How did South Carolina's 2005 sales tax holiday apply to online orders, delivery charges, alterations, exchanges, rain checks, and layaway?

Plain-English summary

South Carolina Revenue Ruling #05-10 explained how the annual three-day August sales tax holiday operated in 2005. A qualifying item was exempt if it was delivered and paid for during the holiday, or if the customer ordered and paid during the holiday and the retailer accepted the order for immediate shipment, even when delivery occurred later.

Mail-order, Internet, custom, and special orders could qualify under that timing rule. Delivery and clothing-alteration charges associated with an exempt sale were also exempt. Layaway purchases did not qualify, while a "90 days same as cash" contract could qualify if it created the payment obligation and met the delivery or immediate-shipment rule.

This ruling is historical. RR 10-8 later superseded prior conflicting holiday guidance, and RR 19-4 expressly superseded RR 10-8 and consolidated the Department's later frequently asked questions and eligible-item list.

What this means for you

Consumers

Ordering alone was not enough. The customer also had to pay during the holiday, and the retailer had to accept the order for immediate shipment unless delivery and payment both occurred during the holiday.

Online and mail-order retailers

An order number, date stamp, or similar action to fill an order could show acceptance. A stock backlog or back order did not defeat immediate shipment when the customer had not requested a delay.

Retailers handling fees and exchanges

Delivery and alteration charges followed the exempt item. After the holiday, exchanging an exempt item for the same item in another size or color did not create additional tax, but applying a return credit to a different item did.

Common questions

Q: Could an online purchase qualify if it arrived after the holiday?
A: Yes, if the customer ordered and paid during the holiday and the retailer accepted it for immediate shipment.

Q: Were delivery and clothing-alteration charges taxable?
A: Not when they were associated with an item that qualified for the holiday exemption.

Q: Did a rain check issued during the holiday preserve the exemption?
A: No. A later purchase did not qualify merely because the rain check was issued during the holiday. An eligible item bought during the holiday with an older rain check could qualify.

Q: Did layaway qualify?
A: No. The statute expressly excluded items placed on layaway or a similar deferred-payment and delivery plan.

Citations and references

• S.C. Code Ann. § 12-36-2120(57) — annual sales tax holiday categories, timing, and exclusions
• SC Revenue Ruling 10-8 — later sales tax holiday Q&A that superseded prior conflicting opinions
• SC Revenue Ruling 19-4 — later consolidated holiday guide that expressly superseded RR 10-8

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR05-10.pdf
• Official later RR 10-8 PDF: RR10-8.pdf
• Official later RR 19-4 PDF: RR19-4.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P.O. Box 125, Columbia, South Carolina 29214
Website Address: http://www.sctax.org

SC REVENUE RULING #05-10

SUBJECT:

Sales Tax Holiday
(Sales and Use Tax)

EFFECTIVE DATE:

Beginning 12:01 a.m. on the first Friday in August and ending at twelve
midnight the following Sunday of each year.

SUPERSEDES:

For sales tax holidays for 2005 and thereafter, this advisory opinion
supersedes all previous advisory opinions and any oral directives in
conflict herewith.

REFERENCES:

S. C. Code Ann. Section 12-36-2120(57) (Supp. 2004)
House Bill 3768, Section 57, of 2005 (Enacted June 7, 2005)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2000)
S. C. Code Ann. Section 1-23-10(4) (Supp. 2004)
SC Revenue Procedure #03-1

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public
and to Department personnel. It is a written statement issued to apply
principles of tax law to a specific set of facts or a general category of
taxpayers. A Revenue Ruling does not have the force or effect of law,
and is not binding on the public. It is, however, the Department s
position and is binding on agency personnel until superseded or
modified by a change in statute, regulation, court decision, or advisory
opinion.

LAW:
Code Section 12-36-2120(57) exempts from the sales and use tax:
(a)

sales taking place during a period beginning 12:01 a.m. on the first Friday in August
and ending at twelve midnight the following Sunday of:
(i)
(ii)

clothing;
clothing accessories including, but not limited to, hats, scarves, hosiery, and
handbags;
(iii) footwear;
(iv) school supplies including, but not limited to, pens, pencils, paper, binders,
notebooks, books, bookbags, lunchboxes, and calculators;

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(v) computers, printers and printer supplies, and computer software;
(vi) bath wash clothes, blankets, bed spreads, bed linens, sheet sets, comforter sets,
bath towels, shower curtains, bath rugs and mats, pillows, and pillow cases.
(b)

The exemption allowed by this item does not apply to:
(i) sales of jewelry, cosmetics, eyewear, wallets, watches;
(ii) sales of furniture;
(iii) a sale of an item placed on layaway or similar deferred payment and delivery plan
however described;
(iv) rental of clothing or footwear;
(v) a sale or lease of an item for use in a trade or business.

(c)

Before July tenth of each year, the department shall publish and make available to the
public and retailers a list of those articles qualifying for the exemption allowed by this
item.

QUESTIONS AND ANSWERS:
The following answers represent the department's opinion with respect to various issues
concerning the "sales tax holiday:"
(1) Has the department published a list, as required by the law, of those articles qualifying for the
exemption?
Yes. SC Revenue Ruling #05-9 lists items exempt from the sales and use tax during the threeday "sales tax holiday." SC Revenue Ruling #05-9 can be found at the department's website
(www.sctax.org ).
(2) When is the "sales tax holiday?"
The three-day "sales tax holiday" is held annually beginning at 12:01 a.m. on the first Friday in
August and ending on the following Sunday at midnight.
(3) Must the eligible item being sold be delivered to the customer during the three-day "sales tax
holiday" in order for the exemption to apply?
An item qualifying for the "sales tax holiday" will be exempt if:
(a) the eligible item is both delivered to and paid for by the customer during the three
days of the "sales tax holiday"; or
(b) the eligible item is ordered and paid for by the customer and the order is accepted by
the retailer during the "sales tax holiday" for immediate shipment, even if delivery is
made after the "sales tax holiday." An order is accepted by the retailer when it has taken
an action to fill the order for immediate shipment.

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Actions to fill an order include placing an "in date" stamp on a mail order or assigning an
order number to a telephone order. An order is for immediate shipment when delayed
shipment is not requested by the customer and is for immediate shipment,
notwithstanding that the shipment may be delayed because of a backlog of orders or
because stock is currently unavailable to, or on back order by, the retailer.
(4) Does the "sales tax holiday" apply to sales made by mail order, Internet or similar retailers?
Yes, provided the item sold is one qualifying for the exemption and the sale occurs during the
three days of the "sales tax holiday" as discussed in Question #3.
(5) Does the "sales tax holiday" apply to custom or special orders?
Yes, provided the item sold is one qualifying for the exemption and the sale occurs during the
three days of the "sales tax holiday" as discussed in Question #3.
(6) Are delivery charges subject to the tax during the "sales tax holiday?"
Most delivery charges are included in the tax base for the sales tax and the use tax. If an item
qualifies for the exemption under the "sales tax holiday," then all delivery charges associated
with that sale are exempt. For example, if a retailer sells a computer during the sales tax holiday
for $2,000 and also charges $55 to deliver the computer, then the entire charge of $2,055 is
exempt from the sales or use tax.
(7) Are alteration charges for clothing sold during the "sales tax holiday" subject to the tax?
If an item of clothing qualifies for the exemption under the "sales tax holiday," then all alteration
charges associated with that sale are exempt. For example, if a retailer sells a pair of pants during
the sales tax holiday for $75 and also charges $10 to alter the pants, then the entire charge of $85
is exempt from the sales or use tax.
(8) How are exchanges of items purchased during the "sales tax holiday" handled when returned
after the "sales tax holiday?"
If a customer purchases an exempt item during the "sales tax holiday" and later exchanges the
item for the same item (different size, different color, etc.), no additional tax will be due even if
the exchange is made after the "sales tax holiday."
However, if the customer returns the item after the "sales tax holiday" and receives credit on the
purchase of a different item, the sales or use tax will apply to the sale of the newly purchased
item.
(9) How are exchanges of items purchased before the "sales tax holiday" handled when returned
during the "sales tax holiday?"
If a customer purchases an item before the "sales tax holiday" and later exchanges the item
during the "sales tax holiday" for the same eligible item (different size, different color, etc.) or

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receives credit on the purchase of a different item, no additional tax will be due if the item
received in the exchange is one that qualifies for the exemption.
(10) How will the "sales tax holiday" apply to rain checks?
The issuance of a rain check during the "sales tax holiday" will not qualify an item for the
exemption if the item is actually purchased after the "sales tax holiday."
Items that qualify for the exemption which are purchased during the "sales tax holiday" using a
rain check will be exempt from sales or use tax regardless of when the rain check was issued.
(11) Does an item placed on lay-away during the "sales tax holiday" qualify for the exemption?
No. The exemption provision specifically states that the exemption does not apply to "a sale of
an item placed on lay-away or similar deferred payment and delivery plan however described."
(12) Does the "sales tax holiday" apply to local sales and use taxes collected by the department
on behalf of counties that have imposed such local sales and use taxes?
Yes, provided the item sold is one qualifying for the exemption and the sale occurs during the
three days of the "sales tax holiday" as discussed in Question #3.
(13) How should retailers report sales exempt during the "sales tax holiday?"
With respect to the return filed for August, all sales, whether or not exempt from the tax, should
be reported on Line 1 of the Worksheet on the back of the sales and use tax return. Sales of items
exempt from the tax during the "sales tax holiday" should be listed as one of the deductions in
the space provided on Line 4 of the Worksheet on Form ST-3. On Forms ST-388 and ST-403,
the deduction for sales exempt under the "sales tax holiday" should be listed as "Sales Tax
Holiday Exemption" as one of the deductions on Line 4 of the Worksheet.
(14) Can retailers elect not to participate in the "sales tax holiday" and collect the sales tax from
their customers on eligible items during the three days of the "sales tax holiday?"
No. Retailers may only "pass on" to their customers sales taxes that are legally due.
The department may revoke any and all licenses issued by the department and held by a retailer
if the retailer passes on sales taxes that are not legally due.
(15) Is the sale of an exempt item on a "90 days same as cash" basis exempt from tax if
purchased during the "sales tax holiday?"
Yes, provided the contract obligating the buyer to pay is signed during the "sales tax holiday"
and delivery of the item is made during the "sales tax holiday" or the retailer accepts the order
during the "sales tax holiday" for immediate shipment, even if delivery is made after the "sales
tax holiday." See Question #3 for what is meant by "immediate shipment."

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If you have any questions, you may call the Department of Revenue at (803) 898-5788 or e-mail
the Department at [email protected].

SOUTH CAROLINA DEPARTMENT OF REVENUE

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

June 29
, 2005
Columbia, South Carolina

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