How did South Carolina's 2010 guidance apply the August sales tax holiday to online orders, delivery, alterations, exchanges, rain checks, and layaway?

Plain-English summary

This 2010 operational guide explained when a purchase occurred during South Carolina's annual August sales tax holiday. A qualifying item was exempt if delivered and paid for during the holiday, or if ordered, paid for, and accepted for immediate shipment during the holiday even though actual 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 immediate-shipment rule.

This ruling is historical. SC Revenue Ruling 19-4 expressly superseded RR 10-8 and should be consulted for later Department guidance.

What this means for you

Consumers

The date of ordering alone was not enough. Payment and retailer acceptance for immediate shipment had to occur during the holiday unless delivery and payment both occurred during it.

Retailers

Retailers could not elect to charge tax on eligible holiday items. The ruling also described exchange, rain-check, and return reporting rules, but its cited forms and procedures are historical.

Online and mail-order sellers

An order number, date stamp, or other action to fill an order could show acceptance. Backorders still counted as immediate shipment when the customer did not request delayed delivery.

Common questions

Q: Could an online order qualify if delivered 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 alteration fees taxable?
A: Not when associated with a qualifying exempt sale under this ruling.

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. A purchase made during the holiday using an older rain check could qualify.

Q: Is this the current Q&A?
A: No. RR 19-4 expressly superseded it.

Citations and references

• S.C. Code § 12-36-2120(57) (annual holiday categories, timing, and exclusions)
• SC Revenue Ruling 19-4 (expressly superseded RR 10-8)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR10-8.pdf
• Official superseding RR 19-4 PDF: https://dor.sc.gov/sites/dor/files/policies/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 10-8

SUBJECT:

Sales Tax Holiday – Questions and Answers
(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

SUPERSEDES:

All previous advisory opinions and any oral directives in conflict
herewith.

REFERENCES:

S. C. Code Ann. Section 12-36-2120(57) (Supp. 2008)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2000)
S. C. Code Ann. Section 1-23-10(4) (Supp. 2005)
SC Revenue Procedure #09-3

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:
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;
(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.

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(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 #10-7 lists items exempt from the sales and use tax during the
three-day "sales tax holiday." SC Revenue Ruling #10-7 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.
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

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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?"

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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 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.

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(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."
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
May 18
, 2010
Columbia, South Carolina

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