Under South Carolina Revenue Ruling 92-12, how did the historical 5% tax and $300 maximum apply when boats, motors, and boat trailers were sold alone or together?

Plain-English summary

South Carolina Revenue Ruling 92-12 supplied a six-part historical tax matrix for boats, motors, and ordinary boat trailers.

The general state sales and use tax rate quoted in the ruling was 5%. Section 12-36-2110(A) instead capped tax at $300 for a boat, but did not provide that maximum for a boat motor or ordinary boat trailer.

The six transaction results

1. Boat sold alone

Tax was the lesser of 5% of gross proceeds or $300.

2. Motor sold alone

Tax was 5% of gross proceeds, with no $300 maximum under the ruling.

3. Boat trailer sold alone

Tax was 5% of gross proceeds. The ruling reasoned that an ordinary boat trailer could be pulled by vehicles other than a truck tractor and therefore did not fit the trailer category receiving the maximum.

4. Boat with a permanently attached motor

The combined boat and motor were taxed at the lesser of 5% of the combined gross proceeds or $300.

A motor was “permanently attached” if it was:

• an inboard motor; or
• an outboard motor sold mounted to the boat, connected to a permanent steering mechanism, and included in the boat's price.

5. Boat and trailer sold together

The boat received the lesser-of-5%-or-$300 treatment. The trailer was separately taxed at 5% of its gross proceeds.

6. Boat, permanently attached motor, and trailer sold together

The combined boat and attached motor received the lesser-of-5%-or-$300 treatment. The trailer remained taxable at 5%.

If the trailer price was not separately stated, tax applied to 5% of its fair market value. Even when separately stated, the allocation had to be reasonable and supported by the taxpayer's records; otherwise fair market value controlled.

What this means for you

Boat dealers applying historical rules

The tax maximum followed the boat transaction, including a qualifying attached motor, but did not shelter a separately sold motor or ordinary boat trailer.

Sellers preparing package invoices

Separately state a reasonable, supportable trailer price. A bundled or unsupported allocation caused the ruling to use fair market value for the trailer.

Buyers evaluating motor attachment

An outboard motor did not automatically join the capped boat price; it had to be mounted, connected to permanent steering, and included in the boat price.

Current transactions

This is a 1992 matrix. Verify today's rate, maximum, definitions, and Department guidance before using it.

Common questions

Q: Did the historical $300 maximum apply to a motor sold alone?
A: No. The ruling applied the full 5% rate.

Q: Did it apply to an ordinary boat trailer?
A: No. The trailer was taxed at 5%.

Q: Could a boat and outboard motor share the maximum?
A: Yes when the outboard was mounted, connected to permanent steering, and included in the boat price.

Q: How was a trailer taxed in a package sale?
A: At 5% of a reasonable separately stated price, or 5% of fair market value when the allocation was absent or unsupported.

Q: Which trailers were outside the ruling's 'boat trailer' definition?
A: Trailers requiring a truck tractor and trailers manufacturers used to move boats to dealerships.

Citations and references

• S.C. Code Ann. § 12-36-100 — sale and purchase definitions
• S.C. Code Ann. § 12-36-910(A) — historical 5% sales tax
• S.C. Code Ann. § 12-36-1310(A) — historical 5% use tax
• S.C. Code Ann. § 12-36-2110(A) — historical $300 maximum tax for specified property

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR92-12.pdf

Original ruling text

SC REVENUE RULING #92-12

SUBJECT:

Sales of Boats, Motors, and Boat Trailers
(Sales Tax)

TAX ANALYST:

Deana West

EFFECTIVE DATE: Applies to all periods open under statute.
SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-36-2110 (Supp. 1991)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 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.

Question:
What amount of sales and use tax should be imposed upon sales of boats, motors, and boat
trailers when sold individually or as a complete package?
Facts:
Questions have arisen concerning the application of sales tax and use tax on sales of boats,
motors, and boat trailers. The purpose of this document is to address the imposition of the 5%
State sales and use tax or the $300.00 maximum tax on such sales.
Discussion:
Code Section 12-36-910(A) imposes a sales tax and reads, in part:
A sales tax, equal to five 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.

1

Code Section 12-36-1310(A) imposes a use tax and reads, in part:
A use tax is imposed on the storage, use, or other consumption in this State of tangible
personal property purchased at retail for storage, use, or other consumption in this State,
at the rate of five percent of the sales price of the property, regardless of whether the
retailer is or is not engaged in business in this State.
Therefore, for the sales or use taxes to apply there must be a retail sale or purchase of tangible
personal property.
Code Section 12-36-100 defines the terms "sale" and "purchase", in part, as:
...any transfer, exchange, or barter, conditional or otherwise, of tangible personal property
for a consideration...
Based on the above, the sales tax and use tax are transactional taxes imposed upon the privilege
of the business of selling at retail, or using, storing, or consuming tangible personal property in
South Carolina.
Code Section 12-36-2110(A), however, provides an exception to the five percent state tax rate.
This section establishes a maximum tax on the sale, use, storage, or consumption of certain items
and reads, in part:
The maximum tax imposed by this chapter is three hundred dollars for each sale...of
each:

(4) boat;
(5) trailer or semitrailer, pulled by a truck tractor...
In summary, Code Section 12-36-2110(A) establishes a maximum tax on boats, and a maximum
tax on trailers and semitrailers capable of being pulled only by a truck tractor. A maximum tax,
however, is not provided for boat motors. In addition, the maximum tax is not provided for boat
trailers since they are capable of being pulled by vehicles other than a truck tractor. 1
Consequently, when Code Section 12-36-2110(A) is applicable, we must look at the specific
transaction involved as well as the type of property involved in the transaction.

1

For purposes of this ruling, boat trailers do not include trailers which must be pulled by truck
tractors or boat trailers which are used by manufacturers to transport boats to dealerships.

2

Conclusion:
The proper State sales or use tax to be imposed upon sales of boats, motors, and boat trailers are
as follows:

1. A boat sold alone is subject to tax at the lesser of 5% of the gross proceeds from the sale
   or $300.
2. A motor sold alone is subject to tax at the rate of 5% of the gross proceeds from the sale.
3. A boat trailer sold alone is subject to tax at the rate of 5% of the gross proceeds from the
   sale.
4. A boat sold with a motor permanently attached to it is subject to tax at the lesser of 5% of
   the gross proceeds from the sale of the boat and motor or $300.2
5. A boat trailer sold in conjunction with the sale of a boat is subject to tax at the rate of 5%
   of the gross proceeds from the sale of the boat trailer. The boat is subject to tax at the
   lesser of 5% of the gross proceeds from the sale of the boat or $300.
6. A boat trailer sold in conjunction with the sale of a boat that has a permanently attached
   motor is subject to tax at the rate of 5% of the gross proceeds from the sale of the boat
   trailer. The boat with a permanently attached motor is subject to tax at the lesser of 5% of
   the gross proceeds from the sale of the boat and motor or $300. (Note: If the price of the
   boat trailer is not separately stated from the price of the boat and motor, the boat trailer is
   subject to tax at 5% of the fair market value of the boat trailer. If the price of the boat
   trailer is separately stated from the price of the boat and motor, the price breakdown must
   be reasonable and supported by the records of the taxpayer, otherwise the trailer will be
   taxed at 5% of its fair market value.)
   SOUTH CAROLINA TAX COMMISSION
   s/A. Crawford Clarkson Jr.
   A. Crawford Clarkson, Jr.,Chairman
   s/T. R. McConnell
   T. R. McConnell, Commissioner
   s/James M. Waddell, Jr.
   James M. Waddell, Jr., Commissioner
   Columbia, South Carolina
   , 1992
   October 28

2

A boat motor is considered permanently attached to a boat if it is (1) an inboard motor or (2) an
outboard motor sold mounted to the boat, connected to a permanent steering mechanism, and
included in the price of the boat.
3