What transactions were covered by South Carolina's one-time Thanksgiving sales-tax holiday on November 24–25, 2006?

Plain-English summary

South Carolina Revenue Ruling 06-7 explained the one-time tax holiday held from 12:01 a.m. on November 24 through midnight on November 25, 2006. During those 48 hours, the state suspended sales, use, and casual excise taxes on otherwise taxable events, except accommodations and additional guest charges.

The holiday was unusually broad. It applied to purchases by individuals, businesses, government agencies, and nonprofits, including qualifying Internet, mail-order, custom, and special orders. The Catawba tribal sales tax was suspended too. Local sales and use taxes, local hospitality taxes, and local accommodations taxes continued to apply.

Timing controlled. A sale qualified when property was delivered and paid for during the holiday, or when it was ordered, paid for, and accepted for immediate shipment during the holiday. Layaway did not qualify. A rain check issued during the holiday did not protect a later purchase, but a purchase made during the holiday could qualify regardless of when the rain check was issued.

The ruling also gave historical rules for delivery and alteration charges, exchanges, services, maintenance contracts, vehicle and boat title applications, and retailer reporting. The holiday expired in 2006 and has no current effect.

What this means for you

Historical transaction review

The ruling may help explain records from November 24–25, 2006, but it does not authorize a present-day exemption.

Retailers

Retailers could not opt out and collect state tax that was not legally due. The ruling warned that excess collection could trigger license revocation and a penalty equal to 150% of the unauthorized amount.

Buyers using remote or special orders

Internet, mail-order, custom, and special orders could qualify if the transaction met the ruling's payment, acceptance, and immediate-shipment timing rules.

Common questions

Q: Were local taxes suspended?
A: No. Local sales and use, hospitality, and accommodations taxes remained due. The Catawba tribal sales tax was covered.

Q: Were accommodations exempt?
A: No. Accommodations and additional guest charges under § 12-36-920 were excluded.

Q: Did layaway qualify?
A: No. The ruling said property reserved for future delivery was not an immediate-delivery transaction.

Q: Does this holiday recur every Thanksgiving?
A: No. The statute and ruling expressly addressed a one-time event in 2006.

Citations and references

• Act 388 of 2006, Part I, § 4E — created the one-time tax suspension
• S.C. Code Ann. § 12-36-920 — excluded accommodations and additional guest charges
• S.C. Code Ann. § 27-16-130(H) — applied state sales-tax rules to the Catawba tribal sales tax
• Act 386 of 2006, § 2 — excess-collection penalty cited by the ruling

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR06-7.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 #06-7

SUBJECT:

One-Time Thanksgiving Sales Tax Holiday
(State Sales and Use Tax)

EFFECTIVE DATE:

Effective for 48 hours beginning 12:01 a.m. on November 24,
2006 (Friday) and ending at twelve midnight on November 25,
2006 (Saturday).

REFERENCES:

Act 388 of 2006, Part I, Section 4E (Enacted June 22, 2006)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2000)
S. C. Code Ann. Section 1-23-10(4) (Supp. 2005)
SC Revenue Procedure #05-2

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the
public and to Department personnel. It is an advisory opinion
issued to apply principles of tax law to a set of facts or general
category of taxpayers. It is the Department’s position until
superseded or modified by a change in statute, regulation, court
decision, or another Departmental advisory opinion.

LAW:
Act 388 of 2006, Part I, Section 4E, enacted June 22, 2006, creates a one-time sales tax holiday
for November 24th and November 25th of 2006, and states:
The imposition of the sales, use, and casual excise taxes imposed pursuant to
Chapter 36 of Title 12 of the 1976 Code, the South Carolina Sales and Use Tax
Act, is suspended with respect to otherwise taxable events occurring on
November 24 and 25, 2006. The suspension provided pursuant to this paragraph
does not apply to the sales tax on accommodations and other charges imposed
pursuant to Section 12-36-920 of the 1976 Code, nor does the suspension apply to
any local sales or use tax administered by the South Carolina Department of
Revenue.

1

Based on the above, the following are important points to remember concerning the one-time
sales tax holiday set for November 24th and November 25th of 2006:

1. The one-time sales tax holiday applies to all purchases except accommodations and
   additional guest charges upon which the tax is imposed under Code Section 12-36-920.
2. The one-time sales tax holiday applies to purchases made by businesses, government
   agencies, and nonprofit organizations as well as purchases made by individuals.
3. The one-time sales tax holiday only applies to the state sales and use tax, the state
   casual excise tax and the Catawba Indian tribal sales tax. The one-time sales tax holiday
   does not apply to sales and use taxes administered and collected by the Department of
   Revenue on behalf of counties and school districts or to local hospitality taxes and local
   accommodations taxes collected directly by any county or municipality.
   QUESTIONS AND ANSWERS:
   The following answers represent the department's opinion with respect to various issues
   concerning the one-time "sales tax holiday" set for November 24th and November 25th of 2006:
   (1) Will the department publish a list of those articles qualifying for the exemption from the state
   sales and use tax?
   There is no need to publish a list of items exempt from the state sales and use tax during "sales
   tax holiday" set for November 24th and November 25th of 2006. This one-time “sales tax
   holiday” applies to all purchases, except for purchases of accommodations or the payment of
   additional guest charges subject to the sales tax under Code Section 12-36-920.
   (2) When is this one-time "sales tax holiday?"
   This one-time "sales tax holiday" will last for 48 hours and begin at 12:01 a.m. on November 24,
   2006 (Friday) and end at twelve midnight on November 25, 2006 (Saturday).
   (3) Must the item being sold be delivered to the customer during the one-time "sales tax holiday"
   set for November 24th and November 25th of 2006 in order for the exemption to apply?
   An item will be exempt from the state sales and use tax during the one-time "sales tax holiday"
   set for November 24th and November 25th of 2006 if:
   (a) the item is both delivered to and paid for (cash, check, debit card, credit card or any
   other binding obligation to pay) by the customer during the two days of the "sales tax
   holiday"; or
   (b) the item is ordered and paid for (cash, check, debit card, credit card or any other
   binding obligation to pay) 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.
   2

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 (1) local sales and use taxes collected by the department
on behalf of counties and school districts and (2) the Catawba tribal sales tax collected by the
department on behalf of Catawba Indian tribal government?
The "sales tax holiday" does not apply to local sales and use taxes; therefore, local sales and use
taxes administered and collected by the Department of Revenue on behalf of counties and school
districts still apply to purchases made during the two days of the "sales tax holiday."
The "sales tax holiday" does apply to the Catawba tribal sales tax that is administered and
collected by the Department of Revenue on behalf of the Catawba Indian tribal government. See
Code Section 27-16-130(H) which states that the South Carolina sales and use tax laws,
regulations and rulings apply to the Catawba tribal sales tax.
(5) Does the "sales tax holiday" apply to local hospitality taxes and local accommodations taxes
collected directly by any county or municipality that has imposed such local taxes?
No, local hospitality taxes and local accommodations taxes collected directly by any county or
municipality are still applicable to purchases made during the two days of the "sales tax holiday.
(6) Does this one-time "sales tax holiday" apply to purchases made by businesses, government
agencies, and nonprofit organizations as well as purchases made by individuals?
Yes, provided the sale occurs during the two days of the "sales tax holiday" as discussed in
Question #3. (Local taxes are applicable. See Questions #4 and #5.)
(7) Does this one-time "sales tax holiday" apply to sales made by mail order, Internet or similar
retailers?
Yes, provided the sale occurs during the two days of the "sales tax holiday" as discussed in
Question #3. (Local taxes are applicable. See Questions #4 and #5.)
(8) Does the "sales tax holiday" apply to custom or special orders?
Yes, provided the sale occurs during the two days of the "sales tax holiday" as discussed in
Question #3. (Local taxes are applicable. See Questions #4 and #5.)
(9) Are delivery charges subject to the tax during the "sales tax holiday?"

3

Most delivery charges are included in the tax base for the sales tax and the use tax; therefore, all
delivery charges associated with that sale are exempt from the state sales and use tax. For
example, if a retailer sells furniture during the sales tax holiday for $12,000 and also charges
$200 to deliver the furniture, then the entire charge of $12,200 is exempt from the state sales or
use tax. (Local taxes are applicable. See Questions #4 and #5.)
(10) Are alteration charges for clothing sold during the "sales tax holiday" subject to the tax?
All alteration charges associated with a 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 state sales or use tax. (Local taxes are applicable. See
Questions #4 and #5.)
(11) How are exchanges of items purchased during the "sales tax holiday" handled when
returned after the "sales tax holiday?"
If a customer purchases an 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, state and local sales or use tax will apply to the sale of the newly
purchased item.
(12) 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
receives credit on the purchase of a different item, no additional tax will be due.
(13) 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 state sales or use tax regardless of when the rain check was
issued. (Local taxes are applicable. See Questions #4 and #5.)
(14) Does an item placed on lay-away during the "sales tax holiday" qualify for the exemption?
No. Since the item placed on lay-away during the "sales tax holiday" is reserved for future
delivery and is not for immediate delivery as provided for in Question #3, the purchase does not
qualify for the one-time “sales tax holiday.”

4

(15) How should retailers report sales exempt during the "sales tax holiday?"
With respect to the return filed for November, 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 as a result of the "sales tax holiday" on November 24th and
November 25th of 2006 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.
However, in order to properly report any local sales and use taxes due for November of 2006
(see Question #13), retailers will need to “add back” their “sales tax holiday” sales on Line 1 of
the “Local Sales and Use Tax Worksheet” on Form ST-389. Exhibit “A” is a “modified” “Local
Sales and Use Tax Worksheet” containing an additional line (Line 1.a.) that should assist
retailers in properly reporting any local sales and use taxes due for November of 2006.
(16) 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.
In addition, the retailer may be held liable for a penalty equal to one hundred fifty percent of the
amount of tax collected that exceeds the amount authorized or required to be collected from the
purchaser under the sales tax or use tax. (See Act No. 386 of 2006, Section 2.)
(17) Is the sale of an item on a "90 days same as cash" basis exempt from state sales and use 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."
(18) Does this one-time "sales tax holiday" apply to sales of electricity, gas, laundry services,
communication services (e.g., cable television services, satellite programming services, prepaid
wireless calling arrangements, fax transmissions, etc. 1 ), and warranty, maintenance and similar
service contracts?"

1

See SC Revenue Ruling #04-15 for more detailed information as to the types of communication services that are
subject to the sales and use tax.

5

Sales of electricity, gas, laundry services, communication services (e.g., cable television services,
satellite programming services, prepaid wireless calling arrangements, fax transmissions, etc. 2 ),
and warranty, maintenance and similar service contracts will be exempt or taxable during the
one-time "sales tax holiday" set for November 24th and November 25th of 2006 as follows:
(a) Sales of electricity, gas and communication services (e.g., cable television services,
satellite programming services) that are regularly billed on a monthly basis will be
exempt from the state sales and use tax during two days of the one-time "sales tax
holiday" set for November 24th and November 25th of 2006.
If it is not practical to measure or otherwise determine the specific amount of electricity,
gas or communication services provided to a customer during the two days of the “sales
tax holiday,” a reasonable method of providing the customer the benefits of the “sales tax
holiday” should be used. For example, the seller may calculate the amount of service
used during the “sales tax holiday” by a ratio of the two days of the sales tax holiday
(provided the service is active during the two days) to the total number of days in the
billing cycle.
(b) Sales of gas and communication services (e.g., fax transmissions) that are not
regularly billed on a monthly basis will be exempt during the one-time "sales tax holiday"
set for November 24th and November 25th of 2006 if the service is both provided to, and
paid for by, the customer during the two days of the "sales tax holiday."
(c) Sales of laundry service will be exempt during the one-time "sales tax holiday" set for
November 24th and November 25th of 2006 if the items to be cleaned are provided to the
drycleaner and the order is accepted by the drycleaner during the "sales tax holiday" for
immediate cleaning and immediate delivery, even if delivery is made after the "sales tax
holiday."
(d) Sales of warranty, maintenance and similar service contracts will be exempt during
the one-time "sales tax holiday" set for November 24th and November 25th of 2006 if the
contract is signed and becomes effective during the "sales tax holiday." Please note that
subsequent renewals of a contract after the “sales tax holiday” are not exempt.
If the contract is not signed, or does not become effective, during the "sales tax holiday,"
then the sale of the warranty, maintenance and similar service contract is not exempt,
unless otherwise exempt under the law.
Note: See SC Revenue Ruling #05-12 for additional information concerning the
application of the tax to warranty, maintenance and similar service contracts.
(Note: In the above cases where the transaction is exempt from the state sales and use tax under
the one-time “sales tax holiday,” local taxes are still applicable. See Questions #4 and #5.)

2

See SC Revenue Ruling #04-15 for more detailed information as to the types of communication services that are
subject to the sales and use tax.

6

(19) Does this one-time "sales tax holiday" apply to the casual excise tax and purchases of motor
vehicles, motorcycles, boats, motors, and airplanes from a non-retailer?
Yes; however, since the casual excise tax is imposed on the issuance of a certificate of title or
other proof of ownership, the one-time "sales tax holiday" only applies to the casual excise tax
and purchases of motor vehicles, motorcycles, boats, motors, and airplanes from a non-retailer if
the certificate of title or other proof of ownership is applied for during the two days of the
holiday. Since state offices will be closed during the two days of the one-time “sales tax
holiday,” an application for a certificate of title or other proof of ownership for a purchase from a
non-retailer will be exempt from the state casual excise tax if the application is properly
completed and signed; is deposited in the United States mails in an envelope with proper
postage; is addressed to the appropriate office of the Department of Motor Vehicles or the
Department of Natural Resources; and the postmark is legible and falls on either November 24th
or 25th.
Note: If a motor vehicle, motorcycle, boat, motor, and airplane is purchased from a retailer, the
sales or use tax applies and the one-time "sales tax holiday" only applies if the sale occurs during
the two days of the "sales tax holiday" as discussed in Question #3.
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/Ray N. Stevens
Ray N. Stevens, Director

, 2006
September 27
Columbia, South Carolina

7

Exhibit “A”
LOCAL TAX WORKSHEET FOR NOVEMBER 2006
(If Applicable)

1.

Net Sales and Purchases (From line 6 of Sales and Use Tax Worksheet)

1.a. Sales Tax Holiday Sales (From line 4 Deductions of Sales and Use Tax Worksheet)

1.a.______

2.

Catawba Tribal Sales (From line 4b Deductions of Sales and Use Tax Worksheet)

3.

Total Sales and Purchases (Add lines 1, 1a, and 2)

4.

Local Tax Allowable Deductions
Column A
Type of Deduction

Column B
Amount of Deduction

a. Catawba Sales less than $100_

$________

b. Sales Not Subject to Local Tax

$________

$________

$________

5. Total Allowable Deductions (Total Column B)

6. ---

7. Total Net Taxable Local Sales (Line 3 minus line 5)

8. ---

   
   Should agree with ST-389, Page 3, line 1, column A.
   Note: When your sales, purchases and withdrawals are made or delivered into a locality
   With more than one local tax, the total on Form ST-389 will not agree with line 6.
   Note: This form does not address the local taxes on sales that are collected directly by the counties and municipalities (sales of
   accommodations and prepared meals). It only addresses the general local taxes collected by the Department of Revenue on
   behalf of the counties, school districts, and the Catawba Indian tribal government.

CAPITAL PROJECT, CATAWBA TRIBAL, SCHOOL DISTRICT, TRANSPORTATION AND PROPERTY OFFSET
NUMERICAL CODES
As a result of specific legislation, certain counties and jurisdictions now impose additional sales and use taxes, which are identified as
Capital Project, Catawba Tribal, School District, Transportation and Property Offset. These taxes are required to be reported based
upon the county or jurisdiction in which the sales consummates. (Usually this is where the business is located, but it can be the place
of delivery or physical presence by acceptance of the goods sold, if different from the business location.) For your convenience, the
counties and jurisdictions that currently impose these additional taxes are listed on form ST-389 with their assigned four digit
processing code.

8