Which communication and online services does South Carolina treat as taxable transmissions, and which services are exempt or nontaxable?

Plain-English summary

South Carolina Revenue Ruling 17-2 is the Department's broad guide to taxable communication services. Its governing principle is that charges for access to or use of a system for sending or receiving voice or messages are taxable, whether charged by time period or by transmission. The list is illustrative, not exhaustive.

The ruling identifies taxable services including most telephone service, teleconferencing, paging, automated answering, cable television, satellite and other programming transmission, fax, voicemail, email, database and individual-website access, streaming television, movies, music and similar content, and cloud services that process and route calls. It separately addresses retail prepaid wireless arrangements and 900/976 telephone service.

The ruling makes a critical distinction between Internet access and access to content or a database on the Internet. Although the Department viewed ISP access as a way or means of communication, it said it would not assess or collect tax because the federal Internet Tax Freedom Act moratorium had become permanent. A third party's charge to access or use its individual website or database was different and remained taxable—for example, a monthly sports-site subscription.

Data processing is also distinct. South Carolina excludes the manipulation of customer-furnished information through operations such as computing, storing, retrieving, sorting, or electronically transferring that information. Other nontaxable categories listed in the ruling include specified telephone toll and access charges, telegraph messages, ATM communications, qualifying cooperative-member databases, certain school and public-library online systems, nonautomated answering, and electronic tax filing performed by the person who prepared the return.

For a single nonitemized telecommunications bundle containing taxable and nontaxable components, the nontaxable portion becomes taxable unless the provider can reasonably identify it from regular business records maintained for a purpose other than sales tax.

What this means for you

Online-service and content providers

Do not equate delivery over the Internet with federally protected Internet access. The connection service and the paid website, database, streaming, or programming service are separate products under this ruling. Charges for the latter may be taxable communications.

Telecommunications providers

Review bundled invoices and maintain ordinary-course records that can support a reasonable allocation to nontaxable services. Without that support, the ruling taxes the full nonitemized bundle.

Data and software businesses

Focus on what the customer supplies and buys. Manipulating customer-furnished information can be nontaxable data processing, while selling access to the provider's own database, website, or separately offered application service can be taxable communication access.

Common questions

Q: Is an ISP's Internet-access charge taxable?
A: The ruling says the Department would not enforce tax on Internet access because of the permanent federal moratorium.

Q: Is a paid website subscription the same as Internet access?
A: No. A charge to access a third party's individual website or database is taxable under the ruling.

Q: Are streaming subscriptions taxable?
A: Yes. The ruling lists streaming television, movies, music, and similar content as taxable communication services whether charged by subscription, item, or event.

Q: Is data processing taxable?
A: Not when it fits the statutory definition involving manipulation or electronic transfer of customer-furnished information. Access to the provider's own database or separately sold hosted application can be different.

Q: What happens to a mixed taxable/nontaxable bundle?
A: The nontaxable portion is taxed unless the provider can reasonably identify it from ordinary business records maintained for nonsales-tax purposes.

Citations and references

• S.C. Code Ann. Sections 12-36-910(B)(3) and 12-36-1310(B)(3) (ways or means for transmission and bundled transactions)
• S.C. Code Ann. Section 12-36-60 (communications and cooperative-service database exclusion)
• S.C. Code Ann. Section 12-36-910(C) (data processing)
• S.C. Code Ann. Section 12-36-2120(11) (specified communication exemptions)
• S.C. Code Ann. Sections 12-36-910(B)(5) and 12-36-2645 (prepaid wireless and 900/976 service)
• 47 U.S.C. Sections 1101 through 1109 (Internet Tax Freedom Act provisions discussed in the ruling)
• SC Revenue Ruling #16-5 (streaming content)

Subject

Communications – Ways or Means for the Transmission of the Voice or Messages and Other Communications

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR17-2.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 #17-2

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 #06-8 and all previous advisory opinions
and any oral directives in conflict herewith.

REFERENCES:

Chapter 36 of Title 12 (2014 and Supp. 2015)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2014)
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. 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
previously provided in SC Revenue Ruling #06-8 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, as well as more recent developments, 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 and will not enforce the assessment and collection of the sales
and use tax on Internet Access.
In 1998, Congress established a temporary tax moratorium on Internet Access in
the Internet Tax Freedom Act. The moratorium was first extended by the Internet
Nondiscrimination Act and was later extended several times. The tax moratorium
on Internet Access was eventually made permanent as part of the Trade Facilitation
and Trade Enforcement Act of 2015. The moratorium prohibits the taxation of
Internet Access – a service that allows a user to connect to “the myriad of computer
and communications facilities … which comprise the interconnected world-wide
network of networks” known as the Internet (47 U.S.C. Section 1105(4) and (5)).
Since charges to access or use an individual database, such as a website, do not
constitute an access to the Internet, these charges do not come within the
moratorium and are subject to the tax. Charges to access or use an individual
database, such as a website, have been held subject to the tax since 1989; and not
subject to the moratorium since 1998. (See SC Revenue Ruling #89-14, which taxed
charges to access an individual website as a “database access transmission,” as well
as SC Revenue Ruling #04-15 and SC Revenue Ruling #06-8.)
Therefore, charges by a third party to access or use that third party’s individual
website are subject to the sales and use tax (e.g., monthly charges to access a sports
website).

LAW AND DISCUSSION:
General Sales and Use Tax Provisions:
Code Section 12-36-910(A) 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. (Emphasis added.)

1

Code Section 12-36-1110, effective June 1, 2007, increased the general sales and use tax rate by 1% to
6%.

2

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. (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.
Ways or Means for the Transmission of the Voice or Messages:
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
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.)

2

See footnote #1.

3

Furthermore, Code Section 12-36-910(B)(3) and Code Section 12-36-1310(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

"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, SC Revenue Ruling #04-15 and SC Revenue Ruling

06-8.

4

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
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.

5

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, SC Revenue Ruling #04-15,
and SC Revenue Ruling #06-8.)
In addition, charges by services that charge a 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 sales and use tax law provides several exemptions and exclusions for the charges
taxed under Sections 12-36-910(B)(3) and 12-36-1310(B)(3).
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;

6

Code Section 12-36-60 provides the definition of “tangible personal property,” which by
statute includes communications, and 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
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).

7

With respect to Code Section 12-36-910(B)(3) and Code Section 12-36-1310(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 12-361310(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 12-36-910(B)(3)
and 12-36-1310(B)(3).
Finally, in SC Revenue Ruling #16-5, the Department addressed the application of Code
Sections 12-36-910(B)(3) and 12-36-1310(B)(3) to the streaming of television programs,
movies, music, and other similar content, and held:
… 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.

Other Communication Impositions:
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;

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, SC Revenue Ruling #04-15, and
SC Revenue Ruling #06-8.

8

(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.
(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 is Department’s opinion that charges for the following
   communication services are subject to the sales and use tax pursuant to Code Sections 1236-910(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.)
   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 and SC Revenue Ruling #06-8 for previous summaries of
communication services subject to the tax.

9

Automated 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)
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 7), 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 service) (See SC Revenue Ruling #89-14 and SC
Private Letter Ruling #89-21.)

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 and will not enforce the assessment and collection of the sales and use tax on Internet Access.
In 1998, Congress established a temporary tax moratorium on Internet Access in the Internet Tax Freedom
Act. The moratorium was first extended by the Internet Nondiscrimination Act and was later extended
several times. The tax moratorium on Internet Access was eventually made permanent as part of the Trade
Facilitation and Trade Enforcement Act of 2015. The moratorium prohibits the taxation of Internet Access
– a service that allows a user to connect to “the myriad of computer and communications facilities …
which comprise the interconnected world-wide network of networks” known as the Internet (47 U.S.C.
Section 1105(4) and (5)).
Since charges to access or use an individual database, such as a website, do not constitute an access to the
Internet, these charges do not come within the moratorium and are subject to the tax. Charges to access or
use an individual database, such as a website, have been held subject to the tax since 1989; and not subject
to the moratorium since 1998. (See SC Revenue Ruling #89-14, which taxed charges to access an
individual website as a “database access transmission,” as well as SC Revenue Ruling #04-15 and SC
Revenue Ruling #06-8.)
Therefore, charges by a third party to access or use that third party’s individual website are subject to the
sales and use tax (e.g., monthly charges to access a sports website).
7

See SC Revenue Ruling #11-2 and SC Revenue Ruling #03-5, Question #15.

10

Streaming Services that provide Television Programming, Movies, Music, and
Other Similar Content (See SC Revenue Ruling #16-5.)
Cloud-Based Services for Processing and Routing Telephone Calls within a
Customer’s Telephone System (See SC Private Letter Ruling #14-4.)
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.
(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: 8
   Based on the above, it is the Department’s 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))

8

See also SC Revenue Rulings #04-15 and #06-8 for previous summaries of communication services not
subject to the tax.

11

Data Processing Services as defined under Code Section 12-36-910(C) (See SC
Private Letter Ruling #12-2 9 and SC Private Letter Ruling #14-5.)
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.)
Internet Access 10 (Services that allow a user to connect to “the myriad of
computer and communications facilities … which comprise the interconnected
world-wide network or networks” known as the Internet. This does not include
charges to access individual websites, as described above in “Taxable
Communication Services.”)
Non-Automated Answering Services
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
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.”

9

In SC Private Letter Ruling #12-2, the taxpayer sold access to its ASP software and its claims and billing
service for a nonitemized monthly fee. This was determined to be a data processing service not subject to
the sales and use tax. However, it should be noted that SC Private Letter Ruling #12-2 also states in the
Discussion portion of the advisory opinion that charges for use of the taxpayer’s software via an
Application Service Provider, when sold separately from the taxpayer’s claims and billing service, are
subject to the sales and use tax under the provisions of Code Sections 12-36-910(B)(3) and 12-361310(B)(3).
10
See footnote #6.

12

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/W. Hartley Powell
W. Hartley Powell, Director
March 10
, 2017
Columbia, South Carolina

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