Could South Carolina coin-operated-device and owner/operator licenses be transferred to a machine's buyer under RR 95-2?

Plain-English summary

South Carolina Revenue Ruling 95-2 concluded that licenses for coin-operated devices were not transferable from one person or business to another.

That rule covered both the license attached to a machine under Sections 12-21-2720 or 12-21-2730 and the separate owner/operator license under Section 12-21-2728. If a licensed machine was sold or transferred, the seller was to remove and destroy the existing machine license. The new owner had to apply for a new device license before placing the machine in operation.

The Department based the result on statutory language requiring each person maintaining, owning, or operating the machines to apply for and procure a license. The ruling also noted that allowing private transfers could bypass the Department's then-existing two-year South Carolina residency check for a Class III license and would undermine registration of operators and devices.

The ruling described amusement machines including jukeboxes, kiddy rides, video games, pinball, video poker, skeeball, billiard tables, bowling-lane tables, and foosball tables. Its quoted biennial fees and machine categories are historical and should not be treated as current amounts.

Common questions

Q: Did the machine license stay with a device when it was sold? No. The ruling directed the seller to remove and destroy the license.

Q: Could the buyer operate under the seller's remaining license period? No. The buyer had to obtain a new license before operating the machine.

Q: Could an owner/operator license be assigned to the buyer? No. The separate owner/operator license was also nontransferable.

Q: Why did the Department reject transfers? The cited statutes required licensing by the person using or operating the devices, and the Department said transfers would defeat registration and the Class III residency check discussed in the ruling.

Q: Are the 1995 fees and categories current? This page establishes only what RR 95-2 said in 1995. Current statutes and Department guidance should be checked.

Citations and references

• S.C. Code Ann. §§ 12-21-2720 and 12-21-2730 (machine and game-table licenses)
• S.C. Code Ann. § 12-21-2728 (owner/operator license)
• S.C. Code Ann. § 12-21-2804(D) (Class III residency provision discussed)
• Duke Power Co. v. South Carolina Tax Commission, 292 S.C. 64, 354 S.E.2d 902 (1987)

Subject

Transfer of Licenses

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR95-2.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING #95-2 (TAX)

SUBJECT:

Transfer of Licenses
(Coin-Operated Devices)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCES:

S. C. Code Ann. Section 12-21-2720 (Supp. 1993)
S. C. Code Ann. Section 12-21-2730 (Supp. 1993)
S. C. Code Ann. Section 12-21-2728 (Supp. 1993)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 1993)
SC Revenue Procedure #94-1

SCOPE:

A Revenue Ruling is the Department of Revenue's official advisory
opinion of how laws administered by the Department are to be applied
to a specific issue or a specific set of facts, and is provided as guidance
for 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.

Questions:
1.

May a person who has purchased a coin-operated device license from the Department of
Revenue under either Code Section 12-21-2720 or Code Section 12-21-2730 transfer that
license to another person or entity?

2.

May a person who has purchased an owner/operator license from the Department of
Revenue under Code Section 12-21-2728 transfer that license to another person or entity?

Conclusions:
1.

A person who has purchased a coin-operated device license from the Department of
Revenue under either Code Section 12-21-2720 or Code Section 12-21-2730 may not
transfer that license to another person or entity.

Note: If a coin-operated device license purchased under either Code Section 12-21-2720 or Code
Section 12-21-2730 is attached to a coin-operated device that is being sold or transferred to another
person or entity, the license should be removed from the device and destroyed. The new owner of
the machine should apply for and procure from the Department of Revenue a new coin-operated
device license before the machine is placed at a location for operation.
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2.

A person who has purchased an owner/operator license from the Department of Revenue
under Code Section 12-21-2728 may not transfer that license to another person or entity.

Facts:
Many businesses operate, on location, various amusement machines, such as skeeball, juke boxes,
kiddy rides, video games, pinball, and video poker.
While in some cases a business may own its own machines, in many instances a business will enter
into a lease or machine profit sharing agreement with a coin-operator who must be licensed with the
Department of Revenue as an owner/operator under Code Section 12-21-2728. As part of these
arrangements, the business is usually entitled to a percentage of the gross or net income from the
machines.
Under South Carolina law, these machines must have a license attached to them. These licenses are
valid for a two year period and cost $50, $200, or $3,000 for each machine, depending on the type of
machine. In addition, machines which require the $3,000 license are subject to various regulatory
provisions found under the Video Game Machines Act of 1993.
Questions have arisen as to whether the owner/operator license or the machine licenses are
transferable.
Discussion:
Machine Licenses
Code Section 12-21-2720 sets forth the licensing requirements with respect to juke boxes, kiddy
rides, video games, pinball, video poker and other similar coin operated machines, and reads in part:
(A) Every person who maintains for use or permits the use of, on a place or premises
occupied by him, one or more of the following machines or devices shall apply for and
procure from the South Carolina Department of Revenue and Taxation a license
effective for two years for the privilege of making use of the machine in South
Carolina and shall pay for the license a tax of fifty dollars for each machine in item (1),
two hundred dollars for each machine in item (2), and three thousand dollars for each
machine in item (3):... (Emphasis added.)
Code Section 12-21-2730 sets forth the licensing requirements with respect to skeeball tables,
billiard tables, bowling lane tables and footsball tables, and reads in part:
Every person owning or operating a billiard or pocket billiard table, footsball table,
bowling lane table, or skeeball table for profit shall apply for and procure from the
commission a license for the privilege of operating the table and pay for the license a
biennial tax of fifty dollars for each table owned or operated. (Emphasis added.)

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Code Section 12-21-2804(D) prohibits the Department of Revenue from issuing a Class III license
to any person who has not been a resident of the State for two years.
The statute clearly states that all machine licenses must be purchased from the Department of
Revenue and that the Department is responsible for ensuring no person receives a Class III license
unless such person has been a resident of South Carolina for two years.
Where a statute is clear and unambiguous, there is no room for construction and the terms of the
statute must be given their literal meaning. Duke Power Co. v. South Carolina Tax Commission,
292 S.C. 64, 354 S.E.2d 902, 903 (1987).
As such, licenses purchased from the Department may not be sold or transferred by the purchaser to
any other person or entity. To do otherwise would violate the language of Code Sections 12-212720 and 12-21-2730 and would circumvent the residency requirements of Code Section 12-212804(D).
Owner/Operator Licenses
Code Section 12-21-2728 reads:
(A) In addition to all other licenses required by this chapter, a person who owns or
operates devices described in Sections 12-21-2720 and 12-21-2730 shall obtain an
operator's license biennially as follows:
(1)

fifty dollars for devices in Sections 12-21-2720(A)(1) and 1221-2730;

(2)

two hundred dollars for devices in Section 12-21-2720(A)(2);

(3)

two thousand dollars for devices in Section 12-212720(A)(3).

(B) Only one license is required regardless of the number or type of devices owned
or operated, and the cost of that license is the highest fee enumerated in this section
for a device owned or operated.
(C) The licenses provided by this section are subject to Section 12-21-2734 and are
a condition precedent to engaging in or continuing operation of machines described
in this chapter. Failure to remit taxes to the State is justification for the cancellation
of the license provided in this section.
Therefore, the owner of a machine must obtain a license as required by Code Section 12-21-2728.
Only one license is required of each person regardless of the number or type of machines owned or
operated, or the number of locations operated.

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Again, in considering this licensing provision and the licensing provisions of Code Sections 12-212720 and 12-21-2730 together, an owner/operator license purchased from the Department may not
be sold or transferred by the purchaser to any other person.
Finally, two other points need to be considered regarding the issue of the transferability of machine
licenses and owner/operator licenses:
(1) a review of both Articles 19 and 20 of Chapter 21 finds that the General Assembly did
not enact any provisions permitting the transfer of licenses to another person or entity, and
(2) "[I]n seeking the intention of the legislature, we must presume that it intended by its
action to accomplish something and not to do a futile thing. McLeod v. Montgomery, 244
S.C. 308, 136 S.E.2d 778 (1964). Allowing taxpayers to transfer licenses among themselves
would negate the purpose of having persons register themselves and their coin-operated
devices with the Department of Revenue.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank, III, Director

Columbia, South Carolina
April 11
, 1995

For questions concerning coin-operated device licenses, contact your local Department of Revenue
Taxpayer Service Center or John P. McCormack at (803 737-4438.

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