Did RR 94-11 extend South Carolina's school and public-library book exemptions to alternative media?

Plain-English summary

South Carolina Revenue Ruling 94-11 applied historical school and public-library exemptions to books and periodicals delivered in alternative physical formats.

For public and private schools, the exemption covered course-of-study textbooks, books, magazines and periodicals; school-library books; encyclopedias and dictionaries; and newspapers. The ruling treated audio tape, video tape, CD-ROM, microfilm, and microfiche versions like their printed counterparts when they served the same qualifying use.

For publicly supported state, county, or regional libraries open to the public without charge, qualifying books, magazines, periodicals, and newspapers received the same treatment in printed or alternative form.

The ruling drew limits. Nonqualifying school publications remained taxable, media used merely to store or present information—such as a card catalog on CD-ROM—did not qualify, and database-access services were expressly outside the ruling.

Common questions

Q: Did the ruling cover CD-ROM books? Yes, when they were alternative forms of qualifying books used by an eligible school or public library.

Q: Were all school magazines exempt? No. The ruling required them to be part of a prescribed course of study.

Q: Did a library card catalog on CD-ROM qualify? No. The ruling distinguished information-storage or presentation tools from exempt books and periodicals.

Q: Did the ruling decide database-access taxation? No.

Citations and references

• S.C. Code Ann. § 12-36-2120(3) (historical school and public-library exemption)
• S.C. Code Ann. § 12-36-2120(8) (historical printed-newspaper exemption)
• S.C. Regulations 117-174.213, 117-174.251, and 117-174.166
• South Carolina Technical Advice Memorandum 90-6 (instructional software discussed in the ruling)

Subject

School and Library Books - Printed Form or Alternative Forms

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR94-11.pdf

Original ruling text

SC REVENUE RULING #94-11 (TAX)

SUBJECT:

School and Library Books - Printed Form or Alternative Forms
(Sales and Use Taxes)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCES:

S. C. Code Ann. Section 12-36-2120 (Supp. 1993)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 1993)
SC Revenue Procedure #94-1

SCOPE:

A Revenue Ruling is the Department of Revenue's official advisory
opinion of how laws administered by the Department are to be applied to
a specific issue or a specific set of facts, and is provided as guidance for
all persons or a particular group. It is valid and remains in effect until
superseded or modified by a change in the statute or regulations or a
subsequent court decision, Revenue Ruling or Revenue Procedure.

Question:
Are sales of textbooks, books, magazines, periodicals and newspapers to schools and publicly
supported state, county, or regional libraries open to the public without charge in printed form or
alternative forms, such as audio tape, video tape, CD ROM, microfilm and microfiche, exempt from
sales and use taxes under Code Section 12-36-2120?
Conclusion:
Sales to Public and Private Schools
The following sales to public or private schools are exempt from sales and use taxes under
Code Section 12-36-2120, whether in printed form or in alternative forms, such as audio tape,
video tape, CD ROM, microfilm and microfiche:

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1. Textbooks, books, magazines and periodicals, used as part of a prescribed course of
study;

2. School library books;
3. Encyclopedias and dictionaries; and,
4. Newspapers.
   All textbooks, books, magazines and periodicals not falling in the above categories are subject
   to South Carolina sales and use taxes.
   Sales to Public Libraries Sales of books, magazines, periodicals and newspapers to publicly supported state, county, or
   regional libraries in printed form or in alternative forms, such as audio tape, video tape, CD
   ROM, microfilm and microfiche, are exempt from sales and use taxes under Code Section 1236-2120 providing the library is a publicly supported state, county or regional library that is
   open to the public without charge.
   This document does not address the sales and use tax implications of database access services.
   It is our understanding that legislation may be introduced on this topic next year.
   Facts:
   In today's advanced technological environment, public and private schools, and publicly supported
   state, county, or regional libraries that are open to the public without charge are purchasing books,
   magazines, periodicals and newspapers in forms other than in traditional print versions. Some of the
   most common alternative methods have been microfilm and microfiche. Recently, CD ROM has
   gained widespread usage as a means of providing books, magazines, periodicals and newspapers for
   library and school use. Many libraries are also purchasing books on audio and video tape.
   Discussion:
   PRINTED TEXTBOOKS, BOOKS, MAGAZINES AND PERIODICALS USED IN PUBLIC
   OR PRIVATE SCHOOLS
   Code Section 12-36-2120(3) provides an exemption from the sales tax for the gross proceeds of sales
   or sales price of:
   textbooks, magazines, and periodicals used as a part of a course of study in primary and
   secondary schools and institutions of higher learning...
   Regulation 117-174.213 further explains this exemption for textbooks used in public and private
   schools, colleges and universities and reads:

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There is exempted from the measure of the tax levied, assessed, or payable, "The gross
proceeds of the sale of textbooks used in elementary schools, high schools and institutions of
higher learning."
The term "textbook" is construed to include only books purchased for and used in elementary
schools, high schools and institutions of higher learning. Included within the definition of
textbooks are school library books, encyclopedias and dictionaries. Also deemed
textbooks when part of a prescribed course of study are workbooks, band and sheet
music, plays, filmstrips, transparencies, motion picture films, audio tapes and records,
recorded music and periodicals.
Examples of sales subject to the tax are magazine subscriptions, reader guides (this is in
connection with magazine subscriptions), test sheets, answer sheets, evaluation criteria,
games, albums, pupil cumulative records, guide pamphlets, yearbooks, award certificates,
diplomas, writing materials, art supplies, drafting supplies, easels, projectors, projector lamps
and bulbs, projection screens and equipment carts or tables, magboards, flannel boards,
laboratory supplies and equipment, biological supplies incidental to classroom instruction,
athletic equipment, shop supplies and equipment, record players, recorders, computer
instructional equipment, manipulated devices, charts, maps (including globes), map stands,
raw film, blank tapes, and any and all other items of tangible personal property used in the
classroom or office which do not qualify as "textbooks" as hereinabove defined. (Emphasis
added).
Therefore, textbooks, magazines, and periodicals sold to public or private schools, colleges or
universities for use as part of a prescribed course of study are not subject to the state sales and use
taxes, pursuant to Code Section 12-36-2120(3). The exemption is further defined in Regulation 117174.213 to include school library books, encyclopedias and dictionaries. Also included in the
definition of "textbook", and therefore not subject to the state sales and use taxes, are filmstrips, audio
tapes and records, recorded music and periodicals used as part of a prescribed course of study. This
statute, however, does not exempt magazines and periodicals that are not used as part of a prescribed
course of study.
PRINTED BOOKS, MAGAZINES AND PERIODICALS USED IN PUBLICLY SUPPORTED
STATE, COUNTY OR REGIONAL LIBRARIES OPEN TO THE PUBLIC WITHOUT
CHARGE
Code Section 12-36-2120(3) provides an exemption from the sales tax for the gross proceeds of sales
or sales price of:
...all books, magazines, and periodicals sold to publicly supported state, county, or regional
libraries which are open to the public without charge;
Regulation 117-174.251 further explains this exemption for books used in publicly supported state,
county or regional libraries and reads, in part:

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Included in Part III, Permanent Provisions of the 1968 General Appropriation Bill is an
amendment to [Section 12-36-2120] of the 1976 South Carolina Code of Laws, as amended.
The amendment reads that there is exempted from the measure of the tax levied, assessed or
payable "The gross proceeds of the sale of all books sold to legally established, public
supported State, County and/or Regional libraries which are open to the public without
charge."
The term "books" is construed to include filmstrips of a type in general use by
elementary schools, high schools, and institutions of higher learning.
Subject to the tax when purchased by libraries are all other properties such as furniture,
fixtures, typewriters, projectors, turntables, globes, stationery, index cards, files, shelving, and
visual aids. (Emphasis added.)
Therefore, books, magazines, and periodicals sold to publicly supported state, county, or regional
libraries that are open to the public free of charge are not subject to the state sales and use taxes.
Additionally, the exemption for library books is defined in the regulation to include filmstrips.
ALTERNATIVE FORMS OF TEXTBOOKS, BOOKS, MAGAZINES AND PERIODICALS
Now we must consider whether the legislature intended to exempt alternative forms of books,
magazines, and periodicals that are not addressed in the above regulations. The general rule is statutes
are not confined in application to contemporary instances and their principles are to be extended to
embrace new factual situations and new technological developments. Smith v. Pan Air Corp., 684
F.2d 1102 (5th Cir. 1982). Naturally, though, any such extension must be in accord with legislative
intent. See Commission Decision #90-39.
In Technical Advice Memorandum #90-6 the Commission concluded that certain software purchased
by a school district and used as a required part of a prescribed course of study is deemed to be a
textbook and thus qualifies for the exemption provided at Code Section [12-36-2120(3)].
Based upon the above analysis, alternative forms of the traditional printed textbooks, library books,
magazines and periodicals, such as microfilm, microfiche, and CD ROM, are new technological
developments for the same use, and are included in the exemption provided in Code Section 12-362120(3). The exemption does not include alternative forms that are used by the library to store or
present information, such as a card catalog on CD ROM.
ALTERNATIVE FORMS OF NEWSPAPERS
Code Section 12-36-2120(8) provides that gross proceeds of sales of printed newspapers are exempted
from sales tax. We must now determine whether newspapers purchased by schools and libraries on CD
ROM or microfiche are exempt from sales and use taxes. Newspapers are not specifically included in
the definition of "textbook" set forth in Regulation 117-174.213 or in the definition of "book" set forth
in Regulation 117-174.251, however, as discussed in the above section, it appears the legislative intent
is to exempt newspapers used by public and private schools, colleges and universities, as well as,
newspapers used by publicly supported state, county or regional libraries that are open to the public,
whether printed or on an alternative format such as microfiche or CD ROM.
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Based on the above, newspapers on alternative forms sold to schools and libraries are exempt from
sales and use taxes under Code Section 12-36-2120(3) as a "book". Only newspapers printed on
newsprint paper that meet the requirements of Regulation 117-174.166 qualify for the exemption as a
"newspaper" under Code Section 12-36-2120(8).

SOUTH CAROLINA DEPARTMENT OF REVENUE

S/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr., Chairman

s/James M. Waddell Jr.
James M. Waddell, Jr., Commissioner

Columbia, South Carolina
December 6
, 1994

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