Did South Carolina's former military automobile exemption cover a nonresident service member who stopped in the state to pick up a car while traveling to an out-of-state assignment?

Plain-English summary

South Carolina Private Letter Ruling 90-11 denied a former sales-tax exemption for an automobile bought by a nonresident service member who stopped in South Carolina while traveling from a European duty tour to a new assignment in another state.

The exemption covered an automobile or motor-bike sale to a person domiciled in or residing in another state who was “located within South Carolina by reason of orders” from the U.S. Armed Forces. The ruling interpreted “located” to mean settled or established, not merely present while passing through.

Because the service member came to Charleston only to pick up the vehicle before continuing to the out-of-state assignment, the sale did not qualify under former section 12-35-550(25).

Why the exemption did not apply

The Department focused on the statutory phrase “located within South Carolina by reason of orders.” Using dictionary definitions, it read “locate” as stationing, situating, or becoming established and “settle” as putting firmly in a place or establishing.

The ruling also applied the rule that tax exemptions are strictly construed against the taxpayer. It would not stretch the exemption's language to treat temporary passage through the state as being located there.

Facts that mattered

• The service member was domiciled in or a resident of another state.
• The service member had finished a European tour of duty.
• The person traveled to Charleston to collect an automobile ordered through a buying service.
• The person then continued to a military assignment outside South Carolina.
• The stop in South Carolina was passage to the new assignment, not a posting or establishment in the state.

What this means for you

Automobile sellers

Under the former statute analyzed in this ruling, nonresident military status and military travel orders were not enough by themselves. The buyer also had to be located—meaning settled or established—in South Carolina because of those orders.

Service members

The ruling distinguished being stationed or established in South Carolina from stopping in the state while traveling to another duty location.

Accountants and tax professionals

This is a historical interpretation of former Chapter 35. The ruling separately noted that a pass-through sale might qualify under former section 12-35-555 as a sale to a nonresident, citing Information Letter 90-8, but it did not decide that alternative treatment.

Common questions

Q: Did military orders make the automobile sale exempt?

A: No. The service member was only passing through South Carolina on the way to an assignment in another state.

Q: What did “located within South Carolina” mean in the ruling?

A: Settled or established in South Carolina, rather than temporarily present.

Q: Did the ruling decide whether another nonresident-sale provision applied?

A: No. It only noted that former section 12-35-555 might apply and referred readers to Information Letter 90-8.

Q: Can a current dealer or service member rely on PLR 90-11?

A: No. The document says it applied only to the specific facts presented, had no precedential value, and was not intended for general distribution. It also interpreted statutes in effect in 1990.

Citations and references

• Former S.C. Code section 12-35-550(25) (Supp. 1988) — exemption analyzed for automobile and motor-bike sales to qualifying nonresident military personnel
• Former S.C. Code section 12-35-555 — possible nonresident-sale treatment noted but not decided
• Hay v. South Carolina Tax Commission, 273 S.C. 269, 255 S.E.2d 837 (1979); Fennell v. South Carolina Tax Commission, 233 S.C. 43, 103 S.E.2d 424 (1958); and Etiwan Fertilizer Co. v. South Carolina Tax Commission, 217 S.C. 484, 60 S.E.2d 682 (1950) — dictionary use
• Owen Industrial Products, Inc. v. Sharpe, 274 S.C. 193, 262 S.E.2d 33 (1980); Hollingsworth on Wheels, Inc. v. Greenville County Treasurer, 276 S.C. 314, 278 S.E.2d 340 (1981); and York County Fair Association v. South Carolina Tax Commission, 249 S.C. 337, 154 S.E.2d 361 (1967) — strict construction of exemptions
• S.C. Code section 12-3-170 and SC Revenue Procedure 87-3 — PLR authority cited in the ruling

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR90-11.pdf

Original ruling text

SC PRIVATE LETTER RULING #90-11

TO:

Department of the XYZ

SUBJECT:

Nonresident Military Sales Tax Exemption

REFERENCE:

S.C. Code Ann. Section 12-35-550(25)(Supp. 1988)

AUTHORITY:

S.C. Code Ann. Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Private Letter Ruling is a temporary document issued to a taxpayer, upon
request, and it applies only to the specific facts or circumstances related in the
request. Private Letter Rulings have no precedential value and are not intended
for general distribution.

Question:
Are sales of automobiles to members of the Armed Forces, who are "passing through" South
Carolina enroute to a new assignment, exempt from the sales tax, pursuant to Code Section 12-35550(25)?
Facts:
The Department of XYZ frequently encounters situations whereby a service member, concluding a
tour of duty in Europe, is "passing through" South Carolina enroute to a military base located outside
of this State. The service member has ordered an automobile, through one of several buying
services, and will travel to Charleston to pick up the automobile before proceeding to a new
assignment outside of South Carolina.
Code Section 12-35-550(25), which concerns sales of automobiles to nonresident military personnel,
exempts from the sales tax:
The gross proceeds of the sale of automobiles or motor bikes to a person domiciled in or
resident of another state, who is located within South Carolina by reason of orders of the
Armed Forces of the United States. This claim for exemption is allowed only if within ten
days of the sale or purchase a statement is furnished the vendor from a commissioned officer
of the Armed Forces of a higher rank than the purchaser certifying that the person claiming
the exemption is a member of the Armed Forces on active duty and is domiciled in or a
resident of another state. Since the exemption requires a statement from a commissioned
officer of higher rank than the purchaser, XYZ personnel in Charleston need to know
whether or not such service members qualify for the exemption.

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Discussion:
To answer the question at hand, the meaning of the phrase "located within South Carolina by reason
of orders", as found in Code Section 12-35-550, must be determined.
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 SE2d 837 (1979); Fennell v. South Carolina Tax Commission, 233
SC 43, 103 SE2d 424 (1958); Etiwan Fertilizer Co. v. South Carolina Tax Commission, 217 SC 484,
60 SE2d 682 (1950).
The Second College Edition of the American Heritage Dictionary provides the following definitions:
"Locate"

-

To station, situate, or store. To become established; settle

"Settle"

-

To put firmly in a desired position or place; establish.

In summary, the word "located", as used in Code Section 12-35-550(25), means settled or
established.
Furthermore, tax exemption statutes are strictly construed against the taxpayer. Owen Industrial
Products, Inc. v. Sharpe, 274 SC 193, 262 SE2d 33 (1980); Hollingsworth on Wheels, Inc. v.
Greenville County Treasurer et al, 276 SC 314, 278 SE2d 340 (1981). This rule of strict construction
simply means that constitutional and statutory language will not be strained or liberally construed in
the taxpayer's favor. York County Fair Association v. SC Tax Commission, 249 SC 337, 154 SE2d
361 (1967).
Conclusion:
Sales of automobiles to members of the Armed Forces, who are "passing through" South Carolina by
reason of orders, enroute to a new assignment, are not exempt from the sales tax pursuant to Code
Section 12-35-550(25).
NOTE: Sales of automobiles to members of the Armed Forces, who are "passing through" South
Carolina enroute to a new assignment in another State, may qualify as a sale to a
"nonresident" under the provisions of Code Section 12-35-555 (See Information Letter #908).

SOUTH CAROLINA TAX COMMISSION
s/S. Hunter Howard Jr.
S. Hunter Howard, Jr., Chairman
s/A. Crawford Clarkson Jr.
A. Crawford Clarkson, Jr., Commissioner

Columbia, South Carolina
, 1990
April 5

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