Did South Carolina Revenue Ruling 93-13 impose the historical casual excise tax when a total-loss vehicle was transferred to an insurer in settlement of a claim?

Plain-English summary

South Carolina Revenue Ruling 93-13 concluded that transferring a vehicle declared a total loss to an insurance company in settlement of a claim was not subject to the historical casual excise tax. Although that tax generally applied when a certificate of title or other proof of ownership was issued, it excluded transfers specifically exempt from sales or use tax.

The cited vehicle statute required an insurer acquiring a total-loss vehicle to obtain the title and submit it for cancellation with a damage report. It also expressly exempted transfers of those vehicles to and from insurance companies from sales tax. Because the claim-settlement transfer was sales-tax exempt, the casual excise tax did not apply.

Common questions

Q: Did the ruling cover the insurer's acquisition in settlement of the claim? Yes.

Q: Why did the casual excise tax exemption follow? The casual excise statute incorporated sales- and use-tax exemptions, and the cited vehicle law exempted transfers to and from insurers.

Q: Did the ruling address the insurer's later salvage procedures? It described title cancellation and later salvage transfer requirements, but the stated question concerned the initial claim-settlement transfer.

Citations and references

• S.C. Code Ann. § 12-36-1710 (1992 Supp.) — historical casual excise tax
• S.C. Code Ann. § 12-36-2120 (1992 Supp.) — incorporated sales- and use-tax exemptions
• S.C. Code Ann. § 56-19-480 (1976) — historical total-loss title and insurer-transfer provisions
• South Carolina Revenue Ruling 92-10 — additional casual-excise guidance noted in the ruling

Subject

Vehicle Declared a Total Loss by an Insurance Company

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR93-13.pdf

Original ruling text

SC REVENUE RULING #93-13 (TAX)

SUBJECT:

Vehicle Declared a Total Loss by an Insurance Company
(Casual Excise Tax)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 56-19-480 (1976)
S.C. Code Ann. Section 12-36-2120 (Supp.1992)
S.C. Code Ann. Section 12-36-1710 (Supp.1992)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1992)
SC Revenue Procedure #93-6

SCOPE:

A Revenue Ruling is the Department of Revenue's official interpretation
of how laws administered by the Department are to be applied to a
specific issue or a specific set of facts, and applies to all persons or a
particular group. It is valid and remains in effect until superseded or
modified by a change in the statute or regulations or a subsequent court
decision, Revenue Ruling or Revenue Procedure.

Question:
Is the transfer to an insurance company, in settlement of a claim, of a vehicle that has been declared
a total loss subject to the casual excise tax under Code Section 12-36-1710?
Conclusion:
The transfer to an insurance company, in settlement of a claim, of a vehicle that has been declared a
total loss is not subject to the casual excise tax under Code Section 12-36-1710.
Facts:
Many times when a vehicle is destroyed by a fire, collision or other causes, the vehicle is declared a
total loss and ownership of the vehicle is transferred to an insurance company in settlement of a
claim. The insurance company will then sell the vehicle for salvage.
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Questions have arisen as to the application of the casual excise tax with respect to vehicles acquired
by insurance companies in settlement of claims.
Discussion:
Code Section 12-36-1710 imposes the casual excise tax and reads in part:
In addition to all other fees prescribed by law there is imposed 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. The tax is five percent
of the fair market value of the motor vehicle, motorcycle, airplane, boat, and motor.
In summary, the casual excise tax is imposed upon the issuance of a certificate of title or other
proof of ownership for motor vehicles, motorcycles, boats, motors, or airplanes, unless
specifically excluded from the tax.
While Code Section 12-36-1710 does not provide a specific exemption for a vehicle acquired by
an insurance company in settlement of a claim, it does exempt from the tax the "gross proceeds
of transfers of motor vehicles ... specifically exempted by Section 12-36-2120 from the sales or
use tax".
Code Section 12-36-2120 exempts from the sales or use tax the gross proceeds of sales, or sales
price of:
tangible personal property or receipts of any business which is prohibited from taxing by the
Constitution or laws of the United States of America or by the Constitution or laws of this
State.
Code Section 56-19-480 reads in part:
Any owner who scraps, dismantles, destroys, or in any manner disposes to another as
wreckage or salvage, a vehicle otherwise required to be titled in this State shall immediately
deliver to the Department the vehicle's certificate of title for cancellation notifying the
Department to whom the vehicle is delivered.
If a vehicle is acquired by an insurance company in settlement of a claim to such vehicle by
fire, collision, other causes, or is left with the insured after being declared a total loss by the
insurance company, the company or its agent shall immediately deliver to the Department
the vehicle's certificate of title for cancellation together with a report indicating the type and
severity of damage to the vehicle. At such time as the insurance company may thereafter
transfer the damaged vehicle, the company or its agent shall notify the Department to whom
the transfer was made on a form prescribed by the Department. The vehicle may then be
transferred as salvage by use of a form prescribed by the Department. The manufacturer's
serial plate or vehicle identification number (VIN) plate shall remain with the vehicle at all
times until the vehicle is shredded, crushed, melted, or destroyed.

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* * * *
Vehicles acquired by insurance companies as outlined above are exempt from ad
valorem property taxes and inventory taxes, and the transfers of the vehicles to and
from insurance companies [are] exempt from sales taxes. (Emphasis added.)
In summary, the transfer to an insurance company of a vehicle that has been declared a total loss
is not subject to the sales tax; and therefore, is not subject to the casual excise tax.
Note: See SC Revenue Ruling #92-10 for additional information concerning the casual excise
tax.
For questions concerning the casual excise tax, contact Office Audit - Sales Tax at (803) 7374788 or John P. McCormack at (803) 737-4438.

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