When did South Carolina's casual excise tax apply to private sales of boats, boat motors, and airplanes under RR 20-1?

Plain-English summary

South Carolina Revenue Ruling #20-1 explains the casual excise tax rules that applied beginning July 1, 2017 to boats, boat motors, and airplanes bought from a nonretailer when sales or use tax had not already been paid. RR #22-6 superseded this ruling for the rules effective July 1, 2022, so this page is historical guidance.

The tax was imposed when South Carolina issued a certificate of title or other proof of ownership, and it applied only to the last sale before the title application. The purchaser—not the individual or other nonretailer seller—was responsible for payment.

Under RR #20-1, a boat or airplane was taxed at 5% of fair market value, capped at $500. A boat motor bought alone, rather than permanently attached to a boat, was taxed at 6% with no $500 cap. An individual age 85 or older buying for personal use received a one-percentage-point reduction: 4% for a boat or airplane, still capped at $500, or 5% for a separately purchased boat motor. Local sales and use taxes did not apply to casual-excise transactions.

Fair market value generally meant the agreed purchase price less a trade-in allowance. It included cash, assumed loans, exchanged property, and amounts paid at delinquent property-tax sales. A national used-value publication was used only when necessary.

What this means for you

Private-party buyers for historical periods

For a covered nonretailer transaction, calculate the tax on Form ST-236 and pay when title or other proof of ownership is issued. The tax could be paid through the Department of Revenue or, for a boat or motor, the Department of Natural Resources.

Retailers

Retail sales were not casual-excise transactions. A South Carolina retailer had to collect sales tax, and an out-of-state retailer transaction could create use tax. A licensed retailer could not shift its collection obligation to the titling agency.

Out-of-state purchases

A purchase from an out-of-state retailer was generally subject to use tax, with credit for sales or use tax paid to another state. A purchase from an out-of-state nonretailer was subject to casual excise tax when South Carolina title was issued, unless the property had been substantially used outside South Carolina first.

Common questions

Q: Did the tax apply to cars, motorcycles, or trailers?
A: No. RR #20-1 says the casual excise tax did not apply to motor vehicles, motorcycles, boat trailers, semitrailers, or pole trailers.

Q: Were gifts or prizes taxable?
A: No. The ruling also lists exemptions for specified immediate-family and heir transfers, entity-formation transfers, trade-ins, resale transfers, and transactions on which sales or use tax was already paid.

Q: Were federally documented vessels taxable?
A: The ruling lists vessels registered and documented by the United States Commissioner of Customs among the exempt transfers. RR #21-8 later modified RR #20-1 concerning one-time airplane and boat sales and federal documentation.

Q: Is the uncapped 6% boat-motor rule current?
A: No. RR #22-6 superseded RR #20-1 after the 2022 law change. Use the later ruling for sales on or after July 1, 2022.

Citations and references

• S.C. Code Ann. §§ 12-36-1710 and 12-36-1720 — casual excise tax and exempt transfers
• S.C. Code Ann. § 12-36-2110 — maximum tax
• S.C. Code Ann. § 12-36-2640 — reduced rate for purchasers age 85 or older
• SC Revenue Ruling #21-8 — modification concerning one-time airplane and boat sales
• SC Revenue Ruling #22-6 — superseding casual-excise guidance effective July 1, 2022

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR20-1.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC REVENUE RULING #20-1

SUBJECT:

Sales of Boats, Boat Motors, and Airplanes
(Casual Excise Tax)

EFFECTIVE DATE:

July 1, 2017

SUPERSEDES:

SC Revenue Ruling #08-8, SC Revenue Ruling #92-10, and all previous
advisory opinions and any oral directives in conflict herewith.

REFERENCES:

S.C. Code Ann. Section 12-36-1710 (2014; 2019 Supp.)
S.C. Code Ann. Section 12-36-2110 (2014; 2019 Supp.)
S.C. Code Ann. Section 12-36-1720 (2014)

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
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 Department advisory
opinion.

PURPOSE OF UPDATE
As a result of legislative changes, this advisory opinion concerning the application of the casual
excise tax on sales of airplanes, boats, and boat motors when the sales tax has not previously been
paid is being updated.1 Effective July 1, 2017, sales or purchases of motor vehicles and
motorcycles were no longer subject to a sales and use tax 2 or casual excise tax; these transactions
are now subject to an infrastructure maintenance fee upon first registering the vehicle with the
South Carolina Department of Motor Vehicles. In addition, the maximum sales and use tax
amount was increased to $500 from $300.
1

See Act 40 of 2017, “The South Carolina Infrastructure and Economic Development Reform Act.”
One exception exists for certain motor vehicle sales to nonresidents where the sales tax is remitted to the SC
Department of Motor Vehicles. See South Carolina Information Letter #17-10 and Revenue Ruling #18-1 for further
guidance.
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QUESTIONS AND ANSWERS
TAX COMPUTATION, TAX RATES, AND PAYMENTS

1. Q. What is the casual excise tax and when is it imposed on sales of boats, boat motors, or
   airplanes?
   A. The casual excise tax is imposed upon the issuance of a certificate of title or other proof
   of ownership for every (1) boat, (2) boat motor, or (3) airplane required to be registered,
   titled, or licensed. It only applies to the last sale before the application for title. The
   casual excise tax does not apply to motor vehicles, motorcycles, trailers (including boat
   trailers), semitrailers, or pole trailers. See Code Sections 12-36-1710(A) and 12-36-1720.
   An individual or non-retailer located in South Carolina who sold the item is not responsible
   for collecting the casual excise tax. The purchaser is liable for paying the casual excise tax.
2. Q. What is the casual excise tax rate?
   A. Below is a summary of the applicable tax rate that may be imposed on transfers of boats,
   boat motors, and airplanes.
   General Tax Rates:
   The casual excise tax is 5% of the “fair market value” of the boat or airplane purchased.
   (See Question 3 for the definition of “fair market value.”) However, Code Section 12-362110 provides that the casual excise tax on sales of boats or airplanes may not exceed
   $500 (maximum tax) on these transactions.
   The casual excise tax is 6% of the “fair market value” of a boat motor that is purchased
   alone (not permanently attached to the boat). Since a boat motor is not a maximum tax
   item, the tax may exceed $500.
   Special Provision for Persons 85 and Older:
   South Carolina sales and use tax law provides for a 1% lower state tax rate for purchases
   by individuals 85 years of age and older for their personal use. The lower tax rate is
   referred to as the 1% exclusion or reduction.
   Therefore, the casual excise tax is 4% (instead of 5%) of the “fair market value” of the
   boat or airplane purchased by an individual 85 years or older for his personal use, not to
   exceed $500 (maximum tax). The casual excise tax is 5% (instead of 6%) of the “fair
   market value” of a boat motor that is purchased alone (not permanently attached to the
   boat) by an individual 85 years or older for his personal use. See Code Section 12-36-2640.

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Maximum Tax:
The maximum tax provisions apply to the casual excise tax in the same manner that the
maximum tax provisions apply to the sales tax and the use tax.
Therefore, the maximum tax of $500 applies to a transfer of a boat or an airplane that is
subject to the casual excise tax. The maximum tax does not, however, apply to the transfer
of a boat motor sold alone (i.e., not permanently attached to a boat).
Local Sales and Use Taxes:
Local sales and use taxes administered and collected by the Department on behalf of local
jurisdictions do not apply to transactions subject to the casual excise tax.

3. Q. What is the amount on which the casual excise tax is computed?
   A. The casual excise tax is computed on the “fair market value” which is defined as: (1) the
   total purchase price (i.e., price agreed upon by the buyer and seller) less any trade-in
   allowance of the boat, boat motor, or airplane, or (2) the valuation shown in a national
   publication adopted by the Department. The valuation shown in a national publication of
   used values, however, is used only in cases of necessity, for example, when closely held
   stock is exchanged for a motor vehicle.
   The price agreed upon by the buyer and seller, less any trade-in, includes: (1) the amount
   of cash paid, (2) the amount of any loan assumed, (3) the value of any property
   exchanges, or (4) the amount paid at delinquent property tax sales.
4. Q. When is the casual excise tax due?
   A. The casual excise tax is due upon the issuance of a certificate of title, or other proof of
   ownership, of a boat, boat motor, or airplane required to be registered, titled or licensed.
5. Q. How is the casual excise tax remitted?
   A. Department of Revenue Form ST-236, “Casual or Use Excise Tax Return,” is used to
   compute the casual excise tax due on the transfer of a boat, boat motor, or airplane.
   The tax may be paid at the Department of Revenue or the Department of Natural
   Resources when registering a boat or motor.

APPLICABILITY OF SALES TAX, USE TAX, OR CASUAL EXCISE TAX

6. Q. Is the sale of a boat, boat motor, or airplane by a non-retailer (a person not in the business
   of selling tangible personal property at retail, e.g., a casual sale by an individual) subject
   to the casual excise tax?

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A. Yes. However, an individual or non-retailer located in South Carolina who sold the item is
not responsible for collecting the casual excise tax upon the sale of a boat, boat motor, or
airplane. The purchaser is liable for paying the casual excise tax.

7. Q. Is the sale of a boat, boat motor, or airplane by a retailer subject to the casual excise tax?
   A. No, however, the sale of a boat, boat motor, or airplane by a retailer is subject to the sales
   tax or the use tax. The South Carolina retailer collects and remits sales tax to the
   Department upon the sale of a boat, boat motor, or airplane.
8. Q. Does a licensed South Carolina retailer have the option of not remitting the sales tax or
   the use tax on the sale of a boat or a boat motor since the Department of Natural
   Resources has the authority to collect the casual excise tax or the use tax when the boat or
   boat motor is registered, titled, or licensed?
   A. No. The retailer must remit the sales tax or the use tax on a retail sale (unless otherwise
   exempt) of a boat or boat motor when the delivery of the boat or boat motor is made in,
   or into, South Carolina.
9. Q. If a South Carolina resident or business purchases a boat, boat motor, or airplane outside
   of South Carolina and brings the boat, boat motor, or airplane to South Carolina for use in
   South Carolina, is the South Carolina resident or business liable for the use tax or the
   casual excise tax?
   A. The tax to be collected (use tax or casual excise tax) depends on whether the boat, boat
   motor, or airplane purchased outside of South Carolina is purchased from a retailer or a
   non-retailer as explained below.
   Purchases from Retailer:
   The use tax applies to the storage, use, or other consumption in South Carolina of boats,
   boat motors, and airplanes purchased from a retailer located outside South Carolina for
   storage, use, or other consumption in South Carolina.
   If a sales or use tax was due and paid in another state on such purchases, a credit against
   the South Carolina use tax is allowed.
   Note: The use tax does not apply to property purchased from a retailer located outside
   South Carolina if the property is used substantially outside South Carolina by the
   purchaser before being stored, used, or consumed in South Carolina.
   Purchases from Non-Retailer:
   The casual excise tax applies to the issuance of every certificate of title, or other proof of
   ownership, for boats, boat motors, and airplanes purchased outside South Carolina from
   non-retailers if a sales or use tax has not been paid on the transaction necessitating the
   transfer of title.
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Note: The casual excise tax does not apply to property purchased outside South Carolina if
the property has been substantially used outside South Carolina by the purchaser before
being titled, registered, or licensed in South Carolina.

10. Q. Does the maximum tax provisions for a boat and an airplane apply to the casual excise
    tax, as well as the sales tax and the use tax?
    A. Yes. Note: Since boats may be sold with a boat motor and trailer, the Department has
    issued an advisory opinion, SC Revenue Ruling #18-13, concerning the application of the
    sales tax, the use tax, and the casual excise tax to the sale of boats, boat motors, and boat
    trailers. See SC Revenue Ruling #18-13 for a more detailed information.

TRANSFERS NOT SUBJECT TO THE TAX

11. Q. Does the casual excise tax apply to a boat, boat motor, or an airplane transferred to
    another person as a gift or as a prize?
    A. No. The casual excise tax does not apply to property transferred as a gift or prize in that
    there has not been a sale to the person receiving the property. (See Code Section 12-361710(B) for exclusions.)
12. Q. What transactions are exempt from the casual excise tax?
    A. The following transfers of boats, boat motors, or airplanes are specifically exempted from
    the casual excise tax pursuant to Code Sections 12-36-1710 and 12-36-1720:
    • Transfers to members of the immediate family (i.e., spouse, parent, child, sister,
    brother, grandparent, and grandchild);
    • Transfers to a legal heir, legatee, or distributee;
    • Transfers from an individual to a partnership upon formation, or from a stockholder
    to a corporation upon formation;
    • Transfers to a licensed motor vehicle dealer or licensed motorcycle dealer for the
    purpose of resale;
    • Transfers to a financial institution for the purpose of resale;
    • Transfers to any other secured party, as a result of repossession, for the purpose of
    resale;
    • Transfers to the seller or secured party in partial payment (e.g., trade-ins);
    • Transfers where a sales or use tax has been paid on the transaction necessitating the
    transfer (this includes sales tax paid to an auctioneer licensed as a retailer);
    • Transfers of motor vehicles, motorcycles, or airplanes specifically exempted by
    Section 12-36-2120 from the sales or use tax (see Question 13 below);
    • Transfers that are a gift or prize; and
    • Vessels registered and documented by the United States Commissioner of Customs.

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13. Q. What transfers are exempt from the casual excise tax because they are exempt from sales
or use tax under Code Section 12-36-2120 or otherwise exempt or excluded under the
law?
A. Below are examples of transfers of boats, boat motors, and airplanes that are exempt from
sales and use tax under Code Section 12-36-2120 or otherwise exempt or excluded under the
law and, therefore, exempt or excluded from the casual excise tax. These examples illustrate
frequent methods of transfer, and are not intended to be all-inclusive.
Type of Transfer

Explanation of Tax Exemption

Sales of Farm
Machinery

Airplanes used in planting, cultivating, or harvesting farm
crops (e.g., crop dusting) are exempt.
Code Section 12-36-2120(16).

Sale of Entire Business

Depreciable assets used in the operation of a business are
exempt when the entire business is sold by the owner, pursuant
to a written contract, and the purchaser continues operation of
the business.
Code Section 12-36-2120(42).
Sales by, or Sales to, the When agents of the federal government purchase a boat, boat
Federal Government or motor, or airplane on behalf of the federal government, the
Federal Credit Unions
purchase is not subject to tax providing the credit of the agent
is not advanced or risked, the purchase order discloses the
purchase is made on behalf of the federal government, title to
the property vests in the federal government, and the vendor is
paid directly from the federal government.
Code Section 12-36-2120(1) and (2). See SC Attorney General
Opinion #S-OAG-59 that concluded federally chartered credit
unions are instrumentalities of the federal government.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
March 9
, 2020
Columbia, South Carolina

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