Who was liable for South Carolina's historical tax on bingo proceeds, and could the Commission collect it from a promoter's bond?

Plain-English summary

South Carolina Revenue Ruling 93-5 interpreted the 1992 extension of sales and use tax to licensed bingo proceeds. It concluded that the bingo promoter and nonprofit organization were jointly and severally liable, while the promoter was primarily liable for payment. The Commission therefore had to assess both parties for tax due on bingo proceeds.

The ruling also treated each required bingo bond as security for all state taxes. The Commission could levy against the promoter's bond for unpaid bingo-proceeds tax and could likewise levy against the nonprofit organization's bond. The tax did not apply to games operated under a Class E license.

Common questions

Q: Could the Commission assess only the promoter? No. The ruling required assessment against both the promoter and nonprofit organization, while making the promoter primarily liable.

Q: Could the promoter's bond cover this tax? Yes. The ruling read the bond statute's “all state taxes” language to include the tax on bingo proceeds.

Q: Did the tax apply to Class E games? No.

Citations and references

• S.C. Code Ann. § 12-21-3610 (1992 Supp.) — historical tax on bingo proceeds
• S.C. Code Ann. § 12-21-3380 (1992 Supp.) — joint and several liability
• S.C. Code Ann. § 12-21-3530 (1992 Supp.) — required bonds as security for state taxes
• South Carolina Revenue Ruling 89-23 and Commission Decision 91-15 — assessment treatment discussed in the ruling

Subject

Bingo Proceeds - Code Section 12-21-3610

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR93-5.pdf

Original ruling text

SC REVENUE RULING #93-5

SUBJECT:

Bingo Proceeds - Code Section 12-21-3610

TAX MANAGER:

John P. McCormack

EFFECTIVE DATE:

Applies to all periods open under the statute.

REFERENCE:

S.C. Code Ann. Section 12-21-3610 (Supp. 1992)
S.C. Code Ann. Section 12-21-3380 (Supp. 1992)
S.C. Code Ann. Section 12-21-3530 (Supp. 1992)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1992)

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information and remains a permanent document until superseded by a
Regulation or is rescinded by a subsequent Revenue Ruling.

Questions:
1.

Can a bingo promoter be held liable for the tax imposed upon bingo proceeds under Code
Section 12-21-3610?

2.

If a bingo promoter can be held liable for the tax imposed upon bingo proceeds under Code
Section 12-21-3610, can the Commission levy against the promoter's bond for any unpaid tax
imposed under Code Section 12-21-3610?

Facts:
As part of the Appropriations Act of 1992 (Act 501, Part II, Section 59), the General Assembly
extended the State sales and use tax to the proceeds of licensed bingo games.
Questions have arisen as to the application of various provisions of the bingo law to this new tax on
bingo proceeds.
Discussion:
Code Section 12-21-3610 became effective July 1, 1992, and reads:

1

The sales and use tax imposed pursuant to Chapter 36 of Title 12 applies on gross proceeds
from the game of bingo as provided in this chapter [21], but this section does not apply to
bingo games held under a Class E license.
In order to address the first issue, we must review Code Section 12-21-3380. That section reads:
The promoter and the nonprofit organization are jointly and severally liable for all taxes,
penalties, interest, and fines imposed by this article and Chapter 54 of Title 12. However,
the promoter at all times is liable primarily.
The Commission, in SC Revenue Ruling #89-23, reviewed this section with respect to the bingo tax
and held:
An assessment for bingo taxes and penalties may be issued in the name of the promoter, the
nonprofit organization, or both.
However, it is Commission policy to issue the assessment in the names of the promoter and
the nonprofit organization, with each party receiving a copy of the assessment so that all
concerned are adequately notified of their liability.
Later, in Commission Decision #91-15, the Commission stated that the bingo taxes "must be
assessed against both [the nonprofit organization] and the Promoter, with the Promoter being
primarily liable for payment."
Code Section 12-21-3380, as cited above, imposes this joint and several liability with respect to "all
taxes, penalties, interest, and fines imposed by this article ..." The new tax on bingo proceeds is
imposed under the same article (Article 23 of Chapter 21 of Title 12); therefore, the "promoter and
the nonprofit organization are jointly and severally liable for [the tax on bingo proceeds]."
In summary, the tax on bingo proceeds, as imposed under Code Section 12-21-3610, must be
assessed against both the nonprofit organization and the promoter, with the promoter being primarily
liable for payment.
The second issue concerns the bonding requirements of Code Section 12-21-3530. That section
reads:
Except as otherwise provided in this section, every organization and promoter licensed to
conduct bingo, as a condition precedent to conducting a game or to continue in the business
of conducting a game, shall file a bond executed by a surety company authorized to do
business in this State, or post a cash bond with the commission in an amount as may be
approved by the commission. The organization and the promoter must have separate bonds.
No organization or promoter may engage in this business before submitting the bond
required by this section. This bond is security for all state taxes, penalties, interest, fines,
fees, and warrant costs for which the promoter or organization is liable. The minimum bond
for a promoter is twenty thousand dollars. The minimum bond for an organization licensee
is as follows:

1

(1)

Class AA twenty thousand dollars;

(2)

Class B ten thousand dollars;

(3)

Class C no bond required;

(4)

Class D no bond required;

(5)

Class E no bond required.

Therefore, the bond is security for all state taxes.
Conclusions:
1.

The tax on bingo proceeds, as imposed under Code Section 12-21-3610, is the joint and
several liability of the nonprofit organization and the promoter, with the promoter being
primarily liable. Therefore, the Commission must assess both the nonprofit organization and
the promoter for any tax due under Code Section 12-21-3610.

Note: The tax on bingo proceeds, as imposed by Code Section 12-21-3610, does not apply to bingo
games operated under a Class E license.
2.

Since a bond of a bingo promoter is "security for all state taxes" under Code Section 12-213530, the Commission can levy against the promoter's bond for any unpaid tax imposed under
Code Section 12-21-3610, as well as all other state taxes which may be due by the promoter.

Note: The Commission may also levy against the nonprofit organization's bond for any unpaid tax
imposed under Code Section 12-21-3610, in addition to all other taxes, since the bond is "security
for all state taxes".
SOUTH CAROLINA TAX COMMISSION
s/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr., Chairman
s/T. R. McConnell
T. R. McConnell, Commissioner
s/James M. Waddell, Jr.
James M. Waddell, Jr., Commissioner
Columbia, South Carolina
1993
March

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