When someone comes to South Carolina to make a one-time sale of an airplane or boat, does South Carolina sales tax or casual excise tax apply?

Plain-English summary

A plane or boat is a big-ticket item, and South Carolina taxes it in one of two very different ways depending on who is selling. SC Revenue Ruling #21-8 walks through the common scenario where a seller travels to South Carolina to make a single, one-time sale of an airplane or boat, the buyer takes possession here, and then either keeps it in South Carolina or leaves with it. The ruling modifies SC Revenue Ruling #20-1.

If the seller is a retailer (in the business of selling): SALES TAX. South Carolina imposes sales tax on retail sales delivered in the state. Under International Harvester Co. v. Wasson, three things must be true: the seller is in the business of making retail sales in South Carolina, it's a retail sale, and the sale (delivery) happens in South Carolina. Airplanes and boats are "maximum tax" items — taxed at 5%, but no more than $500 per sale. Because delivery occurs here, the tax applies even if the buyer immediately takes the item out of state. Maximum-tax items are exempt from local sales and use tax.

If the seller is a nonretailer (a casual or isolated sale): CASUAL EXCISE TAX (maybe). A truly casual or isolated sale by someone not in the business of selling is not subject to sales tax. Instead, South Carolina's casual excise tax (also 5%, max $500) applies when a certificate of title or proof of ownership is issued for a boat, boat motor, or airplane. Key points:

• The purchaser is liable for the casual excise tax; the individual/nonretailer seller does not collect it.
• Federal titling defeats the tax. If the title or registration is issued by a federal agency — the FAA for airplanes, or the U.S. Coast Guard / U.S. Customs for federally documented boats — the casual excise tax cannot apply, under the doctrine of intergovernmental tax immunity (McCulloch v. Maryland, United States v. Livingston; SC Attorney General Opinion #83-33). A state cannot tax the federal government's issuance of documentation.
• A boat titled by the SC Department of Natural Resources (not federally documented) does owe the casual excise tax.
• Airplanes/boats are excluded from the casual excise tax if sales or use tax was already paid on the transaction.
• There is no local casual excise tax.

A practical break for one-time sellers. If a retailer comes to South Carolina only for a single sale of an airplane or boat, the Department will let the retailer or purchaser report and remit the sales tax on Form ST-236 ("Casual Excise or Use Tax Return") without registering and filing monthly returns. But a retailer making multiple South Carolina sales must get a retail license, collect sales tax, and file monthly.

What this means for you

Aircraft and boat dealers (retailers) selling in South Carolina

If you're in the business of selling and you deliver a plane or boat to a buyer in South Carolina, you owe South Carolina sales tax capped at $500 — regardless of where the buyer registers it or takes it afterward. For a genuine one-time South Carolina sale you can use Form ST-236 instead of registering; repeat sales require a retail license and monthly filing.

Private (nonretailer) sellers and their buyers

A private, one-off sale isn't a taxable retail sale, but the buyer may owe the casual excise tax (max $500) when titling — unless the plane/boat is titled through a federal agency (FAA, or USCG/Customs documentation for boats). A boat titled through SC DNR does trigger the tax. The seller doesn't collect it; the buyer pays it.

Accountants and advisors

The dividing line is the seller's status (retailer vs. nonretailer) and, for casual sales, whether titling is federal (immune) or state (taxable). Both taxes cap at $500 and both exempt these maximum-tax items from local tax. Confirm whether sales/use tax was already paid, which excludes the casual excise tax entirely.

Common questions

Q: A dealer flew a plane here and sold it to me; I'm taking it out of state. Do I owe South Carolina tax?
A: Yes — South Carolina sales tax (5%, max $500) applies because the retailer delivered it to you in South Carolina, even though you take it out of state.

Q: I bought a boat from a private individual. Do I owe anything?
A: It's not a taxable retail sale, but you (the buyer) may owe the casual excise tax (5%, max $500) when titling — unless the boat is documented with the U.S. Coast Guard/Customs. A boat titled through SC DNR does owe the casual excise tax.

Q: Why doesn't the casual excise tax apply to FAA-titled airplanes?
A: Because the FAA is a federal agency, and a state cannot tax the federal government's issuance of a title or proof of ownership (intergovernmental tax immunity).

Q: Is there a maximum tax?
A: Yes. Both the sales tax and the casual excise tax on airplanes and boats are capped at $500, and these maximum-tax items are exempt from local sales and use tax.

Citations and references

Statutes and regulations:

• § 12-36-910 (sales tax imposition); § 12-36-1110 (6% rate, not applied to max-tax items); § 12-36-2110 ($500 maximum tax on aircraft/boats)
• § 12-36-1710 / § 12-36-1720 (casual excise tax; fair market value; exclusions); Regulation 117-322 (casual/isolated sales); Regulation 117-334 (delivery in SC)
• §§ 50-23-20 / 50-23-30 (DNR titling; exemption for USCG-documented vessels)

Authorities:

• International Harvester Co. v. Wasson, 281 S.C. 458 (1984) — the three requirements for sales tax
• United States v. Livingston, 179 F. Supp. 9, aff'd 364 U.S. 855; McCulloch v. Maryland — intergovernmental tax immunity
• SC Attorney General Opinion #83-33 (July 8, 1983) — casual excise tax cannot reach federal documentation

Related Department guidance (described in prose, not linked): this ruling modifies SC Revenue Ruling #20-1.

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR21-8.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 #21-8
SUBJECT:

Onetime Sales of Airplanes and Boats
(Sales Tax and Casual Excise Tax)

EFFECTIVE DATE: Applies to all periods open under the statute.
MODIFIES:

SC Revenue Ruling #20-1

REFERENCES:

S.C. Code Ann. Section 12-36-910 (2014)
S.C. Code Ann. Section 12-36-1710 (Supp. 2020)
S.C. Code Ann. Section 12-36-2110 (Supp. 2020)
SC Regulation 117-322 (2012)
SC Regulation 117-334 (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 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
Questions have arisen concerning the tax implications of sales of an airplane or boat in South
Carolina when a seller comes to South Carolina for the sole purpose of making a onetime retail
sale of an airplane or boat. The purchaser takes physical possession in South Carolina and may
either maintain possession in South Carolina or immediately take the airplane or boat out of
South Carolina.
Purchasers include South Carolina resident and nonresident individuals acquiring items for
personal use and in-state and out-of-state companies purchasing items for their own business use.
The airplane or boat may be titled, registered and/or licensed in the state of the individual’s
domicile, the company’s principal place of business, or with the federal government (e.g., in the
case of certain boats, with the U.S. Coast Guard).
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LAW AND DISCUSSION
Sales Tax
Code Section 12-36-910(A) imposes the sales tax and provides:
A sales tax, equal to five 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 12-36-1110 increased the general sales tax rate to 6% from 5%. However, this
additional 1% does not apply to items subject to a maximum sales tax pursuant to Code Section
12-36-2110. Code Section 12-36-2110(A)(1) and (4) establishes a maximum sales tax of $500
on each sale, rental, and lease of an aircraft or a boat.
In International Harvester Co. v. Wasson, 281 S.C. 458, 460-61 (1984), the South Carolina
Supreme Court identified the following three requirements for a transaction to be subject to the
sales tax:
(1) A person must be in the business of making retail sales in South Carolina.
The term business “includes all activities, with the object of gain, profit, benefit, or
advantage…” Code Section 12-36-20.
(2) The sale must be a retail sale.
Code Section 12-36-110 says that retail sales are all sales except those defined as
wholesale sales; and Code Section 12-36-120 says wholesale sales do not include
sales to users or consumers.
(3) The sale must take place within South Carolina.
Code Section 12-36-100 defines a “sale” as “any transfer, exchange, or barter,
conditional or otherwise, of tangible personal property for a consideration including
… a rental, lease, or other form of agreement; …” If the transfer of tangible personal
property, i.e., delivery, takes place in South Carolina, the sale takes place in this state.
Therefore, the sales tax is imposed with respect to all retail sales, rentals, and leases of tangible
personal property in South Carolina by persons engaged in the business of selling, renting, or
leasing tangible personal property at retail in this state. If the tangible personal property is
delivered to the purchaser in South Carolina, the sales tax applies even if the purchaser takes the
item out-of-state. See SC Regulation 117-334.
In addition, sales, rentals, and leases of airplanes or boats are subject to the sales and use tax at a
rate of 5%, but no more than $500. A lease must be in writing and specifically state the term of,
and remain in force for, a period in excess of 90 continuous days to qualify for the maximum

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tax.1 Sales, rentals, and leases of items subject to a maximum tax are exempt from local sales
and use taxes administered and collected by the Department.
Casual Excise Tax
Regulation 117-322 provides that “[c]asual or isolated sales by persons not engaged in the
business of selling tangible personal property at retail are not subject to the sales or use tax.”
The regulation defines “casual” as “occurring, encountered, acting or performed without
regularity or at random;” and the terms “occasional” and “isolated” mean “occurring alone or
once, an incident not likely to recur, sporadic.” 2
While these transactions are not subject to sales tax, Code Section 12-36-1710 imposes a casual
excise tax 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. See Code Sections 12-36-1710(A) and 12-36-1720.
An individual or non-retailer who sold the item is not responsible for collecting the casual excise
tax. The purchaser is liable for paying the casual excise tax. Further, airplanes or boats are
excluded from the casual excise tax where a sales or use tax has been paid on the transaction
necessitating the transfer. 3
Code Section 12-36-1710 imposes the casual excise tax at a rate of 5% of the “fair market value”
of the airplane or boat purchased. (See Code Section 12-36-1710(C) for the definition of “fair
market value”.) Code Section 12-36-1110 increased the casual excise tax rate to 6% from 5%.
However, this additional 1% does not apply to items subject to a maximum casual excise tax
pursuant to Code Section 12-36-2110. Code Section 12-36-2110(A)(1) and (4) establishes a
maximum casual excise tax for each sale, rental, and lease of an aircraft or boat. As such, sales,
rentals, and leases of airplanes or boats are subject to the casual excise tax at a rate of 5%, but no
more than $500. A lease must be in writing and specifically state the term of, and remain in
force for, a period in excess of 90 continuous days to qualify for the maximum tax.4 Also, as
stated above, sales, rentals, and leases of maximum tax items are exempt from local sales and use
taxes administered and collected by the Department. 5
Title or Other Proof of Ownership Issued by the Federal Government
Code Section 50-23-20 requires all watercraft held or principally used in South Carolina to be
titled by the SC Department of Natural Resources (“DNR”). However, Code Section 50-23-30
provides an exemption from this titling requirement for watercraft documented with the United
States Coast Guard. In addition, South Carolina Attorney General Opinion #83-33 (July 8, 1983)
Code Section 12-36-2110(A)(2). In addition, the sales or use tax applies to each renewal of the lease and the
maximum tax for that renewal will only apply if (1) the lease renewal is in writing and (2) the lease renewal
specifically states a term of, and remains in force for, a period in excess of 90 continuous days.
2
Note: Commission Decision #87-145 addressed casual and isolated sales under a prior version of SC Regulation
117-322 (the sales and use tax regulations were reorganized in 2002) and said that “[i]f several sales are made, the
seller in all likelihood has become engaged in the business of selling and thus within the terms of § [12-36-910].”
3
Code Section 12-36-1710(B)(4).
4
Code Section 12-36-2110(A)(2).
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In addition, while Code Section 12-36-1710 imposes a casual excise tax on boats and airplanes, there is no law that
authorizes counties, municipalities, or other local governments to impose a local casual excise tax.
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addressed a question of whether South Carolina can impose the casual excise tax on a certificate
of title or other proof of ownership issued by the U.S. Commissioner of Customs for a vessel. In
finding that the casual excise tax may not be imposed, the opinion cited the exemption in a prior
version of Code Section 50-23-30 6 and further said:
In United States v. Livingston, 179 F. Supp. 9, affirmed 364 U.S. 855, 80 S. Ct.
1611, 4 L. Ed. 2d 1719, it was stated that:
'The doctrine of mutual immunity of state and of nation from
taxation by the other, enunciated by Chief Justice Marshall in
M'Culloch v. State of Maryland, 4 Wheat. 316, 4 L. Ed. 579, has
not lost vitality with age. If, at times, it has seemed that 'the line
between the taxable and the immune has been drawn by an
unsteady hand,' the basic principle that the United States, its
property, its essential functions and activities are not subjects of
taxation by the states has not been questioned in modern times.'
Under such, the State cannot impose a tax upon the issuance by the United States
of the certificate of documentation and registry. … The casual excise tax is not
applicable to the documentation and registry issued by the United States
Customs office.
Based on the above, the casual excise tax does not apply to the issuance of a title, other proof of
ownership, or other documentation for a boat by a federal government agency, such as the U.S.
Coast Guard or U.S. Customs and Border Protection. 7
In addition, the SC Aeronautics Commission has informed the Department that airplanes in
South Carolina are registered, titled, and licensed by the Federal Aviation Administration
(“FAA”), not by the SC Aeronautics Commission. The FAA became a component of the U.S.
Department of Transportation in 1967 pursuant to the Department of Transportation Act (49
U.S.C. 106). Since the Department of Transportation is part of the federal government, for the
same reasons stated above, the casual excise tax does not apply to the FAA’s issuance of a title
or other proof of ownership for an airplane in South Carolina.
EXAMPLES
The examples provided below illustrate the applicability of the maximum sales and use tax and
casual excise tax to onetime retail sales of airplanes or boats in South Carolina. Since airplanes
or boats are maximum tax items, local sales and use taxes administered by the Department on
behalf of local jurisdictions do not apply to the following transactions.

Since the issuance of South Carolina Attorney General Opinion #83-33, the exemption cited in the prior version of
Code Section 50-23-30 has been modified but is substantially the same.
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The U.S. Coast Guard and U.S. Customs and Border Protection are federal agencies within the U.S. Department of
Homeland Security. U.S. Coast Guard Vessel Documentation is a national form of boat registration. Documented
vessels do not have titles; they maintain Certificates of Documentation that expire in 1-5 years from issuance. See
https://unitedstatesvessel.us/certificate-of-documentation/.
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Example 1 – Sale by Retailer to South Carolina Company for Use in South Carolina
Facts: A retailer located in State X flies an airplane to South Carolina for the sole purpose of
selling and delivering the airplane to a South Carolina company for its own use in providing
aerial tours in South Carolina. The airplane is titled by the FAA in the South Carolina
company’s name.
Conclusion: This is a retail transaction subject to South Carolina sales tax (5% rate but no more
than $500) since the retailer is engaged in the business of selling tangible personal property in
South Carolina to the end user, and the sale (i.e., delivery) took place in South Carolina.
The result is the same in this example if the retailer sells and delivers a boat to the South
Carolina company for its own use in providing boat tours.
Example 2 – Sale by Retailer to Nonresident Individual for Use Outside of South Carolina
Facts: A retailer located in State X flies an airplane to South Carolina for the sole purpose of
selling and delivering the airplane to an individual purchaser from State Y for personal use in
State Y. The airplane is titled by the FAA in the individual purchaser’s name.
Conclusion: This is a retail transaction subject to South Carolina sales tax (5% rate but no more
than $500) since the retailer is engaged in the business of selling tangible personal property in
South Carolina to the end user, and the sale (i.e., delivery) took place in South Carolina.
The result is the same in this example if the retailer sells and delivers a boat to the individual
purchaser for personal use in State Y.
Example 3 – Sale by Nonretailer to South Carolina Company for Use in South Carolina
Facts: A nonretailer located in State X flies an airplane to South Carolina for the sole purpose of
selling and delivering the airplane to a South Carolina company for its own use in providing
aerial tours in South Carolina. The airplane is titled by the FAA in the South Carolina
company’s name.
Conclusion: This transaction is not subject to sales tax since the airplane was purchased from a
person not engaged in the business of selling tangible personal property at retail (i.e., a
nonretailer). In addition, the casual excise tax does not apply since the airplane was titled by a
federal government agency, the FAA.
The result is the same in this example if the nonretailer sells and delivers a boat to the South
Carolina company for its own use in providing boat tours in South Carolina, and the boat is
registered with a federal government agency (e.g., the U.S. Coast Guard) in the South Carolina
company’s name. However, if the boat is titled with DNR, and not registered with the federal
government, the South Carolina company must pay the casual excise tax (5% rate but no more
than $500).

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Example 4 – Sale by Nonretailer to Nonresident Individual for Use Outside of South
Carolina
Facts: A nonretailer located in State X flies an airplane to South Carolina for the sole purpose of
selling and delivering the airplane to an individual purchaser from State Y for personal use in
State Y. The airplane is titled by the FAA in the individual purchaser’s name.
Conclusion: This transaction is not subject to sales tax since the airplane was purchased from a
person not engaged in the business of selling tangible personal property at retail (i.e., a
nonretailer). In addition, the casual excise tax does not apply since the airplane was titled by a
federal government agency, the FAA.
The result is the same in this example if the nonretailer sells and delivers a boat to the individual
purchaser for personal use in State Y and the boat is titled by State Y or registered with a federal
government agency (e.g., the U.S. Coast Guard) in the individual purchaser’s name.
NOTE: If a retailer comes to South Carolina for the sole purpose of making a onetime sale of a
airplane or boat, and the retailer is not engaged in multiple retail sales transactions in South
Carolina, then the Department will allow the retailer or purchaser to report and remit the sales
tax due on the transaction using Form ST-236, “Casual Excise or Use Tax Return.” This will
allow the retailer to make that onetime sale without having to register with the Department and
file monthly returns. However, if the retailer makes multiple sales of airplanes or boats in South
Carolina, the retailer is required to obtain a retail license, remit sales tax, and file monthly sales
and use tax returns.
SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell

W. Hartley Powell, Director

June 10
, 2021
Columbia, South Carolina

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