leasing tangible personal property in South Carolina is a taxable sale — the state's 6% sales tax applies to the gross proceeds [§ 12-36-910(A) plus the 1% under § 12-36-1110; Reg 117-309.15]. But there's a long-standing carve-out: if the owner furnishes an operator or crew to operate the property, the owner is rendering a nontaxable service, not renting, and the receipts are not subject to sales or use tax [Reg 117-309.15]. (In that case the owner is the consumer of the equipment and owes tax when it buys the equipment.)

Revenue Ruling #26-3 answers the question the regulation leaves open: who counts as an "operator"? Using the "true object" test, the Department draws a bright line based on operation and control:

• Operator (nontaxable service): a person who uses skill or expertise to operate or exert control over the equipment to perform a function or produce a desired effect — such that the equipment will not work without their continual control.
• Not an operator (taxable rental): a person who merely cautions, reminds, or enforces rules, watches for safety, monitors use, or troubleshoots/maintains the equipment. That's still a rental of the equipment, and the whole charge — including delivery, set-up, and breakdown — is taxable.

A crucial practical point: separately stating the charges does not change the outcome, and simply saying you "operate" the equipment doesn't automatically make it a nontaxable service — the actual degree of control controls.

The ruling illustrates the line with worked $500 + $100 examples: an inflatable bounce house or movie screen with an onsite safety monitor is a taxable rental; a mechanical bull or gaming trailer that only works under the staffer's continual direct control is a nontaxable service, but the same equipment left to run on a preprogrammed setting is a taxable rental; construction equipment the company's own operator runs (skid steer, backhoe, crane, excavator) is a nontaxable service, but the same equipment dropped off for the customer to run is taxable; simulators, mobile laser tag, and tables/chairs are taxable rentals. One example also flags a second tax: if a customer then charges each guest a fee to use the gaming trailer, that per-person charge is subject to the admissions tax [§ 12-21-2420].

What this means for you

Event and party rental companies (inflatables, mechanical bulls, gaming trailers, laser tag)

Standing by for safety and rules enforcement is not operating. Bounce houses, inflatable movie screens, laser-tag setups, simulators, and tables/chairs are taxable rentals even when your staff stays onsite the whole time — collect and remit the 6% sales tax on the full charge (rental + delivery/setup), whether or not you itemize them. You cross into nontaxable-service territory only when your staffer is in continual, hands-on control so the equipment can't function without them (e.g., running a mechanical bull or gaming station live). If you charge patrons a per-head fee to enter or use an amusement device, remember the separate admissions tax may apply to that fee.

Contractors and construction-equipment rental (skid steers, backhoes, cranes, excavators)

The "operated equipment" distinction is squarely in your world. If your operator runs the machine as part of the job, the charge is a nontaxable service. If you drop the machine off for the customer to run — even if you stay to instruct, troubleshoot, or enforce safety — it's a taxable rental of the equipment. Bare equipment rental (no operator) is taxable; operated equipment is not.

Accountants and tax professionals

This is a "true object" analysis keyed to operation and control, drawing on the classic Vanderbilt Law Review formulation and Snite v. Department of Revenue. Two traps to watch: (1) itemizing rental vs. service charges is irrelevant — the transaction is characterized as a whole; and (2) the taxpayer's label ("we operate it") is not dispositive. Where the service qualifies, remember the flip side: the owner becomes the consumer of the equipment and owes use tax on its own acquisition cost.

Common questions

Q: We rent bounce houses and stay onsite the whole time for safety. Taxable?
A: Yes. Watching for safety and enforcing the rules isn't operating the equipment, so the full charge (rental plus delivery/setup) is a taxable rental. Itemizing the charges doesn't change that.

Q: We rent a mechanical bull and our staffer runs it by hand the entire time. Taxable?
A: No — if the bull won't operate without your staffer's continual control, that person is an operator and the whole charge is a nontaxable service. But if you set it to a preprogrammed level that then runs on its own, it's a taxable rental.

Q: We deliver a backhoe and our employee operates it for the job. Sales tax?
A: No sales tax — operated construction equipment is a nontaxable service. If instead you drop the machine off for the customer to run (even with onsite instruction or troubleshooting), it's a taxable rental.

Q: Does separately stating the rental and the "service" help?
A: No. The Department looks at the true object of the whole transaction; separating the costs will not change taxability. And calling yourself an "operator" doesn't guarantee nontaxable treatment — the actual degree of control decides.

Q: A customer charges guests $10 each to use our operated gaming trailer. Any tax on that?
A: Yes, but a different one — that per-person charge to enter or use the trailer is subject to the admissions tax under § 12-21-2420 unless a statutory exemption applies.

Citations and references

Statutes:

• S.C. Code Ann. § 12-36-910(A) (2014) — imposes the sales tax on retail sales of tangible personal property
• S.C. Code Ann. § 12-36-1110 — additional 1% sales tax (combined 6% state rate)
• S.C. Code Ann. § 12-36-60 (2014) — defines "tangible personal property"
• S.C. Code Ann. § 12-21-2420 — admissions tax on paid admissions to places of amusement

Regulations:

• S.C. Regulation 117-309.15 — renting/leasing TPP is taxable, but furnishing an operator makes it a nontaxable service
• S.C. Regulation 117-308 — services are not taxed when the service is the true object of the transaction

Authority for the true-object test (described in prose, not linked): 9 Vanderbilt Law Review 231 (1956); Snite v. Department of Revenue, 398 Ill. 41, 74 N.E.2d 877 (1947).

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR26-3.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 #26-3
SUBJECT:

Rental and Leases of Tangible Personal Property with an Operator
(Sales and Use Tax)

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

Title 12, Chapter 36 of the S.C. Code of Laws (2014 & Supp. 2023)
S.C. Regulation 117-308
S.C. Regulation 117-309.15

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4)
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:
The purpose of this advisory opinion is to provide the Department’s guidance on whether a person
(the “Taxpayer”) renting or leasing tangible personal property is subject to the State’s sales tax or
rendering a nontaxable service when accompanying and remaining with the tangible personal
property.
OVERVIEW:
The Taxpayer may enter into a contract with a customer to rent or lease tangible personal property
(e.g. an inflatable 1 or gaming trailer 2, construction equipment, or chairs and tables) (“equipment”).
As part of the contract, the Taxpayer will deliver and set-up the equipment at a predetermined
Inflatables are tangible personal property inflated with a gas, usually air, and include items such as bounce houses,
mazes, bungee runs, wall climbs, movie screens, and other similar items.
2
Gaming trailers are enclosed trailers with a gaming station(s) (e.g., video games, virtual reality (VR) machine or
game, simulators, etc.) located on the interior and/or exterior of the trailer.
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location. Additionally, the Taxpayer’s employee(s) may remain with the equipment for the duration
of the customer’s event to either monitor the equipment’s use or operate or control the equipment.
At the conclusion of the contracted event, the Taxpayer will break down and remove the equipment.
LAW AND DISCUSSION:
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.
Code Section 12-36-910(A) states:
A sales tax, equal to [six] 3 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.
Thus, unless an exemption applies, either sales or use tax is imposed at a rate of 6% on all retail
sales of tangible personal property.
The sales and use taxes do not apply to “[r]eceipts from services, when the services are the true
object of the transaction… unless the sales and use tax is specifically imposed by statute on such
services.” SC Regulation 117-308.
The sales and use taxes also apply to “[t]he gross receipts or gross proceeds proceeding or accruing
from the leasing or renting of tangible personal property.” SC Regulation 117-309.15. However,
“[i]f the owner of tangible personal property furnishes an operator or crew to operate such property,
such owner is not deemed to be renting or leasing the property but is rendering a service and the
receipts therefrom are not subject to the sales or use tax.” Id. In those cases, “[p]ersons purchasing
tangible personal property for use in rendering such service are liable for payment of sales or use
tax at the applicable rate on the purchase price.” Id.
SC Regulation 117-309.15 provides that a Taxpayer’s use of an operator constitutes a nontaxable
professional service. However, neither SC Regulation 117-309 nor Chapter 36 of Title 12 define
the term “operator.” In such instances, the “true object” test is helpful. The “true object” test may
be used to delineate sales of services from sales of tangible personal property. The “true object”
test is best described in 9 Vanderbilt Law Review 231 (1956). It states:
The true test then is one of basic purpose of the buyer. When the product of the service is
not of value to anyone other than the purchaser, either because of the confidential character
of the product, or because it is prepared to fit the purchaser’s special need – a contract or
will prepared by a lawyer, or the accident investigation report prepared for an insurance
company – this fact is evidence tending to show that the service is the real purpose of the
contract. When the purpose of a contract is to produce an article which is the true object of
S.C. Code Ann. § 12-36-910(A) imposes a 5% sales tax. S.C. Code Ann. § 12-36-1110 imposes an additional 1%
sales tax rate.
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the agreement, the final transfer of the product should be a sale, regardless of the fact that
special skills and knowledge go into its production. Under this analysis, printing work,
done on special order and of significant value only to the particular customer, is still a sale.
The purchaser is interested in the product of the services of the printer, not in the services
per se. Similarly, it would seem that contracts for custom-produced articles, be they
intrinsically valuable or not, should be classified as sales when the product of the contract
is transferred.
The Vanderbilt Law Review article, in quoting Snite v. Department of Revenue, 398 Ill. 41, 74
N.E.2d. 877 (1947), also establishes the following general rule:
If the article sold has no value to the purchaser except as a result of services rendered by
the vendor, and the transfer of the article to the purchaser is an actual and necessary part of
the services rendered, then the vendor is engaged in the business of rendering service, and
not in the business of selling at retail. If the article sold is the substance of the transaction
and the service rendered is merely incidental to and an inseparable part of the transfer to
the purchaser of the article sold, then the vendor is engaged in the business of selling at
retail, and the tax which he pays...[is measured by the total cost of article and services]. If
the service rendered in connection with an article does not enhance its value and there is a
fixed or ascertainable relation between the value of the article and the value of the service
rendered in connection therewith, then the vendor is engaged in the business of selling at
retail, and also engaged in the business of furnishing service, and is subject to tax as to the
one business and tax exempt as to the other.
While the above quotations do not establish rigid rules, they do provide general guidance in
determining the purpose of a transaction and are particularly helpful in addressing the issue at
hand.
Here, the essential element in determining the “true object” of a transaction involving an operator
or crew to operate the equipment is the degree of operation and control, including the use of special
skills, the Taxpayer’s employee(s) exerts on the equipment. It follows then that an “operator” for
purposes of SC Regulation 117-309.15 must exert control of, and operate, the equipment. In the
absence of an operator, the transaction simply consists of a transfer of title or possession of tangible
personal property for a consideration, which is subject to the sales tax.
It is the Department’s position that an operator is a person who utilizes certain skills or expertise
to operate, or exert control over, equipment in the performance of a function or to produce a desired
effect over a machine or device (i.e., tangible personal property). An operator is the user and
consumer of the tangible personal property used in providing a nontaxable service. Conversely,
any charges in conjunction with the rental or lease of equipment without an operator are includable
in gross proceeds of sales and subject to state and local sales tax.
CONCLUSION
A person furnished in conjunction with the rental or lease of equipment who utilizes certain skills
or expertise to perform a function or produce a desired effect over a machine or device is an
operator rendering a nontaxable service.
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A person furnished in conjunction with the rental or lease of equipment who cautions, reminds, or
enforces conduct for equipment users or who troubleshoots or maintains the equipment is not an
operator. Therefore, any charges in conjunction with the rental or lease of equipment without an
operator are includable in gross proceeds of sales and subject to state and local sales tax.
EXAMPLES
Rental of Inflatables
Question
The Taxpayer rents or leases an inflatable for $500. The Taxpayer will deliver, set-up, break down,
and remove the inflatable for an additional charge of $100. For safety purposes, the Taxpayer will
remain onsite to ensure anyone using the inflatable is complying with the rules of use/conduct. All
charges may or may not be separately stated.
Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of tangible personal property and subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
Question
The Taxpayer rents or leases an inflatable movie screen for $500. The Taxpayer will deliver, setup, break down, and remove the inflatable movie screen for an additional charge of $100. For
safety purposes, the Taxpayer will remain onsite to ensure the inflatable movie screen is
undisturbed. All charges may or may not be separately stated.
Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of tangible personal property and subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
Rental of Mechanical Bulls
Question
The Taxpayer rents or leases mechanical bull riding equipment (i.e., mechanical bull, safety mat,
inflatables, etc.) for $500. The Taxpayer will deliver, set-up, break down, and remove the
equipment for an additional charge of $100. The Taxpayer will remain onsite to ensure the
equipment is powered on, any safety equipment is intact, software updates are applied, and the
equipment is operational. Additionally, the Taxpayer will be in direct control or command of the
equipment (i.e., the equipment will not work/operate without the Taxpayer’s continual control).
The Taxpayer will enforce any necessary rules of use or conduct while the equipment is in use.
All charges may or may not be separately stated.

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Answer
The Taxpayer is an operator providing a nontaxable service. Therefore, the total gross proceeds
($500 + $100, or $600) are not subject to the sales tax. The separation of costs will not change the
taxability of this transaction.
Question
The Taxpayer rents or leases mechanical bull riding equipment (i.e., mechanical bull, safety mat,
inflatables, etc.) for $500. The Taxpayer will deliver, set-up, break down, and remove the
equipment for an additional charge of $100. The Taxpayer will remain onsite to ensure the
equipment is powered on, any safety equipment is intact, software updates are applied, and the
equipment is operational. Additionally, the Taxpayer will select from a preprogrammed list of bull
riding levels and difficulties. Once selected, the equipment operates without the Taxpayer’s
control. The Taxpayer will enforce any necessary rules of use or conduct while the equipment is
in use. All charges may or may not be separately stated.
Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of tangible personal property and subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
Rental of Construction Equipment
Question
The Taxpayer rents or leases construction equipment (“equipment”) (e.g., skid steer, backhoe,
crane, excavator) for a specific project for $500. The Taxpayer will deliver and operate the
construction equipment for an additional charge of $100. All charges may or may not be separately
stated.
Answer
The Taxpayer is an operator providing a nontaxable service. Therefore, the total gross proceeds
($500 + $100, or $600) are not subject to the sales tax. The separation of costs will not change the
taxability of this transaction.
Question
The Taxpayer rents or leases construction equipment (“equipment”) for a specific project for $500.
The Taxpayer charges $100 to deliver, set-up, break down, and remove the equipment. The
Taxpayer will not operate the equipment but for safety purposes, the Taxpayer will remain onsite
to provide instruction, troubleshoot any operational issues, and ensure that the user is following
the rules of use, conduct, or safety. All charges may or may not be separately stated.
Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of tangible personal property and subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
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Rental of Gaming Trailer
Question
The Taxpayer rents or leases a gaming trailer for $500. The Taxpayer will deliver, set-up, break
down, and remove the gaming trailer for an additional charge of $100. The Taxpayer will remain
onsite. The Taxpayer will ensure the equipment is powered on, any safety equipment is intact,
software updates are applied, and the gaming trailer is operational. The Taxpayer will enforce any
necessary rules of use/conduct while games are in use. If there is a technical issue (i.e., game
buffering, equipment failure or replacement), the Taxpayer will troubleshoot the issue or render
the game out-of-order. All charges may or may not be separately stated.
Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of the gaming trailer and are subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
Question
The Taxpayer rents or leases a gaming trailer for $500. The Taxpayer will deliver, set-up, break
down, and remove the gaming trailer for an additional charge of $100. The Taxpayer will remain
onsite to ensure the equipment is powered on, any safety equipment is intact, software updates are
applied, and the gaming trailer is operational. Additionally, the Taxpayer will be in direct control
or command of the game (i.e., the game will not work/operate without the Taxpayer’s continual
control). The Taxpayer will enforce any necessary rules of use/conduct while games are in use. If
there is a technical issue (i.e., game buffering, equipment failure or replacement), the Taxpayer
will troubleshoot the issue or render the game out-of-order. All charges may or may not be
separately stated.
Answer
The Taxpayer is an operator providing a nontaxable service. Therefore, the total gross proceeds
($500 + $100, or $600) are not subject to the sales tax. The separation of costs will not change the
taxability of this transaction.
Question
The Taxpayer rents or leases a gaming trailer for $500. The Taxpayer will deliver, set-up, break
down, and remove a gaming trailer provided at no cost to the customer. Set-up includes making
sure games are powered on, any safety equipment is intact, software updates are applied, and other
tasks to ensure the gaming trailer is operational. The Taxpayer is in direct control or command of
the game (i.e., the game does not work/operate without the Taxpayer’s continual control). The
Taxpayer also enforces any necessary rules of use or conduct while games are in use.
Answer
The Taxpayer is primarily serving as an operator, while also providing monitoring services, since
the gaming trailer games are not playable without the Taxpayer’s continual control over the games.
Therefore, the total gross proceeds of $500 are charges for a nontaxable service.
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Question
The Taxpayer provides the gaming trailer to his customer at no cost. The Taxpayer will deliver,
set-up, break down, and remove a gaming trailer provided at no additional cost to the customer.
Set-up includes making sure games are powered on, any safety equipment is intact, software
updates are applied, and other tasks to ensure the gaming trailer is operational. The Taxpayer is in
direct control or command of the game (i.e., the game does not work/operate without the
Taxpayer’s continual control). The Taxpayer also enforces any necessary rules of use or conduct
while games are in use. Additionally, the customer will charge each person a separate fee of $10
to enter into or use the gaming trailer.
Answer
The Taxpayer is primarily serving as an operator, while also providing monitoring services, since
the gaming trailer games are not playable without the Taxpayer’s continual control over the games.
Therefore, such charges in conjunction with an operator are charges for a nontaxable service.
The charge ($10) to enter or use the gaming trailer is subject to the admissions tax4 unless
specifically exempted by statute.
Rental of Mobile Simulator
Question
The Taxpayer rents or leases a mobile simulator for $500. The Taxpayer will deliver, set-up, and
break down a mobile simulator (e.g., golf, airplane, motorcycle, car, etc.) for an additional charge
of $100. The Taxpayer will ensure the simulator is powered on, any safety equipment is intact,
software updates are applied, and the simulator is operational. The Taxpayer will remain onsite to
ensure the safe use of the simulator and enforce rules of use/conduct. If there is a technical issue
(i.e., simulator buffering, failure, or replacement), the Taxpayer will troubleshoot the issues and
make any necessary adjustments to make the simulator playable or render it out-of-order. All
charges may or may not be separately stated.
Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of tangible personal property and subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
Mobile Laser Tag
Question
The Taxpayer rents or leases laser tag equipment and a laser tag course for $500. The Taxpayer
will deliver, set-up, break down, and remove the laser tag equipment, the laser tag course, which
may include inflatables, and may serve as a referee or group instructor for an additional charge of
$100. If there is a technical issue (i.e., laser tag equipment malfunction, defect in inflatable, first
aid, etc.), the Taxpayer will troubleshoot the issues and make any necessary adjustments to allow
the customer to resume use of the laser tag equipment. All charges may or may not be separately
stated.
4

S.C. Code Ann. § 12-21-2420 imposes an admissions tax on paid admissions to places of amusement.

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Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of tangible personal property and subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
Tables and Chairs
Question
The Taxpayer rents or leases tables and chairs for $500. The Taxpayer will deliver, set-up, break
down, and remove the tables and chairs for an additional $100. The Taxpayer may remain onsite
during the event.
Answer
The Taxpayer is not an operator. Therefore, the total gross proceeds ($500 + $100, or $600) are in
conjunction with the rental or lease of tangible personal property and subject to the sales tax. The
separation of costs will not change the taxability of this transaction.
Note: A Taxpayer’s statement that the Taxpayer is operating equipment does not automatically
guarantee that the Taxpayer is providing a nontaxable professional service.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
February 17
,2026
Columbia, South Carolina

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