Under historical SC Revenue Ruling 91-17, which county's one-percent local option sales or use tax applied to a delivery?
Apply this to your situation
This page answers the general question as of 1991. Ezel answers yours, under current South Carolina tax law, with citations.
Plain-English summary
South Carolina Revenue Ruling 91-17 was a comprehensive 1991 guide to the original one-percent county local option sales and use tax. Its central rule followed delivery:
- A retailer located in a local-option county owed that county's one-percent sales tax on tangible personal property delivered within the same county.
- Property delivered outside the retailer's county was not subject to that county's sales tax.
- If property was delivered into another local-option county and first stored, used, or consumed there, the purchaser owed that county's one-percent use tax.
- Depending on the retailer's activities in the destination county, the retailer could be required to collect the use tax as the state's collection agent.
The ruling required reporting by the county and municipality where delivery or first use occurred. It expressly warned that a mailing address was not reliable for locating a transaction.
How the ruling located delivery
Delivery occurred when and where title or possession transferred from the retailer to the customer. RR 91-17 gave these historical rules:
- FOB destination or similar terms: delivery at the purchaser's location or other directed destination.
- FOB shipping point or similar terms: delivery at the retailer's location.
- No shipping terms: delivery at the purchaser's location or directed destination.
- Retailer's own vehicle: delivery at the purchaser's location or directed destination.
- Title transfers but the retailer keeps possession: delivery at the retailer's location.
Retailers with multiple locations had to keep records identifying the location to which each sale was attributable.
Sales tax versus use tax
The historical local sales tax was the retailer's liability for qualifying in-county deliveries. The local use tax was the purchaser's liability when property was first stored, used, or consumed in a local-option county.
A retailer required to collect use tax was accountable as a collection agent rather than becoming the underlying taxpayer. The Commission could assess a retailer that had sufficient destination-county activity but failed to collect tax on taxable sales.
The purchaser was relieved from local use-tax liability when:
- delivery occurred in another county and that county's local sales tax was paid; or
- the purchaser held a receipt showing that the retailer collected the applicable use tax.
The original retailer-collection criteria
For deliveries made in the retailer's own vehicles, the ruling said a collection duty could arise if the retailer had any of these destination-county connections:
- an office, warehouse, distribution house, sales house, other business place, or property;
- an agent, salesperson, or employee;
- regular advertising through media located in the county; or
- regular advertising through outside media with extensive coverage in the county.
For common-carrier, UPS, mail, or other third-party delivery, the original ruling listed an in-county business location or property, or an agent, salesperson, or employee. It reserved other situations for case-by-case analysis.
These collection criteria are especially historical: SC Revenue Ruling 05-16 later modified Question 3, and RR 09-9 superseded RR 91-17.
Purchaser reporting
When the retailer did not collect the one-percent use tax, the purchaser had to report and pay it directly. Property bought outside South Carolina and first stored, used, or consumed in a local-option county was subject to the local use tax in addition to the historical five-percent state use tax.
The same destination rule applied to an in-state purchase delivered from one county for first use in another. Reporting was by the county and municipality of first storage, use, or consumption.
Special transactions covered by the ruling
RR 91-17 also addressed a wide range of 1991 administrative questions:
- Withdrawals from wholesale inventory: report where first withdrawn, used, or consumed.
- Outside salespeople: report where delivery occurred, including when the salesperson delivered the goods while taking the order.
- Direct-pay certificates: tax became due where property was first withdrawn, used, or consumed; merely transferring inventory did not trigger tax.
- Limited exemption certificates: an item qualifying under Section 12-36-2120 was exempt from both state and local tax; misuse left the holder liable when the item was withdrawn, used, or consumed.
- Construction contracts: non-transition-exempt materials followed supplier-delivery rules for sales tax and first-use rules for use tax; manufacturer-contractors reported at the jobsite.
- Utilities: report where consumption occurred; the ruling included electronic transmission and pipeline providers.
- Pre-imposition leases: later payments under a lease entered before the county's imposition date were not subject to the local tax.
- Installment sales: the transaction date controlled whether the local tax applied; a purchaser paying uncollected use tax could not spread it over installment payments.
- Accommodations: room charges and additional guest charges were subject to the local sales tax and reported by location.
- Other-state tax credit: credit applied against South Carolina use tax under the allocation rules stated in the ruling.
Transactions the ruling excluded
The one-percent tax did not apply to:
- items subject to the historical maximum tax under Section 12-36-2110;
- transactions subject to the Casual Excise Tax; or
- transactions exempt or excluded from the historical five-percent state sales or use tax.
The ruling warned that trailers pulled by vehicles other than truck tractors and pole trailers were not within the listed local-tax exemption.
Refund and billing rules
For local sales tax, the in-state retailer could seek a refund when tax had been paid incorrectly. For local use tax, the purchaser was the taxpayer entitled to the refund and needed documentation showing payment to the retailer.
The retailer could include sales tax in the sales price or show it separately. Use tax collected from a purchaser had to be shown on a receipt with the taxable amount and tax collected. An out-of-state retailer collecting both state and local use tax could show one combined six-percent South Carolina tax under the historical rule.
Property-tax provisions
The ruling also interpreted the related property-tax credit and fund-allocation provisions. It excluded the historical $20,000 homestead-exemption amount from taxable property for the credit calculation, used agricultural fair market value for agricultural purposes, and applied the allocation percentages in effect for the year a county imposed the tax.
Common questions
Q: Did the retailer's county tax every sale made by that retailer?
A: No. Under the ruling, its one-percent sales tax applied only when delivery occurred within that county.
Q: Did a mailing address determine the county or municipality?
A: No. The ruling expressly said retailers could not rely on mailing addresses.
Q: Who owed the destination county's use tax?
A: The purchaser, although the retailer could be required to collect it.
Q: Could a retailer collect local use tax voluntarily?
A: Yes. Once collected, the retailer had to remit it to the Commission.
Q: Did moving direct-pay inventory between locations trigger tax?
A: No. Tax was triggered when the property was withdrawn, used, or consumed.
Q: Is RR 91-17 current local-tax guidance?
A: No. RR 05-16 modified part of it, RR 09-9 expressly superseded it, and later local-tax rulings superseded the intervening guidance.
Citations and references
- S.C. Code Ann. §§ 4-10-10 et seq. — historical Local Option Sales and Use Tax Act
- S.C. Code Ann. §§ 4-10-20, 4-10-25, 4-10-40(B), and 4-10-90(B) — historical imposition, transition, credit, and allocation provisions
- S.C. Code Ann. §§ 12-36-110, 12-36-2120, and 12-36-2510 — retail-sale definition, exemptions, and direct pay
- South Carolina Attorney General opinion dated July 30, 1991 — delivery rule attached to the ruling
- SC Revenue Ruling 05-16 — modified RR 91-17 Question 3: https://dor.sc.gov/sites/dor/files/policies/RR05-16.pdf
- SC Revenue Ruling 09-9 — expressly superseded RR 91-17: https://dor.sc.gov/sites/dor/files/policies/RR09-9.pdf
- SC Revenue Ruling 22-8 — later local sales-and-use-tax guidance: https://dor.sc.gov/sites/dor/files/policies/RR22-8.pdf
Source
- Landing page: https://dor.sc.gov/advisory-opinion-search
- Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR91-17.pdf
Original ruling text
SC REVENUE RULING #91-17
SUBJECT:
Local Option Sales & Use Tax
(Sales, Use & Property)
TAX MANAGERS:
John McCormack & Jerry Knight
EFFECTIVE DATE:
January 1, 1991
SUPERSEDES:
SC Revenue Ruling #90-11, Information Letter #91-13 and all previous
documents and any oral directives in conflict herewith.
REFERENCE:
S.C. Code Ann. Section 4-10-10, et. seq. (Supp. 1990)
AUTHORITY:
S.C. Code Ann. Section 12-4-320 (Enacted June, 1991)
SC Revenue Procedure #87-3
SCOPE:
A Revenue Ruling is the Commission's official interpretation of how tax
law is to be applied to a specific set of facts. A Revenue Ruling is
public information and remains a permanent document until superseded
by a Regulation or is rescinded by a subsequent Revenue Ruling.
FACTS:
On July 30, 1991, the South Carolina Attorney General issued an opinion concerning the Local
Option Sales and Use Tax, a copy of which is attached. The opinion holds that a "retail sale of
tangible personal property is not subject to the local option sales tax when the seller located
within a county that imposes the tax is required to deliver the property to the purchaser outside
of that county."
The opinion stated in a footnote that the "opinion does not treat the question of whether the seller
is required to collect the use tax when the property is delivered into another county that also
imposes the local option sales and use tax. Such is dependent upon the controlling facts and the
extent of the seller's activity with that county. Such a sale, however, would be subject to the
local option use tax in the county wherein the sale was consummated by delivery."
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WHAT DOES THE ATTORNEY GENERAL'S OPINION MEAN?
The South Carolina Tax Commission has adopted the Attorney General's opinion effective July
1, 1991. Therefore, SC Revenue Ruling #90-11 and Information Letter #91-13 are rescinded.
Retailers in counties that have imposed the local option sales and use tax must now remit the 1%
sales tax only on sales of tangible personal property delivered within the county. Sales of
tangible personal property that are delivered by the retailers outside the county are not subject to
the 1% sales tax.
However, depending on the facts and circumstances, retailers may be required to collect the 1%
use tax if the county into which the property is delivered has imposed the local option sales and
use tax. (See Questions #1 - #5.)
For the purposes of this document, the local option sales tax will be referred to as the "1% sales
tax" and the local option use tax will be referred to as the "1% use tax". Also, for purposes of this
document, a "local option tax county" is a county that has imposed the 1% sales and use taxes.
LIABILITY FOR 1% LOCAL OPTION TAX: A SUMMARY
1% Sales Tax: If a retailer is located in a local option tax county, he is liable for the 1% sales tax
on all sales of tangible personal property delivered within the county in which he is located.
1% Use Tax: If a retailer delivers tangible personal property into a local option tax county, the
person taking delivery and first storing, using or consuming the property in the local option tax
county is liable for the 1% use tax.
However, if certain criteria are met, the retailer making deliveries into a local option tax county
can be required to collect that county's 1% use tax. (See Questions #1 - #5.)
If the retailer is required to collect a county's 1% use tax, he does not become liable for the tax,
but is held accountable for the tax as a collection agent for the State. Therefore, if upon being
audited, it is found such retailer has failed to collect that county's 1% use tax on any taxable
sales, the Tax Commission may assess the retailer for that county's 1% use tax.
NOTE: A purchaser is not liable for a county's 1% use tax if he takes delivery in another county
and pays the other county's 1% sales tax. Also, the purchaser is relieved of the liability for the
1% use tax if he has a receipt from a retailer showing the retailer has collected the 1% use tax.
HOW PLACE OF DELIVERY IS DETERMINED:
For purposes of the 1% local option tax and this document, delivery of tangible personal
property is defined to occur when and where title or possession of tangible personal property
transfers from the retailer to his customer. Following are guidelines to be used in determining
when and where delivery occurs:
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FOB Destination Or Similar Terms: Delivery is considered to take place at the purchaser's
location or wherever delivered to the purchaser (at the purchaser's direction).
FOB Shipping Point Or Similar Terms: Delivery is considered to take place at the
retailer's location. Retailers with multiple retail locations are to maintain their records so
as to clearly show which sales are attributable to each location.
Shipping Terms Are Unspecified: Delivery is considered to take place at the purchaser's
location or wherever delivered to the purchaser (at the purchaser's direction).
Retailer Uses Own Vehicle: If a retailer uses his own vehicle(s) for making deliveries,
delivery is considered to take place at the purchaser's location or wherever delivered at the
direction of the purchaser. This applies whether the vehicles are owned or leased by the
retailer.
Situations Where Title Transfers, But Not Possession: Delivery is considered to take place
at the retailer's location.
For example, a printer may produce business cards for a customer. The cards include all
needed information except for the employee name. The printer keeps possession of, but
not title to, the cards. At the direction of the customer, the printer will imprint the
customer's cards with an employee's name and send the imprinted cards to the customer.
Retailers with multiple retail locations are to maintain their records so as to clearly show
which sales are attributable to each location.
NOTE: Retailers reporting sales for purposes of the local option tax must report their
sales by county and municipality where delivery occurs.
RETAILERS CANNOT RELY ON MAILING ADDRESSES IN REPORTING THE
LOCAL OPTION TAX. A MAILING ADDRESS IS NOT AN ACCURATE
INDICATION AS TO WHETHER OR NOT A LOCATION IS WITHIN A
PARTICULAR MUNICIPALITY OR COUNTY.
QUESTIONS & ANSWERS CONCERNING THE 1% SALES AND USE TAXES:
IN-STATE RETAILERS - REPORTING REQUIREMENTS:
- Q. How is a retailer who is located in a county that has imposed the local option tax to report
his sales for purposes of the 1% sales and use taxes?
A. 1% Sales Tax: A retailer located in a local option tax county is subject to the 1% sales
tax on all sales of tangible personal property delivered inside the county in which the
retailer is located.
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1% Use Tax: A retailer located in a local option tax county who makes deliveries into
another local option tax county is required to collect the other county's 1% use tax, if
certain criteria are met. (See Question #3.)
Sales on which a retailer is required to report the 1% sales or use tax are to be reported by
county and municipality of delivery on Form ST-389, which is to be attached to the
appropriate sales and use tax return.
- Q. How is a retailer who is located in a county that has not imposed the local option tax to
report his sales for purposes of the 1% sales and use taxes?
A. 1% Sales Tax: A retailer located in a county that has not imposed the 1% sales and use
tax is not subject to the 1% sales tax.
1% Use Tax: A retailer located in a county that has not imposed the 1% sales and use tax
who makes deliveries into a local option tax county is required to collect the other
county's 1% use tax, if certain criteria are met. (See Question #3.)
Sales upon which a retailer is required to collect the 1% use tax are to be reported by
county and municipality of delivery on Form ST-389, which is to be attached to the
appropriate sales and use tax return. - Q. What are the criteria that must be met to require a retailer to collect a county's 1% use
tax?
A. Whether or not a retailer can be required to collect a county's 1% use tax is dependent
upon the controlling facts and the extent of the seller's activities within the county into
which tangible personal property is delivered.
Retailers Using Their Own Vehicles: A retailer can be required to collect a county's 1%
use tax if the retailer is shipping property into the county, using his own vehicles
(whether owned or leased), and any one of the following criteria is met:
(a)
The retailer maintains, temporarily or permanently, directly or by subsidiary, an
office, warehouse, distribution house, sales house, other place of business, or
property in the county.
(b)
The retailer or a subsidiary has, temporarily or permanently, an agent, salesman, or
employee operating within the county.
(c)
The retailer advertises, on a regular basis, via advertising media located in the
county (e.g. newspapers, television, radio).
(d)
The retailer advertises, on a regular basis, via advertising media located outside the
county but which has extensive coverage within the county.
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Retailers Using Other Than Their Own Vehicles: A retailer can be required to collect a
county's 1% use tax if the retailer is shipping property into the county, using other than
his own vehicles (e.g. common carrier, UPS, the mail), and any one of the following
criteria is met:
(a)
The retailer maintains, temporarily or permanently, directly or by subsidiary, an
office, warehouse, distribution house, sales house, other place of business, or
property in the county.
(b)
The retailer or a subsidiary has, temporarily or permanently, an agent, salesman, or
employee operating within the county.
Other Situations: All other situations must be considered on a case-by-case basis, in light
of current case law.
NOTE: If upon being audited, it is found a retailer has sufficient activities in a particular
county to require him to collect that county's 1% use tax, but has failed to collect that
county's 1% use tax on any taxable sales, the Tax Commission may assess the retailer for
that county's 1% use tax.
- Q. May an in-state retailer, who does not have sufficient activities in a particular local
option tax county to require the retailer to collect that county's 1% use tax, voluntarily
collect that county's 1% use tax?
A. Yes. If a retailer voluntarily collects the 1% use tax, he has an obligation to remit the tax
to the Tax Commission.
OUT-OF-STATE RETAILERS - REPORTING REQUIREMENTS : - Q. How are out-of-state retailers (nonresident retailers) to report their sales?
A. Nonresident retailers are required to "identify the county or municipality in the county
area in which tangible personal property purchased at retail is stored, used or consumed
in this State" (Code Section 4-10-20).
PURCHASERS - REPORTING REQUIREMENTS : - Q. The liability for the 1% use tax, as with the 5% state use tax, is on the purchaser. The
retailer may, however, be required to collect the tax from the purchaser. If the retailer
does not collect the 1% use tax from the purchaser, then the purchaser must pay the tax
directly to the Tax Commission on his return.
In those situations where the retailer does not collect the 1% use tax, how is the purchaser
to report the tax?
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A. Purchases from Outside South Carolina: Purchases of tangible personal property (not for
resale) from outside South Carolina, first stored, used or consumed in a local option tax
county, are subject to the 1% use tax, in addition to the 5% state use tax. Such purchases
are to be reported by county and municipality where the property is first stored, used or
consumed.
Purchases from Inside South Carolina: Purchases of tangible personal property (not for
resale) from one county, which is first stored, used or consumed in another county, are
subject to the 1% use tax if stored, used or consumed in a local option tax county. Such
purchases are to be reported by county and municipality where the property is first
stored, used or consumed.
NOTE: The purchaser is not liable for a county's 1% use tax if he takes delivery in
another county and pays the other county's 1% sales tax. Also, the purchaser is relieved
of the liability for the 1% use tax if he has a receipt from a retailer showing the retailer
has collected the 1% use tax from the purchaser.
ARTISTS, CRAFTSMEN & TRANSIENT OR TEMPORARY RETAILERS:
- Q. How are "artists and craftsmen" licensed under Code Section 12-36-510(A)(2) and
"transient or temporary" retailers licensed under Code Section 12-36-510(A)(3) to report
their sales?
A. Such retailers are to report their sales by municipality and county where delivery is made.
(See Questions #1 and #2.)
WITHDRAWALS FOR USE: - Q. Code Section 12-36-110(c) defines "retail sale" to include "the withdrawal, use, or
consumption of tangible personal property by anyone who purchases it at wholesale".
How are such "retail sales" to be reported?
A. These retail sales are to be reported by county and municipality where the property is
first withdrawn, used or consumed.
SALES MADE VIA OUTSIDE SALESMEN: - Q. How are in-state retailers to report sales made as a result of orders taken by outside
salesmen?
A. Such retailers are to report their sales by municipality and county where delivery is made.
(See Questions #1 and #2).
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10. Q. How are in-state retailers to report sales made by outside salesmen who, at the time of
taking the order, also deliver the merchandise to the customer?
A. Such retailers are to report their sales by municipality and county where delivery is made.
(See Questions #1 and #2).
- Q. How are out-of-state retailers who solicit orders via salesmen to report their sales?
A. Such retailers are to report their sales by municipality and county where delivery is made.
If the property is delivered into a local option tax county, then the sale is subject to the
1% use tax. If the property is delivered into a county that has not imposed the local
option tax, then the 1% use tax is not due. (See Question #5.)
"DIRECT PAY" CERTIFICATES: - Q. What effect, if any, does the use of a "direct pay" exemption certificate (Code Section 1236-2510) have on the reporting of the 1% sales and use tax?
A. By using a so-called "direct pay" exemption certificate, a taxpayer can make all
purchases tax free and must pay any taxes due directly to the Commission. The taxpayer
is liable for any taxes due and the tax (sales or use) is due upon the property being
"withdrawn, used or consumed by the taxpayer". For purposes of the 1% sales and use
tax, such withdrawals, use or consumption are reportable by county and municipality
where the property is first withdrawn, used or consumed. - Q. For those taxpayers who use a "direct pay" exemption certificate, what is the effect on the
1% sales and use tax if the property is merely transferred from one locale to another? By
"transferred", it is meant the property is not withdrawn from inventory for use or
consumption, but is merely moved from one location to another.
A. Merely transferring property from one locale to another does not trigger the tax. The tax
is due when the property is withdrawn, used or consumed by the taxpayer and such use or
consumption is reportable by the county and municipality where first withdrawn, used or
consumed.
"LIMITED" EXEMPTION CERTIFICATES: - Q. What effect, if any, does use of a "limited" exemption certificate have on the reporting of
the 1% sales and use tax?
A. Unlike a "direct pay" exemption certificate, which allows the holder to make all
purchases free of the tax, a so-called "limited" exemption certificate only allows specific
items, which are exempt under Code Section 12-36-2120, to be purchased tax-free.
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If the holder of the limited exemption certificate purchases an item which falls within an
exemption provided by Code Section 12-36-2120, then the purchase is exempt from the
5% state tax and the 1% local tax.
However, if the holder uses the certificate to purchase an item not exempt under Code
Section 12-36-2120, then the holder of the certificate is liable for any tax due upon the
property being withdrawn, used or consumed. For purposes of the 1% sales and use tax,
such withdrawals, use or consumption are reportable by county and municipality where
the property is first withdrawn, used or consumed.
TRANSACTIONS NOT SUBJECT TO THE 1% TAX:
- Q. Are there any transactions which are not subject to the 1% sales and use tax?
A. Yes. The following transactions are exempted or excluded from the 1% sales and use
tax:
(1)
Sales of "items with a maximum tax levied in accordance with [Section 12-362110]" are exempt from the 1% tax.
"Items with a maximum tax" are aircraft, motor vehicles, motorcycles, boats,
trailers and semitrailers pulled by truck tractors, self-propelled light construction
equipment, unassembled aircraft, mobile homes, and musical instruments and
office equipment purchased by certain religious organizations.
(2)
Transactions subject to the Casual Excise Tax under Article 17 of Title 12 are
exempt from the 1% tax.
That Article imposes "an excise tax for the issuance of every certificate of title, or
other proof of ownership, for every motor vehicle, motorcycle, boat, motor, or
airplane, required to be registered, titled, or licensed".
(3)
Those transactions exempted or excluded from the imposition of the 5% state sales
or use tax are exempt from the 1% tax.
NOTE: Sales of trailers that can be pulled by vehicles other than truck tractors, and sales
of pole trailers, are not exempt from the 1% local sales and use taxes.
CONSTRUCTION CONTRACTS:
- Q. How does the 1% sales and use tax apply to construction contracts?
A. Section 4-10-25 provides "[t]he gross proceeds of sales of tangible personal property
delivered after the imposition date of the tax levied under Section 4-10-20 in a county,
either under the terms of a construction contract executed before the imposition date, or a
written bid submitted before the imposition date culminating in a construction contract
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entered into before or after the imposition date are exempt from the local sales and use
tax provided a verified copy of the contract is filed with the South Carolina Tax
Commission within six months after the imposition of the local option sales and use tax".
For information on how to apply for the above exemption, see SC Information Letter
91-27.
1% Sales Tax:
For those transactions which are not exempt under the provisions of Code Section 4-1025 (see above), the 1% sales tax is reportable by the contractor's supplier in the county
and municipality where the tangible personal property is delivered.
If the property is delivered within the county in which the supplier is located, and that
county has imposed the 1% tax, then the 1% sales tax is due. If the property is delivered
within the county in which the supplier is located, and that county has not imposed the
tax, then the 1% sales tax is not due.
1% Use Tax:
For those transactions which are not exempt under the provisions of Code Section 4-1025 (see above), the 1% use tax is reportable by county and municipality where the
property is first stored, used or consumed.
The liability for the 1% use tax, as with the 5% state use tax, is on the contractor. The
supplier may, however, be required to collect the tax from the contractor. (See Questions
1 - #5.)
If the contractor takes delivery in one local option tax county and pays that county's 1%
sales tax to the supplier, he is not liable for the 1% use tax if he takes the property to
another local option tax county and stores, uses or consumes the property in that county.
Also, the contractor is relieved of the liability for the 1% use tax if he has a receipt from
the supplier showing the supplier has collected the 1% use tax from the contractor.
- Q. Code Section 12-36-110(1)(d) includes in the definition of "retail sale" "the use within
this State of tangible personal property by its manufacturer as building materials in the
performance of a construction contract".
How are such businesses, which are generally referred to as "manufacturer/contractors",
to report these "retail sales"?
A. "Manufacturer/contractors" are to report the 1% sales or use tax by county and
municipality where the property is used or consumed - the location of the construction
site.
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VENDING MACHINE OPERATORS
- Q. How are businesses that make sales from vending machines to report their sales?
A. 1% Sales Tax:
Items to be sold from vending machines, except for cigarettes and soft drinks in closed
containers, purchased from suppliers located in a local option tax county are subject to
the 1% sales tax if delivered to the vending machine operator in that county. The
vending machine operator's supplier is liable for the tax on such sales and is to account
for his sales by the county and municipality where the property is delivered to the
vending machine operator.
Sales of cigarettes and soft drinks in closed containers are subject to the 1% sales tax
upon being sold from the vending machines, if the machines are located in a local option
tax county. The liability for the tax is on the vending machine operator and he is to
account for such sales by county and municipality in which the vending machines are
located.
1% Use Tax:
Items to be sold from vending machines, except for cigarettes and soft drinks in closed
containers, which are purchased from suppliers located outside the State or outside the
local option tax county, are subject to the 1% use tax. The vending machine operator is
not liable for the county's 1% use tax if he takes delivery in another county and pays the
other county's 1% sales tax.
If the supplier (whether in-state or out-of-state) does not collect the 1% use tax from the
vending machine operator (who is liable for the 1% use tax), or the 1% sales tax is not
paid, then the vending machine operator is to pay the tax directly to the Tax Commission
on his return. (See Question #6)
Purchases of cigarettes and soft drinks in closed containers for sale from vending
machines are not subject to the 1% use tax. The 1% sales tax is due upon such items
being sold from machines located in a local option tax county. The liability for the 1%
sales tax is on the vending machine operator. Again, such sales are to be accounted for
by county and municipality where the machines are located.
UTILITIES - Q. How are utilities to report the 1% sales or use tax?
A. Code Section 4-10-20 requires utilities "to report sales in the county or municipality in
which consumption of the tangible personal property occurs". In other words, utilities
are to report their sales by county and municipality where their customers are located.
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20. Q. For purposes of question #19, what is a "utility"?
A. A "utility" is an entity which sells products or services subject to the 5% state sales and
use tax and transmits or delivers its products or services via electronic transmissions or
pipelines (i.e. electric and gas companies, telephone companies, cable TV companies and
other communications companies).
NOTE: Entities which sell water via pipelines to the public are also "utilities"; however,
their sales are exempt from the 5% sales and use tax.
BUSINESSES WHICH BILL ON A MONTHLY BASIS:
- Q. For those taxpayers who sell and bill their services on a monthly basis (i.e. electric
utilities and cable TV companies), when are they to begin reporting the 1% sales or use
tax?
A. Section 4-10-100 requires such persons to report the 1% tax "beginning on the first day
of the billing period beginning on or after the date of general imposition". The phrase
"date of general imposition" means the date the 1% tax becomes effective in a particular
county (e.g. July 1, 1991).
For example, if an electric power company has a billing period ending July 10, 1991, the
first "billing cycle" subject to the 1% tax would be the period beginning July 11, 1991.
The period July 1st through July 10th would not be subject to the 1% tax.
LEASES: - Q. If tangible personal property is leased prior to the imposition date of the 1% tax in a local
option tax county and the lease period extends beyond the imposition date, does the 1%
sales or use tax apply to those lease payments made after the imposition date?
A. No. The 1% sales or use tax would not apply to those lease payments made after the
imposition date on leases entered into before the imposition date of the 1% local option
tax.
NOTE: For more information concerning leases, see SC Revenue Ruling #91-9.
INSTALLMENT SALES: - Q. Code Section 12-36-2560, which concerns sales made on an installment basis, allows a
retailer to elect "to include in the return only the portion of the sales price actually
received by the retailer during the taxable period or to include the entire sales price in the
return for the taxable period during which the sale was consummated".
If the retailer has elected to pay the tax as payments are received, are payments received
after the imposition date of the 1% tax subject to the 1% sales or use tax?
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A. For sales made after the imposition date, the 1% sales or use tax applies to all payments
received. For sales made before the imposition date, the 1% sales or use tax would not
apply.
For those sales made on or after the imposition date of the 1% tax, and on which the
retailer does not collect the 1% use tax from the purchaser (if he delivers to the purchaser
in a local option tax county), the purchaser must pay his county's 1% use tax on his return
directly to the Tax Commission. If the purchaser must pay the 1% use tax, the tax is due
on the entire purchase price. The purchaser may not pay the 1% use tax as payments are
made to the retailer.
ACCOMMODATIONS:
- Q. Does the 1% sales tax apply to charges for accommodations? See Code Section 12-36920(A).
A. Yes. The 1% sales tax applies to charges for accommodations. - Q. Does the 1% sales tax apply to "additional guest charges", as defined at Code Section 1236-920(B)?
A. Yes. The 1% sales tax applies to charges for "additional guest charges". - Q. How are taxpayers who are subject to the sales tax on accommodations and "additional
guest charges" to report the 1% sales tax if they own or manage rental units in different
counties or municipalities?
A. Section 4-10-20 provides that such taxpayers "shall report separately in [their] sales tax
return[s] the total gross proceeds from business done in each county or municipality",
using Form ST-389.
CREDIT FOR SALES AND USE TAXES PAID IN ANOTHER STATE: - Q. May credit be taken against the 1% use tax for sales and use tax due and paid in another
state?
A. Yes. Credit may be taken against the 1% use tax for sales and use tax due and paid in
another state, as provided below:
(1)
If the total tax due and paid in another state (state plus local) is less than 6% and
property is stored, used or consumed in a South Carolina county which has imposed
the 1% use tax, then the use tax owed in South Carolina is to be allocated 5/6 to the
State and 1/6 to the county.
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For example, Georgia has a 4% state tax and a 1% local tax; therefore, if a taxpayer
makes a purchase in Georgia with a sales price of $1,000, upon which the 5% tax
was due and paid in Georgia, and stores, uses or consumes the property in a South
Carolina county which has imposed the 1% use tax, the difference owed in South
Carolina (1%) is to be allocated as follows State portion = 5/6 times 1% times $1,000 = $ 8.30
Local portion = 1/6 times 1% times $1,000 = 1.70
Total due
$10.00
=======
(2)
If the total sales and use taxes due and paid in another state (state plus local) is
greater than 6%, no tax will be due in South Carolina (either state or local).
(3)
If the property is stored, used or consumed in a S.C. county which has not imposed
the 1% sales and use tax, credit will be allowed against the 5% state use tax up to
the amount of state and local taxes due and paid in the other state.
NOTE: If the purchaser takes delivery of tangible personal property in a local
option tax county and pays that county's 1% sales tax, the purchaser is not liable for
the 1% use tax if the property is first stored, used or consumed in another local
option tax county.
REFUNDS OF THE STATE & LOCAL SALES AND USE TAXES:
- Q. If a retailer pays taxes which should not have been paid, who is entitled to a refund - the
retailer or the purchaser?
A. Sales Made By In-State Retailers. If a retailer is located in a local option tax county and
delivers property in that county, the retailer may receive a refund for the 5% state sales
tax and the 1% county sales tax, if the tax should not have been paid.
If an in-state retailer delivers property into a local option tax county, the retailer may
receive a refund for the 5% state sales tax, if the tax should not have been paid. The
retailer may not, however, receive a refund for the 1% use tax.
The purchaser is the taxpayer for purposes of the 1% use tax and is, therefore, the only
one entitled to the refund for the 1% use tax. To receive the refund, the purchaser must
have documentation showing he has paid the 1% use tax to the retailer.
Sales Made By Out-of-State Retailers. If an out-of-state retailer delivers property into a
local option tax county, the retailer may not receive a refund for the 5% state use tax or
the 1% county use tax, if the tax should not have been paid.
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The purchaser is the taxpayer for purposes of the 5% state use tax and the 1% county use
tax and is, therefore, the only one entitled to the refund for the State and county use taxes.
To receive the refund, the purchaser must have documentation showing he has paid the
State and county use taxes to the retailer.
How To Request A Refund. Taxpayers who are entitled to a refund of the 1% local
option tax may send a letter to:
S.C. Tax Commission
Office Audit - Sales Tax
P.O. Box 125
Columbia, S,C. 29214
This letter must contain:
(1)
the taxpayer's name, address, telephone number and retail license number;
(2)
reason(s) for the refund; and
(3)
a schedule showing (by month) a breakdown by county and municipality where the
tax was originally reported. This schedule must also show the type tax (sales or
use) and amount to be refunded.
All refunds are subject to verification by audit, either before or after issuance.
For assistance in requesting a refund, taxpayers should contact Mr. Larry Strickland at
(803) 737-4788.
HOW TAXES SHOULD BE SHOWN ON BILLINGS TO CUSTOMERS:
- Q. Are retailers required to show the 5% state tax and the 1% local tax separate from the
sales price on billings to their customers?
A. Both the state and local sales taxes are the liability of the retailer. Code Section 12-36940 allows, but does not require, the retailer to include in the sales price the amount of
the sales tax.
The state and local use taxes are the liability of the purchaser. Code Section 12-36-1350
requires the retailer to "collect the use tax from the purchaser and give to the purchaser a
receipt showing the amount subject to the tax and the amount of tax collected".
Sales By In-State Retailers. An in-state retailer located in a local option tax county, and
making deliveries in that county, is not required to separately show either the 5% state
sales tax or the 1% local sales tax from the sales price on billings to his customers. The
retailer, however, does have the option under Code Section 12-36-940 to separately show
the sales taxes from the sales price.
14
An in-state retailer making deliveries into a local option tax county is not required to
separately show the 5% state sales tax
from the sales price. The retailer, however, does have the option under Code Section 1236-940 to separately show the sales tax from the sales price. However, if he collects the
1% use tax, he is required to separately show the 1% use tax from the sales price.
Sales Made By Out-of-State Retailers. An out-of-state retailer making deliveries into a
local option tax county is required to separately show the 5% state use tax and the 1%
local use tax from the sales price on billings to his customers. The retailer is not required
to separate the two taxes. He can just show a 6% South Carolina tax was collected.
OTHER INFORMATION:
- Q. Is the 1% sales or use tax to be considered in determining whether or not a taxpayer is
required to pay estimated taxes?
A. No. Code Section 12-36-2600 was amended to specifically exclude the 1% sales and use
tax from the estimated tax provisions. - Q. Do the discount provisions for filing and paying timely (Code Section 12-36-2610) apply
to the 1% sales and use tax?
A. Yes. Code Section 12-36-2610 allows the discount on returns "required by Section 1236-2570 [state tax] and Chapter 10 of Title 4 [1% sales and use tax]". - Q. If the answer to question #31 is "yes", how is the discount amount(s) to be computed?
A. The discount amount is to be computed by applying the appropriate discount rate to the
total tax due on the return (the 5% state combined with the 1% local tax).
The discount allowed is 3% if the total tax liability on a return is less than $100; and 2%
if the total tax is $100 or more.
The total discount amount for a particular taxpayer (state plus local) cannot exceed
$10,000 during any one state fiscal year. - Q. Is the 1% sales and use tax to be considered in determining whether or not a taxpayer
may be permitted to file a quarterly return?
A. Yes. The 1% sales and use tax should be considered in determining whether or not a
taxpayer may be permitted to file a quarterly return. In other words, the 1% tax should
be added to the state tax liability. - Q. Do the penalty and interest provisions of Chapter 54 of Title 12 apply to the 1% sales and
use tax?
15
A. Yes. Section 4-10-20 provides that the 1% sales and use tax are "subject to...the
enforcement provisions of Chapter 54 of Title 12".
- Q. Are the penalties and interest to be applied to the 1% sales and use tax separately from
the state tax?
A. Yes. Penalties and interest are to be applied to the 1% sales and use tax separately from
the state tax. - Q. Is the 1% local option tax to be considered in computing warrant costs, pursuant to Code
Section 12-53-40?
A. Yes. Pursuant to Code Section 12-53-40, warrant costs are to be computed on "the total
of the warrant or tax execution". - Q. Are warrant costs shared with the counties?
A. No. Warrant costs are collected from taxpayers for costs incurred by the State in
collecting warrants and tax executions. This money is deposited into the general fund of
the State, and is not "revenues collected by the Tax Commission on behalf of [the
counties]....to be credited to [the] Local Sales and Use Tax Fund which is separate and
distinct from the state general fund". Code Section 4-10-90(B).
PROPERTY TAX - Q. In computing the credit against the property tax provided by Code Section 4-10-40(B), is
the $20,000 "homestead exemption" amount (Code Section 12-37-250) to be included in
"taxable property"?
A. No. The $20,000 "homestead exemption" amount is not to be included in "taxable
property". - Q. In computing the credit against the property tax provided by Code Section 4-40-40(B),
what value is to be placed on agricultural real property?
A. The value to be placed on agricultural real property is the property's "fair market value
for agricultural purposes", as defined by Code Section 12-43-220. - Q. Code Section 4-10-90(B) requires the revenue generated from the 1% sales and use tax to
be allocated to the Property Tax Credit Fund and the County/Municipal Revenue Fund,
during the first year after the effective date of the act, in a ratio of 63% to 37%. Over the
next four years, the percentage going to the Property Tax Credit Fund will increase, while
the percentage going to the County/Municipal Revenue Fund will decrease. During the
fifth year, the percentages will level out at 71% and 29%, respectively.
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If a county imposes the 1% tax for a year other than the first year (July 1, 1991 through
June 30, 1992), which percentages are to be used for allocation purposes - 63% and 37%
(the first year's percentages) or the applicable percentages in effect for the year of
imposition?
A. If the 1% tax is imposed for a year other than the first year after the effective date of the
act (July 1, 1991 through June 30, 1992), the allocation percentages to be used are those
in effect for the year imposed. For example, if the tax is imposed in a county starting
January 1, 1998, 71% of the revenue from the 1% tax is to be allocated to the Property
Tax Credit Fund and 29% to the County/Municipal Revenue Fund.
NOTIFICATION OF IMPOSITION OF THE 1% TAX
- Q. When are those counties which approve the 1% tax in a year subsequent to the first
referendum year (1990) to notify the Tax Commission and the State Treasurer that they
have adopted a resolution to impose the 1% sales and use tax?
A. For those counties approving the referendum in subsequent years, a certified copy of the
resolution adopting the tax must be delivered to the Tax Commission by December 31st,
following the referendum.
The tax will become effective May 1st of the following year, if the resolution is timely
delivered to the Tax Commission. Failure to deliver the resolution by December 31st
will cause delay of the imposition date until May 1st of the next year.
SOUTH CAROLINA TAX COMMISSION
s/S. Hunter Howard Jr.
S. Hunter Howard, Jr., Chairman
s/A. Crawford Clarkson Jr.
A. Crawford Clarkson, Jr., Commissioner
s/T. R. McConnell
T.R. McConnell, Commissioner
Columbia, South Carolina
, 1991
September 25
17
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