Which communication and online services did South Carolina treat as taxable transmissions under RR 06-8?

Plain-English summary

South Carolina Revenue Ruling 06-8 was the Department's 2006 catalog of taxable and nontaxable communication services. Its general rule was that charges for ways or means to transmit voice or messages were subject to sales and use tax unless an exemption or exclusion applied.

The taxable list included most telephone service, teleconferencing, paging, automated answering, cable and satellite programming, fax, voicemail, email, certain electronic tax filing, and access to an individual website or database, including application-service-provider offerings. Retail prepaid wireless arrangements and 900/976 telephone service were addressed under separate provisions.

The ruling distinguished Internet access from access to a specific online service. It said the Department did not enforce tax on an ISP's Internet-access charge because of the then-existing federal moratorium and the Department's administrative policy. A third party's charge to access its own website or database was different and remained taxable.

Nontaxable categories included specified telephone and telegraph charges, ATM communications, statutory data processing, qualifying cooperative-member databases, tax-return e-filing by the preparer, and certain electronic burglary and fire monitoring services. For a single nonitemized telecommunications bundle, the nontaxable portion became taxable unless the provider could reasonably identify it from ordinary business records maintained for a nonsales-tax purpose.

RR 16-5 later modified the guidance for streaming, and RR 17-2 expressly superseded RR 06-8 with an updated catalog.

What this means for you

Online-service providers

The ruling did not treat every Internet-delivered service as Internet access. Access to a seller's particular website, database, or hosted application could be a taxable communication service.

Telecommunications providers

Maintain regular business records that separately identify nontaxable components of a nonitemized bundle. Without a reasonable allocation, the ruling treated that portion as taxable.

Data-processing businesses

The statutory exclusion focused on manipulation of customer-furnished information. Selling access to the provider's own information or system was treated differently.

Common questions

Q: Was an ISP's Internet-access charge taxed under this ruling?
A: The Department said it would not enforce collection because its tax was not grandfathered under the federal moratorium and its policy had become longstanding.

Q: Was access to a paid website or database the same thing?
A: No. The ruling treated a third party's charge to use its particular website or database as taxable.

Q: Were all electronic services taxable?
A: No. The ruling listed exemptions and exclusions for specified telephone charges, data processing, cooperative databases, and certain other services.

Q: Is RR 06-8 current?
A: No. RR 16-5 modified it, and RR 17-2 later expressly superseded it.

Citations and references

• S.C. Code Ann. §§ 12-36-910(B)(3) and 12-36-1310(B)(3) — charges for ways or means to transmit voice or messages
• S.C. Code Ann. § 12-36-60 — communications and cooperative-service database exclusion
• S.C. Code Ann. § 12-36-910(C) — data-processing definition
• S.C. Code Ann. § 12-36-2120(11) — specified communication exemptions
• S.C. Code Ann. §§ 12-36-910(B)(5) and 12-36-2645 — prepaid wireless and 900/976 services
• SC Revenue Ruling #16-5 — modified the streaming treatment
• SC Revenue Ruling #17-2 — superseding communications guidance

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR06-8.pdf
• Modifying guidance: RR16-5.pdf
• Superseding guidance: RR17-2.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 #06-8

SUBJECT:

Communications – Ways or Means for the Transmission of the
Voice or Messages and Other Communications
(Sales & Use Tax)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

SC Revenue Ruling #04-15 and all previous advisory opinions
and any oral directives in conflict herewith.

REFERENCES:

Chapter 36 of Title 12 (2000 and Supp. 2003)

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.

INTRODUCTION:
The purpose of this advisory opinion is to update a comprehensive discussion that was
originally provided in SC Revenue Ruling #04-15 concerning the application of the sales
and use tax to the wide variety of communication services available to individual
consumers and to businesses. The opinion will “summarize” longstanding Department
opinion concerning the taxability of various communication services and will attempt to
list as many communication services as possible that the Department has held in the past
as subject to the tax, whether through formal advisory opinions, audits or informal advice
provided to taxpayers.
Communication technology is expanding every day. As such, new and emerging
technologies will make available to consumers many new communication services in the
future. The Department will review such communication services on a case-by-case
basis.

Note: Charges for the ways or means for the transmission of the voice or messages
are subject to the sales and use tax under Code Sections 12-36-910(B)(3) and 12-361310(B)(3).) Charges by an Internet Service Provider (“ISP”) that allow a customer
to access the Internet (“Internet Access”) are charges for the ways and means for
the transmission of the voice or messages. However, as discussed below, the
Department has not enforced the assessment and collection of the sales and use tax
on Internet Access.
In 1998 Congress established a tax moratorium in the Internet Tax Freedom Act
The moratorium was later extended in the Internet Nondiscrimination Act. The
moratorium prohibited the taxation of Internet Access, unless the tax was generally
imposed and actually enforced prior to October 1, 1998. Although a few taxpayers
were paying sales and use tax on Internet Access, the Department reviewed its
enforcement of the tax with respect to Internet Access and determined in 1998 that
it had not issued an advisory opinion specifically stating that charges for Internet
Access were taxable, and did not have an audit policy to enforce the assessment and
collection of the tax on Internet Access. Therefore, the Department determined that
the collection of the sales and use tax was not grandfathered under the
Congressional moratorium and therefore it could not tax Internet Access. Since
charges to access or use an individual database, such as a website, did not constitute
an access to the Internet, these charges did not come within the moratorium and
were subject to the tax. In addition, charges to access or use an individual database,
such as a website, were previously held subject to the tax in SC Revenue Ruling #8914 as a “database access transmission.”
An extension of the moratorium was signed by President Bush on December 3, 2004
and extends the ban on the taxation of Internet Access until November 1, 2007. In
addition, the combination of past Department policies and the Congressional
moratorium has created the equivalent of a longstanding administrative policy not
to impose the sales and use tax on Internet Access. Therefore, the Department will
only enforce collection of the sales and use tax after November 1, 2007, on Internet
Access if Congress does not extend the moratorium beyond November 1, 2007, and
the General Assembly enacts legislation or approves a regulation to impose the sales
and use tax upon Internet Access. However, charges by a third party to access or
use that third party’s individual website will continue to be subject to the sales and
use tax (e.g. monthly charges to access a sports website).

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LAW AND DISCUSSION:
Code Section 12-36-910(A) states:
A sales tax, equal to five 1 percent of the gross proceeds of sales, is
imposed upon every person engaged or continuing within this State in the
business of selling tangible personal property at retail. (Emphasis added.)
Code Section 12-36-1310(A) reads:
A use tax is imposed on the storage, use, or other consumption in this
State of tangible personal property purchased at retail for storage, use, or
other consumption in this State, at the rate of five 2 percent of the sales
price of the property, regardless of whether the retailer is or is not engaged
in business in this State. (Emphasis added.)
Code Section 12-36-60 defines the term "tangible personal property" to mean:
...personal property which may be seen, weighed, measured, felt, touched,
or which is in any other manner perceptible to the senses. It also includes
services and intangibles, including communications, laundry and related
services, furnishing of accommodations and sales of electricity, the sale or
use of which is subject to tax under this chapter and does not include
stocks, notes, bonds, mortgages, or other evidences of debt. … (Emphasis
added).
Therefore, the term tangible personal property includes the sale or use of intangibles,
including communications, that are subject to South Carolina sales or use taxes under
Chapter 36 of Title 12.
Communications are subject to sales and use taxes under Chapter 36 of Title 12 pursuant
to Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3), which impose the tax on the:
gross proceeds accruing or proceeding from the charges for the ways or
means for the transmission of the voice or messages, including the charges
for use of equipment furnished by the seller or supplier of the ways or
1

At the time this document was issued, the total state sales and use tax rate was 5%. Beginning June 1,
2007, the total state sales and use tax rate will be 6%. Code Section 12-36-1110, which increases the sales
and use tax rate by 1% beginning June 1, 2007, states:
Beginning June 1, 2007, an additional sales, use, and casual excise tax equal to one
percent is imposed on amounts taxable pursuant to this chapter, except that this additional
one percent tax does not apply to amounts taxed pursuant to Section 12-36-920(A), the
tax on accommodations for transients, nor does this additional tax apply to items subject
to a maximum sales and use tax pursuant to Section 12-36-2110 nor to the sale of
unprepared food which may be lawfully purchased with United States Department of
Agriculture food coupons.
2

See footnote #1.

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means for the transmission of the voice or messages. Gross proceeds from
the sale of prepaid wireless calling arrangements subject to tax at retail
pursuant to item (5) of this subsection are not subject to tax pursuant to
this item. Effective for bills rendered after August 1, 2002, charges for
mobile telecommunications services subject to the tax under this item
must be sourced in accordance with the Mobile Telecommunications
Sourcing Act as provided in Title 4 of the United States Code. The term
“charges for mobile telecommunications services” is defined for purposes
of this section the same as it is defined in the Mobile Telecommunications
Sourcing Act. All other definitions and provisions of the Mobile
Telecommunications Sourcing Act as provided in Title 4 of the United
States Code are adopted; (Emphasis added.)
Furthermore, Code Section 12-36-910(B)(3) and Code Section 12-36-1301(B)(3) address
the taxation of “bundled transactions.” A “bundled transaction” is “a transaction
consisting of distinct and identifiable properties or services, which are sold for one
nonitemized price but which are treated differently for [sales and use] tax purposes.”
Under these provisions, for customer bills that include telecommunications services in a
bundled transaction, where the nonitemized price is attributable to properties or services
that are taxable and nontaxable, the portion of the price attributable to any nontaxable
property or service is subject to tax unless the provider can reasonably identify that
portion from its books and records kept in the regular course of business for purposes
other than sales taxes. The provisions concerning “bundled transactions” are effective for
bills rendered on or after January 1, 2004.
The Code does not provide definitions for various terms or phrases found in Code
Sections 12-36-910(B)(3) and 12-36-1310(B)(3); therefore, it is necessary to determine
their "ordinary and popular meaning." The Department, in interpreting Code Sections
12-36-910(B)(3) and 12-36-1310(B)(3) (and their predecessors), has long used the
definitions found in the Second College Edition of the American Heritage Dictionary for
defining these terms and phrases.
The Second College Edition of the American Heritage Dictionary provides the following
definitions:
"Gross"

• Exclusive of deductions; total

"Proceeds"

• The amount of money derived from a commercial
  or fund-raising venture; yield

"Way"

• A manner of doing something

"Means"

• A method, course of action, or instrument by which
  an act can be accomplished or some end achieved.

"Transmission"

• The act or process of transmitting; The state of being
  transmitted; Something transmitted, as a voice or message
  4

"Transmit"

• Electronics: To send (a signal) as by wire or radio

Substituting the definitions in the Second College Edition of the American Heritage
Dictionary for terms found in Sections 12-36-910(B)(3) and 12-36-1310(B)(3), the literal
meaning becomes - the total amount of money derived, exclusive of deductions, from a
commercial venture and accruing or proceeding from charges for the manner, method or
instruments for sending a signal of the voice or of messages is subject to the sales and use
tax. See SC Revenue Ruling #89-14 and SC Revenue Ruling #04-15.
Furthermore, the definition of tangible personal property, as defined in Code Section 1236-60, includes services and intangibles "the sale or use of which is subject to tax under
[Chapter 36],” such as "communications." The Second College Edition of the American
Heritage Dictionary defines "communication,” in part, as "[t]he exchange of thoughts,
messages or information, as by speech, signals or writing." "Communications" is
defined, in part, as, "a means of communicating esp.: a system of sending and receiving
messages, such as mail, telephone and television." As with the above definitions, the
Department has long used the definition found in the Second College Edition of the
American Heritage Dictionary for the term “communications.”
Based on the above discussion, it is the Department’s position that charges for the ways
or means of communication include charges for access to, or use of, a communication
system (the manner, method or instruments for sending or receiving a signal of the voice
or of messages), whether this charge is based on a fee per a specific time period or per
transmission. This is further supported by the definition of the terms "sale" and
"purchase," which are defined in Code Section 12-36-100 to include "a license to use or
consume."
The Department of Revenue has taxed communication services such as telephone
services, paging services, answering services, cable television services, satellite
programming services (includes, but is not limited to, emergency communication services
and television, radio, music or other programming services), fax transmission services,
voice mail messaging services, e-mail services, and database access transmission services
(on-line information services), such as legal research services, credit reporting/research
services, and charges to access an individual website.
In SC Revenue Ruling #89-14, the Department defined several of these services as
follows:
Facsimile:
Process of transmitting exact copies of written, printed and pictorial
material over telephone lines (or optical fiber cables). Images are
converted by photoelectric cells, which read the amount of light reflected
from or transmitted through a document, into electric signals, which are
sent through the transmission network. Signals are picked up by a

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facsimile receiver, which reproduces the original document by the reverse
process.
Database Access Transmission:
Transmission of computer database information and programs by and
through a modem and telephone lines, whether automatically transmitted
or transmitted as a result of a subscriber accessing a computer. Charges
may be based on the amount of time the transmission is utilized.
Electronic Mail:
Messages that are transmitted from computer to computer over telephone
lines under the direction of an intermediate service. This service is a
"host" computer that receives messages, holds them and sends them to the
proper destination. Users need a microcomputer, or any computer, a
modem, a printer, a telephone line and an electronic mail service.
Credit Reporting:
Transmission of credit data using electronic means and/or computers,
communication networks, CRT's and printers.
Voice Messaging:
Process of recording messages for a particular person or firm into a central
computer database and activating the message to that person or firm when
the computer is accessed for the messages.
All of these communication services and others currently taxed by the Department of
Revenue constitute communication systems that the purchaser pays to access or use. (See
Commission Decision #89-77, SC Revenue Ruling #89-14 and SC Revenue Ruling #0415.)
In addition, charges by services that charge monthly fee for radio programming services
or other communication services a person may receive in their automobile or otherwise
are “charges for the ways or means for the transmission of the voice or messages” and
subject to the tax under Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3).
The statute provides several exemptions and exclusions for the charges taxed under
Sections 12-36-910(B)(3) and 12-36-1310(B)(3).

6

Code Section 12-36-2120(11) exempts:
(a) toll charges for the transmission of voice or messages between
telephone exchanges;
(b) charges for telegraph messages;
(c) carrier access charges and customers access line charges established by
the Federal Communications Commission or the South Carolina Public
Service Commission; and
(d) transactions involving automatic teller machines;
Code Section 12-36-60, the definition of “tangible personal property” which by statute
includes communications, states in part:
Tangible personal property does not include the transmission of computer
database information by a cooperative service when the database
information has been assembled by and for the exclusive use of the
members of the cooperative service. (Emphasis added.)
Code Section 12-36-910(C) states:
Notwithstanding any other provisions of this article or Article 13, Chapter
36 of this title, the sales or use tax imposed by those articles does not
apply to the gross proceeds accruing or proceeding from charges for or use
of data processing. As used in this subsection, “data processing” means
the manipulation of information furnished by a customer through all or
part of a series of operations involving an interaction of procedures,
processes, methods, personnel, and computers. It also means the
electronic transfer of or access to that information. Examples of the
processing include, without limitation, summarizing, computing,
extracting, storing, retrieving, sorting, sequencing, and the use of
computers. (Emphasis added.)
Code Section 12-36-2120(3) exempts from the tax:
(a) textbooks, books, magazines, periodicals, newspapers, and access to
on-line information systems used in a course of study in primary and
secondary schools and institutions of higher learning or for students’ use
in the school library of these schools and institutions;
(b) books, magazines, periodicals, newspapers, and access to on-line
information systems sold to publicly supported state, county, or regional
libraries;
Items in this category may be in any form, including microfilm,
microfiche, and CD ROM; however, transactions subject to tax under
7

Sections 12-36-910(B)(3) and 12-36-1310(B)(3) do not fall within this
exemption; (Emphasis added.)
It should be noted that the above exemptions also provide further support that “database
access transmissions” are subject to the tax since the above exemptions for on-line
information systems, the transmission of computer database information by a cooperative
service, and the electronic transfer of or access to data processing information would not
have been necessary if such communication services were not subject to the tax under
Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3).
Finally, with respect to Code Section 12-36-910(B)(3) and Code Section 12-361310(B)(3), the General Assembly approved in 2006 the amendment of SC Regulation
117-328. The amendment, which became effective June 23, 2006, deleted the last
paragraph of the regulation which concerned outdated “wired music” provided by AM
radio stations and FM radio stations (as defined in the regulation) 3 . Background music is
now usually transmitted via satellite and the charges for such transmissions, in the
opinion of the Department, are subject to the tax under Code Sections 12-36-910(B)(3)
and 12-36-1310(B)(3) ) which impose the sales tax and use tax on charges for the ways or
means for the transmission of the voice or messages. In addition, this provision of the
regulation was, in the opinion of the Department, in conflict with Code Sections 12-36910(B)(3) and 12-36-1310(B)(3).
The South Carolina sales and use tax also address two other types of communication
services by special imposition. Code Section 12-36-910(B)(5) and Code Section 12-361310(B)(5) impose the sales and use tax on the:
gross proceeds accruing or proceeding from the sale or recharge at retail
for prepaid wireless calling arrangements.
(a) “Prepaid wireless calling arrangements” means communication
services that:
(i) are used exclusively to purchase wireless telecommunications;
(ii) are purchased in advance;
(iii) allow the purchaser to originate telephone calls by using an
access number, authorization code, or other means entered manually
or electronically; and
(iv) are sold in units or dollars which decline with use in a known
amount.

3

The amendment to SC Regulation 117-328 only applied to “wired music” provided by AM and FM radio
stations. The amendment does not affect the longstanding position of the Department that satellite
programming services and other programming transmission services (including music) are subject to the
tax. See “Taxable Communication Services” as listed in this document and SC Revenue Ruling #04-15.

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(b) All charges for prepaid wireless calling arrangements must be
sourced to the:
(i) location in this State where the over-the-counter sale took place;
(ii) shipping address if the sale did not take place at the seller’s
location and an item is shipped; or
(iii) either the billing address or location associated with the mobile
telephone number if the sale did not take place at the seller’s
location and no item is shipped.
Code Section 12-36-2645 imposes the sales and use tax on:
gross proceeds accruing or proceeding from the business of providing
900/976 telephone service except that the applicable rate of the tax is ten 4
percent.

CONCLUSION:
Taxable Communication Services 5 :

1. Based on the above, it has been the Department’s longstanding opinion that charges
   for the following communication services are subject to the sales and use tax pursuant to
   Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3):
   Telephone services (not specifically exempted under Code Section 12-362120(11)), including telephone services provided via the traditional circuitcommitted protocols of the public switched telephone network (PSTN), a wireless
   transmission system, a voice over Internet protocol ("VoIP"), or any of other
   method
   Teleconferencing Services
   Paging Services (See SC Information Letter #89-28.)
   Answering Services (See SC Information Letter #89-28.)
   Cable Television Services
   Satellite Programming Services and Other Programming Transmission Services
   (includes, but is not limited to, emergency communication services and television,
   radio, music or other programming services)
   4

As noted above, Code Section 12-36-1110 increases the state sales and use tax rate by 1% beginning June
1, 2007. Therefore, the total state tax rate on the gross proceeds accruing and proceeding from the business
of providing 900/976 telephone service will be 11% beginning June 1, 2007.
5
See also SC Revenue Ruling #04-15 for previous summary of communication services subject to the tax.

9

Fax Transmission Services (See SC Revenue Ruling #89-14.)
Voice Mail Messaging Services (See SC Revenue Ruling #89-14.)
E-Mail Services (See SC Revenue Ruling #89-14.)
Electronic Filing of Tax Returns when the return is electronically filed by a
person who did not prepare the tax return (See SC Revenue Ruling #91-20.)
Database Access Transmission Services (On-Line Information Services), such as
legal research services, credit reporting/research services, charges to access an
individual website 6 (including Application Service Providers), etc. (not including
computer database information services provided by a cooperative service when
the database information has been assembled by and for the exclusive use of the
members of the cooperative services) (See SC Revenue Ruling #89-14 and SC
Private Letter Ruling #89-21.)
Note: It is the Department’s opinion charges for mobile satellite communication services,
such as automobile satellite radio programming or other mobile communication services,
are sourced to the primary place of use of the customer (e.g., the residence of an
individual customer) as defined in the Mobile Telecommunications Sourcing Act.
6

Charges for the ways or means for the transmission of the voice or messages are subject to the sales and
use tax under Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3).) Charges by an Internet Service
Provider (“ISP”) that allow a customer to access the Internet (“Internet Access”) are charges for the ways
and means for the transmission of the voice or messages. However, as discussed below, the Department has
not enforced the assessment and collection of the sales and use tax on Internet Access.

In 1998 Congress established a tax moratorium in the Internet Tax Freedom Act The moratorium was later
extended in the Internet Nondiscrimination Act. The moratorium prohibited the taxation of Internet Access,
unless the tax was generally imposed and actually enforced prior to October 1, 1998. Although a few
taxpayers were paying sales and use tax on Internet Access, the Department reviewed its enforcement of
the tax with respect to Internet Access and determined in 1998 that it had not issued an advisory opinion
specifically stating that charges for Internet Access were taxable, and did not have an audit policy to
enforce the assessment and collection of the tax on Internet Access. Therefore, the Department determined
that the collection of the sales and use tax was not grandfathered under the Congressional moratorium and
therefore it could not tax Internet Access. Since charges to access or use an individual database, such as a
website, did not constitute an access to the Internet, these charges did not come within the moratorium and
were subject to the tax. In addition, charges to access or use an individual database, such as a website, were
previously held subject to the tax in SC Revenue Ruling #89-14 as a “database access transmission.”
An extension of the moratorium was signed by President Bush on December 3, 2004 and extends the ban
on the taxation of Internet Access until November 1, 2007. In addition, the combination of past Department
policies and the Congressional moratorium has created the equivalent of a longstanding administrative
policy not to impose the sales and use tax on Internet Access. Therefore, the Department will only enforce
collection of the sales and use tax after November 1, 2007, on Internet Access if Congress does not extend
the moratorium beyond November 1, 2007, and the General Assembly enacts legislation or approves a
regulation to impose the sales and use tax upon Internet Access. However, charges by a third party to
access or use that third party’s individual website will continue to be subject to the sales and use tax (e.g.
monthly charges to access a sports website).

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(Pursuant to Code Section 12-36-910(B(3) and 12-36-1310(B)(3), “charges for mobile
telecommunications services … must be sourced in accordance with the Mobile
Telecommunications Sourcing Act as provided in Title 4 of the United States Code.)

2. Based on the above, it has been the Department’s longstanding opinion that charges for
   the following communication services are subject to the sales and use tax pursuant to
   Code Section 12-36-910(B)(5) or Code Section 12-36-2645:
   Prepaid Wireless Calling Arrangements (sale or recharge at retail) as
   defined in Code Section 12-36-910(B)(5) (For information on prepaid
   telephone calling cards that do not come within the definition of prepaid
   wireless calling arrangements, see SC Revenue Ruling #04-4.)
   900/976 Telephone Service (The State tax rate on this type of
   communication service is 10% (11% beginning June 1, 2007), not 5% (or
   6% beginning June 1, 2007).)
   Non-Taxable Communication Services 7 :
   Based on the above, it has been the Department’s longstanding opinion that charges for
   the following communication services are not subject to the sales and use tax pursuant to
   Code Sections 12-36-910(B)(3) and 12-36-1310(B)(3):
   Telephone services specifically exempted under Code Section 12-36-2120(11),
   such as toll charges between telephone exchanges and carrier access charges and
   customers access line charges established by the Federal Communications
   Commission or the South Carolina Public Service Commission
   Telegraph Messages (Code Section 12-36-2120(11))
   Communication Services involving Automatic Teller Machines (Code Section 1236-2120(11))
   Data Processing Services as defined under Code Section 12-36-910(C)
   Computer Database Information Services provided by a cooperative service when
   the database information has been assembled by and for the exclusive use of the
   members of the cooperative services (Code Section 12-36-60)
   Electronic Filing of Tax Returns when the return is electronically filed by a
   person who prepared the tax return (See SC Revenue Ruling #91-20.)
   In SC Private Letter Ruling #97-4 and SC Technical Advice Memorandum #95-1 the
   Department determined that charges for electronically monitoring a customer's home or
   business for the purpose of burglary and fire protection were not subject to the sales and
   7

See also SC Revenue Ruling #-4-15 for previous summary of communication services not subject to the
tax.

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use taxes since such charges were not charges for access to, or use of, a communication
system (ways or means for the transmission of the voice or messages). The sale or lease
of equipment to the customer, or the use of the equipment by the monitoring company,
were held subject to the tax based on the specific facts and circumstances.
“Bundled Transactions:”
Based on the above, it is the Department’s opinion that for a customer bill rendered on or
after January 1, 2004 that includes telecommunications services in a bundled transaction,
where the nonitemized price is attributable to properties or services that are taxable and
nontaxable, the portion of the price attributable to any nontaxable property or service is
subject to tax unless the provider can reasonably identify that portion from its books and
records kept in the regular course of business for purposes other than sales taxes.
Note: A “bundled transaction” is “a transaction consisting of distinct and identifiable
properties or services, which are sold for one nonitemized price but which are treated
differently for [sales and use] tax purposes.”
Note: This advisory opinion attempts to list as many communication services as
possible that the Department has held in the past as subject to the tax, whether
through formal advisory opinions, audits or informal advice provided to taxpayers.
Charges for other communication services not listed in this advisory opinion are still
subject to the tax if they constitute charges for the ways or means for the
transmission of the voice or messages and are not otherwise exempted under the
law.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Ray N. Stevens
Ray N. Stevens, Director
November 16
, 2006
Columbia, South Carolina

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