When did superseded RR 96-7 exempt a federal employee's South Carolina hotel stay from accommodations sales tax?

Plain-English summary

South Carolina Revenue Ruling 96-7 said a federal employee's hotel or motel stay on official business was exempt from the state's accommodations sales tax only when the federal government directly purchased the stay.

The ruling treated direct retailer billing to the federal government, payment by government check, and payment through a qualifying centrally billed government credit card as exempt. It listed specific 1990s card-number prefixes for the programs then in use.

If the employee purchased the stay, the charge was taxable even when the trip was official and the federal government later reimbursed the employee. Personal checks and individually billed credit cards fell in that category. Merely presenting a federal tax-exemption certificate was not enough; the transaction also had to meet a direct-purchase method described by the ruling.

SC Revenue Ruling 99-8 later expressly superseded RR 96-7, and later federal-card guidance replaced the old program details.

Common questions

Q: Did official travel status by itself exempt the hotel bill? No. The ruling focused on whether the federal government or the individual employee purchased the accommodations.

Q: Was an employee-paid stay exempt after reimbursement? No. Later reimbursement did not turn the employee's purchase into a direct federal purchase.

Q: Was a government credit card always exempt? No. Under the historical program, exemption depended on who the credit-card company billed. The ruling's card prefixes are obsolete details.

Q: Is RR 96-7 current? No. RR 99-8 expressly superseded it.

Citations and references

• S.C. Code Ann. §§ 12-36-910 and 12-36-920 (sales and accommodations tax)
• S.C. Code Ann. § 12-36-2120(1) and (2) (government exemptions cited)
• SC Revenue Ruling #88-8 and SC Information Letter #94-6 (earlier policy restated)
• SC Revenue Ruling #99-8 (expressly superseded RR #96-7)
• SC Revenue Ruling #09-1 (later federal SmartPay 2 guidance)

Subject

Federal Employee Travel

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR96-7.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 #96-7

SUBJECT:

Federal Employee Travel
(Sales Tax on Accommodations)

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 12-36-910 (Supp. 1995)
S. C. Code Ann. Section 12-36-920 (Supp. 1995)
S. C. Code Ann. Section 12-36-2120(1) and (2) (Supp. 1995)
SC Revenue Ruling #88-8
SC Information Letter #94-6

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1995)
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.

Numerous questions have arisen concerning the applicability of the 7% sales tax on
accommodations imposed on the rental of hotel or motel rooms to federal employees on official
government business. The purpose of this revenue ruling is to restate the Department's
longstanding policy on this matter as set forth in South Carolina Revenue Ruling #88-8 and
South Carolina Information Letter #94-6.
TRANSACTIONS EXEMPT FROM TAX
Charges for hotel and motel accommodations to a federal employee on official government
business are exempt from sales tax pursuant to Code Section 12-36-2120 if the accommodations
are purchased directly by the federal government.
Based upon the analysis contained in SC Revenue Ruling #88-8 and SC Information Letter #946, the 7% sales tax on accommodations in not applicable when:

1. The federal government is billed directly by the retailer;

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2. The federal employee pays by government check; or,

3. The federal employee pays by government credit card and the federal government is billed
   directly by the credit card company. As explained in SC Information Letter #94-6, accommodations purchased with the following cards are handled in this manner and are exempt from South
   Carolina sales tax:
   a. American Express Card issued with account numbers beginning with "3783-9."
   b. I.M.P.A.C. (International Merchant Purchase Authorization Card) Visa Card issued by
   the Rocky Mountain Bankcard System, Inc., with account numbers beginning with
   "4716."
   TRANSACTIONS SUBJECT TO TAX
   Charges for hotel and motel accommodations to a federal employee on official government
   business are subject to the sales tax if the accommodations are purchased by the federal
   employee, even if the employee is reimbursed for the charges. This includes transactions in
   which:
4. The federal employee pays by personal check; or,
5. The federal employee pays by credit card, is billed directly by the credit card company,
   and is reimbursed by the federal government. For example, purchases made by an
   American Express card that begins with "3783-7" or "3783-8" are not exempt.
   NOTE: The presentation by a federal employee of a tax exemption certificate issued
   by the federal government is not sufficient to exempt the transaction from the
   tax. In order to be tax exempt, a transaction involving a tax exemption
   certificate must also meet one of the requirements in the above category
   entitled "Transactions Exempt From Tax."

SOUTH CAROLINA DEPARTMENT OF REVENUE

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

Columbia, South Carolina
June 12
, 1996

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