Are customer charges for streaming television, movies, music, and similar content taxable in South Carolina?

Plain-English summary

South Carolina Revenue Ruling 16-5 held that customer charges for streaming television programs, movies, music, and similar content were subject to South Carolina sales and use tax as charges for communication services.

Pricing did not change the answer. The ruling applied whether the customer paid:

• a recurring subscription for access to a media library;
• a charge for one television episode, series, movie, or other item; or
• a charge to watch a particular live event.

The Department reasoned that streaming content over the Internet was not materially different for this purpose from taxable cable television, satellite programming, and other programming-transmission services.

Why streaming was treated as a communication service

South Carolina's statutory definition of tangible personal property included specified taxable services and intangibles, including communications. Sections 12-36-910(B)(3) and 12-36-1310(B)(3) taxed charges for the ways or means of transmitting voice or messages, including related equipment furnished by the seller.

The Department had long interpreted taxable communication charges to include access to or use of a communications system, whether priced by time period or by transmission. Regulation 117-329 listed cable television, satellite programming, and other television, radio, music, or programming-transmission services as taxable examples.

Streaming let customers receive transmitted video or audio in real time as the information arrived, including on-demand and live content. The ruling therefore treated the Internet transmission itself as a taxable way or means of communication.

Scope and practical effect

• The ruling covered television, movies, music, and other similar streamed content.
• It applied across televisions, computers, streaming-media players, phones, tablets, and other devices described in the ruling.
• The taxable amount was the customer's charge for the streaming communication service.
• The ruling applied to periods open under the statute and modified SC Revenue Ruling #06-8.
• Later SC Revenue Ruling #17-2 included streaming content in the Department's broader communication-services guidance, and SC Private Letter Ruling #18-1 applied the communication-services analysis to a particular streaming subscription and its related benefits.

The ruling did not separately decide the tax treatment of a permanent digital download, a transfer of ownership in a digital file, or a bundle containing materially different products or services.

Common questions

Q: Is a monthly streaming subscription taxable?

A: Yes. RR 16-5 expressly covered subscription pricing.

Q: Is a one-time streamed movie or episode taxable?

A: Yes. Per-item streaming charges were taxable communication-service charges.

Q: What about a streamed live sporting or entertainment event?

A: The ruling expressly included per-event charges and used boxing or wrestling as examples of live events.

Q: Does it matter which device receives the content?

A: No distinction was made among the televisions, computers, media players, phones, tablets, and other devices described.

Q: Did RR 16-5 decide permanent-download taxation?

A: No. Its question, analysis, and conclusion addressed streaming transmissions.

Citations and references

• S.C. Code Ann. Sections 12-36-910 and 12-36-1310 (sales and use tax on communication charges)
• S.C. Code Ann. Section 12-36-60 (definition including specified taxable services and intangibles)
• S.C. Code Ann. Section 12-36-90 (gross proceeds of sales)
• S.C. Regulation 117-329 (communication-service examples)
• SC Revenue Ruling #06-8 (modified guidance)
• SC Revenue Ruling #17-2 and SC Private Letter Ruling #18-1 (later guidance discussing RR #16-5 in prose)

Subject

Streaming of Television Programs, Movies, Music, Etc

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR16-5.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #16-5

SUBJECT:

Streaming of Television Programs, Movies, Music, Etc.
(Sales and Use Tax)

EFFECTIVE DATE:

Applies to all periods open under the statute.

MODIFIES:

SC Revenue Ruling #06-8

REFERENCES:

S.C. Code Ann. Section 12-36-910 (2014)
S.C. Code Ann. Section 12-36-1310 (2014)
S.C. Code Ann. Section 12-36-60 (2014)
S.C. Regulation 117-329 (2012)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

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

Question:
Are charges paid by a customer for streaming television programs, movies, music, and other
similar content subject to South Carolina sales and use tax?
Conclusion:
Charges paid by a customer for streaming television programs, movies, music, and other similar
content are charges for communication services and are therefore subject to South Carolina sales
and use tax whether paid for as part of a subscription service, per item, or per event.

1

Introduction:
Communications technology continues to change rapidly, and new methods of delivering media
content such as television programs, movies and music are constantly being developed. In past
decades, cable television and satellite television began replacing traditional network television as
a new means of distributing media content resulting in a wider variety of viewing options for
customers. These providers began offering customers access to movies over their television on a
pay-per-movie basis, making it unnecessary for a customer to rent a DVD or video tape.
Additional methods of providing access to television programs, movies and music have been
developed as the Internet has allowed customers to watch movies and television shows on
demand and on different types of devices. In some instances, providers might use a combination
of methods to provide media content.
One method of delivering content is through the use of on-demand streaming. This method
allows customers to connect to content providers to watch television programs, movies, and
more at a time of their choosing and through different methods. Consumers can access live and
delayed video programming on televisions, computers, streaming media players, phones, tablets,
and other devices, and can watch programs in “real time,” which is often referred to as
“streaming media”.
Steaming media services may be purchased in a number of ways as well, including as part of a
subscription service, which allows a customer to view an entire library of media content
provided by the service for a single price or by a per-item charge which allows a customer to
either view a single television episode, series, or movie for a specific period of time or pay to
watch a particular live event, such as boxing or wrestling match.
As a result of changing communications technologies, questions have arisen as to how streaming
media services are taxed for sales and use tax purposes. The purpose of this ruling is to discuss
the taxability of streaming of television programs, movies, music, and other similar content.
Law and Discussion:
Code Section 12-36-910(A) reads:
A sales tax, equal to [six] 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.
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 [six] 2 percent of the sales price of the
property, regardless of whether the retailer is or is not engaged in business in this
State.
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2

Code Section 12-36-1110 increased the state sales tax rate from 5% to 6% beginning June 2007.
Code Section 12-36-1110 increased the state use tax rate from 5% to 6% beginning June 2007.

2

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 certain intangibles,
including communications, which 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), each of which imposes 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 means for the
transmission of the voice or messages. … [Emphasis added.] 3
The Department has long held that the charges for the ways or means of communication include
charges for access to, or use of, a communications system (the manner, method or instruments
for sending or receiving a signal of the voice or of messages), whether the charges are based on a
fee per a specific time period or per transmission.
Regulation 117-329 provides guidance as to the application of sales and use tax to a wide variety
of communication services available to individual consumers or businesses. Regulation 117329.4 provides examples of communication services and states:
The following are examples of communication services that are subject to the
sales and use tax (unless otherwise listed as non-taxable in 117-329.5 or otherwise
exempt or excluded under the law):
*

*

*

(e) Cable Television Services
(f) Satellite Programming Services and Other Programming Transmission
Services, including, but is not limited to, emergency communication services and
television, radio, music or other programming services
*

*

*

3

*

The Department has long held that “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 #06-8 or any successor documents.

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The Department has taxed communication services such as telephone services, paging services,
cable television services, satellite programming services (including but 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. 4 Therefore, the gross
proceeds 5 accruing or proceeding from the charges for cable television services, satellite
programming services, and other programming transmission services are taxable, under Code
Sections 12-36-910(B)(3) and 12-36-1310(B)(3), as charges for the ways or means for the
transmission of the voice or messages.
However, as mentioned earlier, media content is now transferred by a number of different
methods, including internet. Specifically, customers may now “stream” movies, television
shows, and music directly to their devices and watch or listen to these types of media on their
own schedule instead of having to watch at a specific time. The terms “streaming” and
“streaming media” are not defined in the sales tax law. It is acceptable in this instance for the
Department to refer to industry definitions. The Alliance for Telecommunications Industry
Solutions (“ATIS”) is a professional organization composed of information and communications
technology companies that develops technical and operational standards for the industry and has
defined “streaming” and streaming media” to mean:
“Streaming”: A technique for transferring data (usually over the Internet) in a
continuous flow to allow large multimedia files to be viewed before the entire file
has been downloaded to a client’s computer.
“Streaming media”: Transmitted video or audio data that are viewed (or listened
to) in real time, i.e., as the information is received. Streaming media may be usercontrolled (as in on-demand, pay-per-view movies) or server-controlled (as in
Webcasting).
Furthermore, the definition of tangible personal property, as defined in Code Section 12-36-60,
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.” The Department has long used the definition found in the Second College Edition of
the American Heritage Dictionary for the term “communications.”

4

See SC Revenue Ruling #06-8 for examples of communication services subject to tax.
Code Section 12-36-90 defines “gross proceeds of sales” to mean “the value proceeding or accruing from the sale,
lease, or rental of tangible personal property” without any deduction for the cost of property sold, the cost of
materials used, or labor or service costs.

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4

Based on the discussion above, the streaming transmission of television programs, movies and
music using the Internet is no different from cable and satellite transmission of television
programs, movies music, and other similar content, all of which are taxable communications
services. Accordingly, charges paid by a customer for streaming television programs, movies,
music, and other similar content are charges for communication services and are therefore
subject to South Carolina sales and use tax, whether paid for as part of a subscription service, per
item, or per event.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Rick Reames III
Rick Reames III, Director
July 6
, 2016
Columbia, South Carolina

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