Are vegetable and fruit seeds or plants exempt from South Carolina sales and use tax when used to grow food?

Plain-English summary

South Carolina Revenue Ruling 16-8 held that vegetable seeds, fruit seeds, vegetable plants, and fruit plants could qualify for state sales and use tax exemption under two different rules, depending on why the purchaser bought them.

Growing food for personal consumption

Seeds and plants intended to grow food for personal use—such as a home garden—were exempt from state sales and use tax as unprepared food under Section 12-36-2120(75) and Regulation 117-337.1(A)(2).

The ruling's examples included vegetable seeds, fruit seeds, vegetable plants, strawberry plants, peach trees, and apple trees. The key was that they were intended to grow food.

This unprepared-food exemption did not automatically eliminate local sales and use tax. The ruling said local tax still applied unless the applicable local tax law separately exempted the sale.

Producing products for sale

Seeds, seedlings, and nursery stock used solely in production for sale of farm, dairy, grove, vineyard, or garden products were exempt under Section 12-36-2120(6).

That included food plants used to grow products for sale at a roadside stand, farmers market, or other venue. The ruling also noted that flower seeds and ornamental plants could qualify under this separate provision when used to grow plants for sale.

What did not qualify

• Flower seeds and ornamental plants bought for personal use did not qualify as unprepared food.
• Birdseed was outside Regulation 117-337.1(A)(2)'s food-growing seed category.
• The production-for-sale exemption required sole use in producing qualifying products for sale; a different or mixed use was not covered by the ruling's conclusion.

Common questions

Q: Are tomato seeds for a household garden exempt?

A: Yes, from state sales and use tax under the ruling, because they are intended to grow food for personal consumption.

Q: Is a peach tree bought to grow fruit for the family exempt?

A: Yes. The ruling expressly included fruit plants such as peach and apple trees, but not ornamental trees.

Q: Are food plants bought by a farmer for products to sell exempt?

A: Yes, when used solely in production for sale under Section 12-36-2120(6).

Q: Are flower seeds exempt?

A: Not when bought for personal use. They could qualify under the production exemption if used to grow plants for sale.

Q: Does the home-garden exemption remove local tax?

A: Not automatically. RR 16-8 said the unprepared-food exemption applied only to state tax unless local law supplied its own exemption.

Citations and references

• S.C. Code Ann. Section 12-36-2120(75) (unprepared food)
• S.C. Code Ann. Section 12-36-2120(6) (seeds, seedlings, and nursery stock used solely in production for sale)
• S.C. Code Ann. Sections 12-36-910 and 12-36-1310 (sales and use tax impositions)
• S.C. Regulation 117-337.1(A)(2) (seeds and plants intended to grow food)

Subject

Exemptions for Sales of Seeds and Plants to Grow Food

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR16-8.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 #16-8

SUBJECT:

Exemptions for Sales of Seeds and Plants to Grow Food
(Sales and Use Tax)

EFFECTIVE DATE:

Applies to all periods open under statute.

REFERENCES:

S.C. Code Ann. Section 12-36-2120 (2014)
SC Regulation 117-337

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.

I.

INTRODUCTION.

Questions have arisen concerning the application of the state sales and use tax to sales of
vegetable seeds, fruit seeds, vegetable plants, and fruit plants. Many individuals purchase these
items to grow food for personal consumption (e.g., in a home garden) while other individuals and
businesses purchase these items to grow plants and produce to sell at a roadside stand, farmers
market, or other venue.
Section 12-36-2120 provides a list of exemptions from the state sales and use tax. Section 1236-2120(75) provides an exemption for unprepared foods, but it does not explicitly state whether
seeds and plants are considered unprepared foods which qualify for the exemption. Section 1236-2120(6) provides another exemption for sales of “seeds, or seedlings, or nursery stock, used
solely in the production for sale of farm, dairy, grove, vineyard, or garden products…” The
purpose of this advisory opinion is to address the application of the state sales and use tax to
sales of vegetable seeds, fruit seeds, vegetable plants, and fruit plants, whether for personal use
in growing food or for use solely in production for sale.

1

II.

DISCUSSION.
A.

Law.

Section 12-36-910(A) provides the general sales tax imposition and states:
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.
Section 12-36-90 defines “gross proceeds” and states:
Gross proceeds of sales, or any similar term, means the value proceeding or
accruing from the sale, lease, or rental of tangible personal property.
(1) The term includes:
*
*
*
(b) the proceeds from the sale of tangible personal property without any deduction
for:
(i) the cost of goods sold;
(ii) the cost of materials, labor, or service;
(iii) interest paid;
(iv) losses;
(v) transportation costs;
(vi) manufacturers or importers excise taxes imposed by the United States;
or
(vii) any other expenses;
*

*

*

Section 12-36-60 defines “tangible personal property” as “personal property which may be seen,
weighted, measured, felt, touched, or which is in any other manner perceptive to the senses.”
Section 12-36-1310(A) provides the use tax imposition and states:
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] percent of the sales price of the
property, regardless of whether the retailer is or is not engaged in business in this
State. 2
Section 12-36-130 defines “sales price” as “the total amount for which tangible personal
property is sold, without any deduction for the cost of the property sold, the cost of the materials
used, labor or service cost, interest paid, losses, or any other expenses.”
1

Section 12-36-1110 imposes an additional 1% sales tax to the 5% general sales tax imposition in Section 12-36910(A).
2
Section 12-36-1110 imposes an additional 1% use tax to the 5% use tax imposition in Section 12-36-1310(A).

2

Seeds and plants are tangible personal property for the purposes of the state sales and use tax
because they may be seen, weighted, measured, felt and touched. Therefore, the gross proceeds
of sales, or sales price, of vegetable seeds, fruit seeds, vegetable plants, and fruit plants are
subject to the state sales and use tax, unless an exemption applies.
B.

Unprepared Food Exemption For Personal Use And Consumption.

Section 12-36-2120 contains a list of exemptions from the sales and use tax imposed by Sections
12-36-910(A) and 12-36-1310(A), respectively. Section 12-36-2120(75) provides an exemption
for the gross proceeds of sales, or sales price, of “unprepared food that lawfully may be
purchased with United States Department of Agriculture food coupons…” 3 It is not clear from
this language whether this exemption applies to sales of vegetable seeds, fruit seeds, vegetable
plants, and fruit plants for personal use and consumption. However, SC Regulation 117-337 was
promulgated to provide guidance as to the application of Section 12-36-2120(75). This
regulation defines “eligible food” and provides, in part:
For purposes of this regulation, the term ‘eligible food’ is food eligible for the
exemption under Code Section 12-36-2120(75) that will be defined to include and
exclude the following:
(A) Foods eligible for the exemption under Code Section 12-36-2120(75) include:
*
*
*
(2) Seeds and plants intended to grow food (not birdseed or seeds to grow
flowers)…
See SC Regulation 117-337.1(A)(2).
Vegetable seeds, fruit seeds, vegetable plants, and fruit plants (e.g., strawberry plants, peach
trees and apple trees) 4 intended to grow food are considered eligible food under SC Regulation
117-337.1. Therefore, sales of vegetable seeds, fruit seeds, vegetable plants, and fruit plants
(e.g., strawberry plants, peach trees and apple trees) 5 which are used to grow food for personal
use and consumption (e.g., in a home garden) are exempt from the state sales and use tax as
unprepared food under Section 12-36-2120(75). 6
C.

Exemption For Use Solely In Production For Sale.

While the unprepared food exemption applies to sales of vegetable seeds, fruit seeds, vegetable
plants, and fruit plants for personal use and consumption, Section 12-36-2120(6) provides an
exemption for sales to persons in the business of growing food and plants for sale. This
provision exempts the gross proceeds of sales, or sales price, of “seeds, or seedlings, or nursery
stock, used solely in the production for sale of farm, dairy, grove, vineyard, or garden
products...”
3

Section 12-36-2120(75) says that this exemption only applies to the state sales and use tax imposed by Chapter 36.
Local sales and use taxes apply unless local tax law specifically exempts sales of unprepared food.
4
Fruit plants do not include ornamental trees or other plants.
5
See footnote #4.
6
Seeds for flowers and other ornamental plants, however, are subject to the state sales and use tax if sold for
personal use (e.g., in a home garden).

3

Therefore, sales of vegetable seeds, fruit seeds, vegetable plants, and fruit plants (e.g., strawberry
plants, peach trees and apple trees) 7 which are used solely in production for sale (e.g., for sale at
a roadside stand or farmers market) of farm, dairy, grove, vineyard, or garden products are
exempt from the state sales and use tax under Section 12-36-2120(6). 8
III.

CONCLUSION.

Sales of vegetable seeds, fruit seeds, vegetable plants, and fruit plants to individuals to grow food
in a home garden for personal use and consumption are exempt from the state sales and use tax
as unprepared food items under Section 12-36-2120(75) and SC Regulation 117-337.1. In
addition, sales of these same items to individuals or businesses for use solely in production of
food for sale at a roadside stand, farmers market, or other venue are exempt from the state sales
and use tax under Section 12-36-2120(6).
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Rick Reames III
Rick Reames III, Director
July 27
, 2016
Columbia, South Carolina

7

See footnote #4.
Seeds for flowers and other ornamental plants which are sold to grow plants for sale are also exempt from the state
sales and use tax under Section 12-36-2120(6).

8

4