Was the requesting delivery company primarily engaged in transportation for hire for South Carolina property tax?

Plain-English summary

South Carolina Private Letter Ruling 14-1 concluded that the requesting package-delivery company was primarily engaged in transportation for hire.

Its furniture, fixtures, and equipment used in that business and required by law to be assessed by the Department were therefore assessed at 9.5% of fair market value under the provisions cited by the ruling.

Facts that mattered

The taxpayer:

• delivered packages throughout South Carolina and the country for compensation;
• held a Certificate of Public Convenience and Necessity for charter air transportation;
• used aircraft, trucks, and vans with related companies to make deliveries; and
• owned South Carolina real and personal property used in distribution and transportation inside and outside the state.

Why the company qualified

The Constitution and Code Section 12-43-220(g) applied the 9.5% ratio to property owned or leased by a company primarily engaged in transporting persons or property for hire and used in that business.

Because the statute did not define the phrase, DOR used its ordinary meaning: the business of conveying passengers or goods for a fee. Paid package delivery fit that meaning.

The taxpayer's airline status also placed relevant property within DOR's appraisal and assessment responsibility under Code Section 12-4-540.

Limits of the holding

The result does not establish that every courier or delivery company receives the same assessment ratio. The PLR depends on the taxpayer's primary activity, compensated transportation, property use, certificate, and Department-assessment status.

Common questions

Q: What did “transportation for hire” mean in this PLR?

A: Conveying passengers or goods for a fee.

Q: Did the ruling cover property unrelated to the transportation business?

A: No. It addressed furniture, fixtures, and equipment used in conducting that business and required to be assessed by DOR.

Q: Can another delivery company rely on this ruling?

A: No. It is binding only for the requesting taxpayer and its stated facts.

Citations and references

• S.C. Constitution Article X, § 1(2) (transportation-for-hire assessment)
• S.C. Code Ann. § 12-43-220(g) (9.5% assessment ratio)
• S.C. Code Ann. § 12-4-540 (Department assessment responsibility)

Subject

Delivery Company as Transportation for Hire

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR14-1.pdf

Original ruling text

State of South Carolina

Department of Revenue
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214

SC PRIVATE LETTER RULING #14-1

SUBJECT:

Delivery Company as Transportation for Hire
(Property Tax)

REFERENCES:

S.C. Constitution, Article X, Section 1(2)
S.C. Code Ann. Section 12-43-220(g) (2014)
S.C. Code Section 12-4-540 (2014)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

A Private Letter Ruling is an advisory opinion issued to a specific
taxpayer by the Department to apply principles of law to a specific set of
facts or a particular tax situation. It is the Department’s opinion limited to
the specific facts set forth, and is binding on agency personnel only with
respect to the person to whom it was issued and only until superseded or
modified by a change in statute, regulation, court decision, or another
Departmental advisory opinion, providing the representations made in the
request reflect an accurate statement of the material facts and the
transaction was carried out as proposed.

Question:
Is Taxpayer’s furniture, fixtures and equipment used in the conduct of its business assessed at
nine and one-half percent as property of a business primarily engaged in transportation for hire
as provided in S.C. Constitution, Article X, Section 1(2) and S.C. Code Section 12-43-220(g)?
Conclusion:
Yes. Taxpayer’s furniture, fixtures and equipment used in the conduct of its business is assessed
at nine and one-half percent since Taxpayer is primarily engaged in transportation for hire as
provided for in S.C. Constitution, Article X, Section 1(2) and S.C. Code Section 12-43-220(g).

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Facts:
Taxpayer is engaged in the business of delivering “X” throughout the State of South Carolina
and the country for compensation. Taxpayer holds a Certificate of Public Convenience and
Necessity for Charter Air Transportation. Taxpayer and its related companies use planes, trucks
and vans to deliver “X” throughout the State and the country for a fee. Taxpayer owns both real
and personal property within the State which is used for the distribution and transportation of
both within and without South Carolina.
Discussion:
The South Carolina Constitution, Article X, Section 1(2) provides:
(2) “All real and personal property owned by or leased to companies primarily engaged in
transportation for hire of persons or property and used by the company in the conduct of such
business shall be taxed on an assessment equal to nine and one-half percent of the fair market
value of such property.”
Code Section 12-43-220(g) also reads:
“All real and personal property owned by or leased to companies primarily engaged in the
transportation for hire of persons or property and used by such companies in the conduct of
such business and required by law to be assessed by the Department shall be taxed on an
assessment equal to nine and one-half percent of the fair market value of such property.
The department shall apply an equalization factor to real and personal property owned by or
leased to transportation companies for hire as mandated by federal legislation.
…”
Taxpayer holds a Certificate of Public Convenience and Necessity for Charter Air Transportation
and is required to be assessed by the Department for property tax purposes. See, S.C. Code
Section 12-4-540. 1
In instances in which there is no definition contained in the statute, it is an accepted practice in
South Carolina to resort to the dictionary to determine the literal meaning of words used in
statutes. For cases where this has been done, see Hay v. South Carolina Tax Commission, 273
SC 269, 255 S.E.2d 837 (1979); Fennell v. South Carolina Tax Commission, 233 S.C. 43, 103
S.E.2d 424 (1958); Etiwan Fertilizer Co. v. South Carolina Tax Commission, 217 SC 484, 60
S.E.2d 682 (1950).
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“Code Section 12-4-540(A)(1) provides in relevant part: The department has the sole responsibility for the
appraisal, assessment, and equalization of the taxable values of corporate headquarters, corporate office facilities,
and distribution facilities and of the real and personal property owned by or leased to the following businesses and
used in the conduct of their business:
…
(d) airline;
…”

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Moreover, the legislation’s words must be given their plain and ordinary meaning without resort
to a forced or subtle construction which would work to limit or to expand the operation of the
statute. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991). The plain meaning of the
statute cannot be contravened. State v. Leopard, 349 S.C. 467, 563 S.E.2d 342 (2002).
Looking at The American Heritage College Dictionary, Fourth Ed. (2002), the most applicable
definition for the term “transportation” is “the business of conveying passengers or goods” while
the term “hire” means “to engage the services of for a fee; employ”.
The plain meaning of the phrase “transportation for hire”, based on the common dictionary use
of those words, is “the business of conveying passengers or goods for a fee”. This phrase
describes Taxpayer’s activities of transporting packages for compensation. Accordingly,
Taxpayer is a company engaged in “transportation for hire” of property and persons. Therefore,
Taxpayer’s business personal property used in the conduct of its business and required by law to
be assessed by the Department is subject to an assessment ratio of nine and one-half percent.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Rick Reams III
Rick Reames III, Director
August 5
, 2014
Columbia, South Carolina

CAVEAT: This advisory opinion is issued to the taxpayer requesting it on the assumption that
the taxpayer’s facts and circumstances, as stated, are correct. If the facts and circumstances
given are not correct, or if they change, then the taxpayer requesting the advisory opinion may
not rely on it. If the taxpayer relies on this advisory opinion, and the Department discovers, upon
examination, that the facts and circumstances are different in any material respect from the facts
and circumstances given in this advisory opinion, then the advisory opinion will not afford the
taxpayer any protection. It should be noted that subsequent to the publication of this advisory
opinion, changes in a statute, a regulation, or case law could void the advisory opinion.

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