Which foods became exempt from South Carolina's state sales and use tax on November 1, 2007 under RR 07-4?

Plain-English summary

Beginning November 1, 2007, South Carolina exempted from state sales and use tax unprepared food that could lawfully be purchased with USDA food coupons or equivalent approved benefits. The shopper did not actually have to use benefits, and the retailer did not have to be authorized to accept them.

Eligible examples included food intended for home consumption, snacks, beverages, seasonings, food-producing seeds and plants, and qualifying cold salads or sandwiches intended to be eaten at home. The exemption did not cover alcohol, ready-to-drink hot beverages, tobacco, ready-to-eat hot food, food designed to be heated in the store, pet food, vitamins, medicines, or nonfood household goods under the ruling's examples.

Prepared meals remained taxable. The ruling included restaurant and cafeteria food, delivered prepared meals, congregate-site meals, and grocery or convenience-store food intended to be eaten at or near the store, including meals sold with seller-provided eating utensils. A single-price package combining eligible food with an ineligible item also lost the exemption; the example was a fruit basket packaged with wine.

What this means for you

Grocery and convenience retailers

Eligibility followed the type of food, not the customer's payment method. Retailers still had to distinguish exempt groceries from prepared food and mixed packages.

Restaurants and meal sellers

Prepared meals and food for immediate consumption remained subject to the state tax described in the ruling, unless a separate statutory exemption applied.

Consumers in counties with local tax

The state exemption did not automatically eliminate local sales and use tax. Each local tax had to contain its own exemption for the food item.

Common questions

Q: Did a shopper have to pay with food benefits?
A: No. The item only had to be legally eligible for purchase with the USDA benefit.

Q: Did the retailer have to accept food benefits?
A: No. Retailer authorization was not required for the state exemption.

Q: Were restaurant meals exempt?
A: No. Prepared meals for immediate consumption were outside this exemption.

Q: Were local taxes also eliminated?
A: Only if the particular local sales and use tax separately exempted the food.

Q: What happened to a gift basket with fruit and wine sold for one price?
A: The ruling said the state exemption did not apply to the mixed package.

Citations and references

• S.C. Code § 12-36-2120(75) (unprepared food eligible for USDA food benefits)
• S.C. Code § 12-36-2120(10) (specified meals for schoolchildren, elderly, disabled, homeless, and needy persons)
• S.C. Code § 12-36-2120(41) (qualifying nonprofit sales)
• Act 115 of 2007, § 3 (enacted exemption and November 1, 2007 effective date)
• SC Information Letter #07-4 (then-current local-tax treatment referenced by the ruling)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR07-4.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 #07-4

SUBJECT:

Exemption for Unprepared Foods
(Sales and Use Tax)

EFFECTIVE DATE:

November 1, 2007

SUPERSEDES:

SC Revenue Ruling #06-5 and all previous advisory
opinions and any oral directives in conflict herewith.

REFERENCES:

Act 115 of 2007, Section 3 (Enacted June 29, 2007)

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 General Assembly, in Act 115 of 2007, Section 3, enacted legislation (Code Section
12-36-2120(75)) to exempt from the state sales and use tax “unprepared food that
lawfully may be purchased with United States Department of Agriculture food coupons.”
Beginning on November 1, 2007, the state sales and use tax will no longer apply to
unprepared food items eligible for purchase with United States Department of
Agriculture food coupons.

1

Act 115 of 2007, Section 3, states:
A. Section 12-36-910 of the 1976 Code, as last amended by Act 388 of
2006, is further amended by deleting subsection (D) which reads:
"(D)(1) Notwithstanding the rate of the tax imposed pursuant to
subsection (A) of this section or the rate of any other sales tax imposed
pursuant to this chapter and the rate of any use tax imposed pursuant to
this chapter, the sales and use tax on the gross proceeds of sales or sales
price of unprepared food which lawfully may be purchased with United
States Department of Agriculture food coupons is three percent.
(2) There is transferred from the general fund of the State to the EIA
Fund in fiscal year 2006-2007 the revenue estimated by the Board of
Economic Advisors to equal EIA revenue not received as a result of the
two percent sales tax differential provided pursuant to this subsection."
B. Section 12-36-2120 of the 1976 Code is amended by adding a new
item at the end appropriately numbered to read:
"( ) unprepared food that lawfully may be purchased with United States
Department of Agriculture food coupons. However, the exemption
allowed by this item applies only to the state sales and use tax imposed
pursuant to this chapter."
C. Notwithstanding any other provision of law, for fiscal year 20072008 only, there must be transferred from the general fund of the State to
the EIA Fund an amount estimated by the Board of Economic Advisors to
equal the difference between EIA Fund revenues from the sales tax on
food in fiscal year 2007-2008 and the amount of such revenue to the EIA
Fund in fiscal year 2006-2007.
D. Notwithstanding any other effective date provided in this act,
subsections A and B of this section take effect November 1, 2007.
Questions and Answers:
1.

What unprepared food items are eligible for the state sales and use tax exemption
beginning November 1, 2007?

2

Effective November 1, 2007, unprepared foods that lawfully may be purchased with
United States Department of Agriculture (“USDA”) food coupons 1 are exempt from
the state sales and use tax.
The term “unprepared” food does not include (1) meals and food sold by a
restaurant, cafeteria, lunch wagon, or other similar places or businesses engaged in
the business of selling prepared meals or food for immediate consumption; (2) meals
prepared and delivered by a meal delivery service; (3) meals sold to or at congregate
meal sites; or (4) meals and food sold at a grocery store, convenience store or any
other similar store for the purpose of eating at or near the store, such as meals and
food sold with eating utensils (e.g., plates, knives, forks, spoons, cups, napkins)
provided by the seller. These meals and foods are considered “prepared meals or
food” and are not eligible for the state sales and use tax exemption and are subject to
the state sales and use tax at the state rate of 6%.
The following are examples of foods eligible and not eligible for the exemption
from the state sales and use tax.
Foods eligible for the state sales and use tax exemption beginning November 1,
2007 include:
*

Any food intended to be eaten at home by people, including snacks,
beverages and seasonings

*

Seeds and plants intended to grow food (not birdseed or seeds to grow
flowers)

*

Cold items, which may include salads or sandwiches, intended to be eaten at
home by people and that are not considered “prepared meals or food” as
discussed above

Items which are not eligible for state sales and use tax exemption and are, therefore,
subject to the state sales and use tax at the state rate of 6% are:
*

Alcoholic beverages, such as beer, wine, or liquor

*

Hot beverages ready-to-drink such as coffee

*

Tobacco

*

Hot foods ready to eat

1

For purposes of the state exemption discussed in this advisory opinion, food coupons
also means food stamps, electronic benefits transfer cards and any other method approved
by the United States Department of Agriculture.

3

*

Foods designed to be heated in the store

*

Hot and cold food to be eaten at a lunch counter, in a dining area or
anywhere else in the store or in a nearby area such as a mall food court or
that are considered “prepared meals or food” as discussed above

*

Vitamins and medicines (Note: Medicines sold by prescription are exempt
from the 6% state sales and use tax.)

*

Pet food

*

Any non-food items such as tissue, soap or other household goods

Note: Some sales of meals and food may be exempt from state and local sales and
use tax under other exemptions found in the sales and use tax law. For example,
Code Section 12-36-2120(10) provides exemptions from the sales and use tax for (1)
meals or foodstuff used in furnishing meals to school children within school
buildings on a nonprofit basis; (2) meals or foodstuff provided to elderly or disabled
persons at home by certain nonprofit organizations; (3) prepared or packaged
foodstuff sold to nonprofit organizations for the homeless and needy; or (4) meals
and prepared or packaged foodstuff sold to public and nonprofit organizations for
congregate or in-home service to the homeless, needy, disabled adults over eighteen
years of age or persons over sixty years of age (provided the meals or packaged
foodstuffs in this item (4) are eligible for purchase with USDA food coupons). Code
Section 12-36-2120(41) exempts from the sales and use tax tangible personal
property, including meals or food, sold by certain nonprofit organizations.
2.

Must the above unprepared food items be purchased with USDA food coupons to be
exempt from the state sales and use tax beginning November 1, 2007?
No.
Note: Food items which are actually purchased with USDA food coupons are
already exempt from the state sales and use tax.

3.

Must the unprepared food items eligible for the state sales and use tax exemption
beginning November 1, 2007 be purchased from a retailer authorized by the United
States Department of Agriculture to accept food coupons?
No.

4.

When the state sales and use tax exemption for unprepared food items eligible for
purchase with United States Department of Agriculture food coupons begins
November 1, 2007, what will be the State sales and use tax rate on sales of such
food items to persons 85 years of age or older?

4

When the state sales and use tax exemption for unprepared food items eligible for
purchase with United States Department of Agriculture food coupons begins
November 1, 2007, sales of such food items to persons 85 years of age or older will
be treated in the same manner as sales of such food items to any other individual. In
other words, sales of such food items will be exempt from the state sales and use tax,
but will not be exempt from the local sales and use tax unless the local sales and use
tax specifically exempts such food items.
5.

When the state sales and use tax exemption for unprepared food items eligible for
purchase with United States Department of Agriculture food coupons begins
November 1, 2007, will sales of such food items in counties that impose a local sales
and use tax also be exempt?
When the state sales and use tax exemption for unprepared food items eligible for
purchase with United States Department of Agriculture food coupons begins
November 1, 2007, sales of such food items in counties that impose a local sales and
use tax on food items eligible for purchase with United States Department of
Agriculture food coupons will not be exempt from the local sales and use tax unless
the local sales and use tax specifically exempts such food items.
Note: For information concerning the various types of local sales and use taxes
being imposed by counties and other jurisdictions, and which of these local taxes
exempt or do not exempt food items eligible for purchase with United States
Department of Agriculture food coupons, see SC Information Letter #07-4. Please
note that this information letter is updated periodically and updated versions of it
can be found on the Department’s website at www.sctax.org under “Dept. Advisory
Opinions.”

6.

When an unprepared food item eligible for purchase with United States Department
of Agriculture food coupons is prepackaged with a non-eligible item, or a single
price is established for a combination of an unprepared food item eligible for
purchase with United States Department of Agriculture food coupons and a noneligible item, is the state sales and use tax exemption applicable?
No. For example, if a grocery store advertises and sells a basket containing fruit and
a bottle of wine, the state sales and use tax exemption is not applicable.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Ray N. Stevens
Ray N. Stevens, Director
, 2007
October 31
Columbia, South Carolina

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