Was electricity purchased by Charleston Air Force Base for on-base family housing and a trailer park exempt as electricity used for residential purposes?

Plain-English summary

South Carolina Revenue Ruling 89-5 exempted electricity purchased by Charleston Air Force Base for its on-base family housing and trailer park. Those locations were intended as places for people to live and therefore met the former definition of electricity used for “residential purposes.”

The result did not come from the base's federal-government status. The ruling explained that the former exemption for sales to the federal government excluded electricity subject to the specified utility tax. The separate residential-use exemption controlled instead.

Why the federal exemption did not control

Former section 12-35-550(42) generally exempted tangible personal property sold to the federal government, but it excluded gross proceeds subject to the electricity and communications provisions cited in that statute.

The ruling therefore treated electricity sold to the federal government as taxable unless another exemption applied.

Why the residential exemption applied

Former section 12-35-550(37) exempted electricity used for residential purposes.

Regulation 117-177 defined residential purposes as space occupied by one or more people with the intention that it serve as a residence, house, dwelling, or abode. The quoted regulation included single-family houses, duplexes, condominiums, apartments, and permanent-type mobile homes used as residences.

The base's family housing and trailer park fit that definition because they were intended as places for people to live.

What this means for you

Utilities serving government property

The customer's government status did not decide the outcome. The ruling looked separately at the electricity's actual residential use.

Military and government housing managers

On the historical facts, family housing and the trailer park qualified because residents used those locations as homes.

Accountants and tax professionals

The ruling applied a use-based residential exemption even though the federal-government exemption did not cover the electricity sale.

Common questions

Q: Was all electricity sold to Charleston Air Force Base exempt?

A: The ruling addressed electricity used in on-base family housing and the trailer park. It did not grant a blanket exemption for every base use.

Q: Did federal ownership create the exemption?

A: No. The cited federal-government exemption excluded the electricity charges at issue; the residential-use exemption supplied the result.

Q: Why did the trailer park qualify?

A: It was intended as a place where people lived or resided, matching the ruling's residential-purpose definition.

Q: Is RR 89-5 necessarily current?

A: No. It interpreted statutes and a regulation in effect in 1989. Current law and later guidance must be checked.

Citations and references

• Former S.C. Code section 12-35-510 — sales tax imposition
• Former S.C. Code section 12-35-550(37) — residential-use electricity exemption
• Former S.C. Code section 12-35-550(42) — federal-government exemption and exclusions
• Former S.C. Code sections 12-35-810 and 12-35-1140 — use tax and electricity provisions cited in the ruling
• Regulation 117-177 — residential-purposes definition quoted in the ruling
• South Carolina Attorney General Opinion 67, dated August 23, 1979 — residential-purpose analysis quoted in the ruling

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR89-5.pdf

Original ruling text

SC REVENUE RULING #89-5

SUBJECT:

Electricity Used for Residential Purposes at Charleston Air Force Base
(Sales Tax)

EFFECTIVE DATE: Applies to all periods open under statute.
SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-35-510 (1976)
S.C. Code Ann. Section 12-35-550(37) (Supp. 1988)
S.C. Code Ann. Section 12-35-550(42) (Supp. 1988)
S.C. Code Ann. Section 12-35-810 (1976)
S.C. Code Ann. Section 12-35-1140 (1976)

SCOPE:

A Revenue Ruling is the Commission's official interpretation of how tax
law is to be applied to a specific set of facts. A Revenue Ruling is public
information and remains a permanent document until superseded by a
Regulation or is rescinded by a subsequent Revenue Ruling.

Question:
Are purchases of electricity by Charleston Air Force Base (CAFB), for use in on-base family
housing and a trailer park, exempt from taxation, pursuant to Code Section 12-35-550(37)?
Facts:
Code Section 12-35-510 imposes "upon every person engaged or continuing within this State in
the business of selling at retail any tangible personal property...an amount equal to [five] percent
of the gross proceeds of sales of the business" (emphasis added).
Code Section 12-35-550(42), effective July 1, 1984, exempts from the sales tax:
The gross proceeds of the sale of tangible personal property to the Federal Government,
not including gross proceeds subject to the tax under [Section] 12-35-1140 and [Section]
12-35-1150 of the 1976 Code.
Code Section 12-35-1140 imposes the tax on "the sale or use of electricity" and Code
Section 12-35-1150 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 of messages".

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Code Section 12-35-550(37), however, provides an exemption for:
The gross proceeds of the sale of electricity…used for residential purposes.(emphasis
added).
In summary, pursuant to Section 12-35-550(42), sales of electricity to the Federal Government
are subject to the sales tax. However, Section 12-35-550(37) provides an exemption for
electricity "used for residential purposes."
Discussion:
In order to address this question, it must be determined if the subject electricity is being used for
"residential purposes".
Regulation 117-177 defines the term "residential purposes" as "...any space or area occupied by
one or more individuals with the intention that such space or area serves as a residence, house,
dwelling or abode. Included in the exemption are single family houses, duplexes, condominium
units, apartments and mobile homes of a permanent type used by a person or persons as a place
of residence, house dwelling or abode. All sales to such locations would be exempt".
Also, Attorney General's Opinion #67, dated August 23, 1979, defines the phrase "residential
purposes". Quoting from that opinion:
One of the primary rules of statutory construction is that words used in a statute should be
taken in their ordinary and popular significance unless there is something in the statute
which requires a different interpretation. Hughes v. Edwards, 265 S.C. 529, 220 S.E.
2d231 (1975); Investors Premium Corp. v. South Carolina Tax Commission, 260 S.C. 13,
193 S.E. 2d642 (1973). Where the terms of a statute are clear and unambiguous and
leave no room for construction,
they must be applied according to their literial
meaning. Mitchell v. Mitchell, 266 S.C. 196, 222 S.E. 2d 217 (1978); Green v.
Zimmerman, 269 S.C. 535, 238 S.E. 2d323 (1977). Also, it is accepted practice in South
Carolina to resort to the dictionary to detemine the literal meaning of words used in
statutes and the meanings which these words embrace. For cases where this has been
done, see Hay v. South Carolina Tax Commission, S.C. , 255 S.E. 2d837 (1979);
Fennell v. South Carolina Tax Commission, 233 S.C. 43, 102 S.E. 2d 424 (1958); Etiwan
Fertilizer Co. v. South Carolina Tax Commission, 217 S.C. 354, 60 S.E. 2d 682 (1950).
"Residential" is defined in Webster's New World Dictionary, 2d Ed. (1978) to mean:
"Of or connected with residence."
Webster's defines "residence" as:
"The act or fact of residing...The place in which a person or thing resides; dwelling
place; abode; esp., a house."

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Webster's defines "reside" to mean:
"To dwell for a long time; have one's residence; live (in or at)."
"Purpose" is defined in Webster's as:
"Something one intends to get or do; intention, aim...with a specific end in view."
Judicially, "residential" has been defined as used, serving or designed as a residence.
Johnson v. Guarino, 168 A. 2d 171. It has also been held that the word "residence" in a
restrictive covenant is equivalent to "residential" and is used in contradistinction to
"business", and that if a building is used as a place of abode and no business carried on,
it would be used for "residence purposes" only, whether occupied by one family or a
number of families. Jernigan v. Capps, 187 Va. 73, 45 S.E. 2d886. Also, the terms
"residence purposes" and "residences" require use of the property for living purposes as
distinguished from uses for business or commercial purposes. MacDonald v. Painter,
Texas, 441 S.W. 2d179.
We, therefore, apply the literal meaning to the term "residential purposes".
The Attorney General's Office concluded that the phrase "residential purposes" means "any
space or area occupied by one or more individuals with the intent that such space or area serve as
a residence, house, dwelling or abode".
Family housing and the trailer park, located on CAFB, fall within the definition of "residential
purposes", as used in Code Section 12-35-550(37), as such facilities are intended to be used as
places for persons to live or reside.
Conclusion:
Purchases of electricity by Charleston Air Force Base, for use in on-base family housing and a
trailer park, are exempt from the sales tax, pursuant to Code Section 12-35-550(37).
SOUTH CAROLINA TAX COMMISSION
s/S. Hunter Howard Jr.
S. Hunter Howard, Jr., Chairman
s/A. Crawford Clarkson Jr.
A. Crawford Clarkson, Jr., Commissioner
s/T. R. McConnell
T. R. McConnell, Commissioner
Columbia, South Carolina
, 1989
April 10,

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