How did RR 98-18 distinguish South Carolina sales and use tax from the Catawba tribal tax for Reservation transactions?

Plain-English summary

South Carolina Revenue Ruling 98-18 explained how the Catawba Indian Claims Settlement Act divided sales and use tax among the state, local jurisdictions, and the Catawba Tribe.

The ruling said the Tribe, its members, and Tribal Trust Funds generally owed state and local sales and use taxes like other persons, subject to specific statutory exceptions. Purchases by the Tribe for tribal-government functions were exempt for 99 years from the Act's effective date. Catawba pottery and artifacts made by tribal members were exempt whether sold on or off the Reservation.

Other sales on the Reservation were exempt from state and local sales and use tax but subject to a special tribal sales tax equal to the state and local tax that otherwise would apply in the surrounding jurisdiction. The Department administered and collected that tribal sales tax and accounted for it separately for remittance to the Tribe.

Sales delivered off the Reservation did not receive the on-Reservation exemption and were subject to state and local tax rather than the tribal sales tax. The ruling also addressed lodging, timely-payment discounts, small deliveries onto the Reservation, and use tax on property bought outside South Carolina.

Key distinctions in the ruling

• Tribal-government purchases: exempt for the 99-year statutory period described.
• Catawba pottery and artifacts made by members: exempt from state and local sales and use tax on or off the Reservation.
• Other on-Reservation sales: generally subject to the special tribal sales tax instead of state and local sales tax.
• Off-Reservation sales: generally subject to state and local sales tax, not the tribal sales tax.
• Deliveries from outside the Reservation of $100 or less: the ruling said the tribal sales tax did not apply and state sales tax applied.
• Out-of-state purchases used on the Reservation: vendor-collected use tax went to the state; when the vendor did not collect, the Tribe collected the tribal use tax directly under the stated rule.
• Lodging on the Reservation: subject to the tribal tax at the rates that otherwise would apply in the surrounding jurisdiction; the numerical examples reflect 1998 rates.

Common questions

Q: Did the regular timely-filing discount apply to tribal sales tax? Yes. The ruling applied S.C. Code Section 12-36-2610 because South Carolina sales and use tax laws, regulations, and rulings governed administration of the special tribal sales tax.

Q: What counted as a Catawba artifact? The ruling described an object, including a tool, weapon, or ornament, made by one or more Catawba members and associated with the Tribe's culture or history.

Q: Did the Department administer both the tribal sales tax and tribal use tax? No. It administered the tribal sales tax. The ruling said the Tribe directly collected tribal use tax when an out-of-state vendor did not collect and remit state use tax.

Q: Are the rates printed in RR 98-18 current? Not necessarily. They were tied to York and Lancaster County taxes in effect in 1998 and must not be used without checking current rates and guidance.

Citations and references

• S.C. Code Ann. § 27-16-130(H) (Catawba tribal-government purchases, pottery and artifacts, tribal sales tax, and tribal use tax)
• S.C. Code Ann. § 12-36-2610 (timely-payment discount)
• 1993 Act No. 142 (effective-date certification described in the ruling)
• Green v. Zimmerman, 269 S.C. 535, 238 S.E.2d 323 (1977); Hay v. South Carolina Tax Commission, 273 S.C. 269, 255 S.E.2d 837 (1979); Fennell v. South Carolina Tax Commission, 233 S.C. 43, 103 S.E.2d 424 (1958); Etiwan Fertilizer Co. v. South Carolina Tax Commission, 217 S.C. 484, 60 S.E.2d 682 (1950) (literal meaning and dictionary use discussed)
• SC Revenue Ruling #22-8 (later local-tax guidance that identifies RR 98-18 for Catawba tribal tax)

Subject

Catawba Indian Claims Settlement Act

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR98-18.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P.O. Box 125, Columbia, South Carolina 29214

SC REVENUE RULING # 98-18

SUBJECT:

Catawba Indian Claims Settlement Act
(Sales and Use Taxes)

EFFECTIVE DATE:

Applies to all periods open under the statute.

EXPIRATION DATE:

November 28, 2092

SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCES:

S. C. Code Ann. Section 27-16-130 (Supp. 1997)
S. C. Code Ann. Section 12-36-2610 (Supp. 1997)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 1997)
SC Revenue Procedure #97-8

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.

Introduction & Law:
Chapter 16, Title 27 of the South Carolina Code of Laws is known as “The Catawba Indian
Claims Settlement Act” (“The Act”). The Act is based on the agreement in principle reached
between the State of South Carolina and the Catawba Indian Tribe to settle differences between
the two parties.
Section 27-16-130 reads, in pertinent part:
(H) The Tribe, its members, and the Tribal Trust Funds are liable for the payment of all
state and local sales and use taxes to the same extent as any other person or entity in the
State, except as specifically provided as follows:
(1)

Purchases made by the Tribe for tribal government functions during ninety-nine
years from the effective date of this chapter are exempt from state and local sales
and use taxes.

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(2)

Catawba pottery and artifacts made by members of the Tribe and sold on or off the
Reservation by the Tribe or members of the Tribe are exempt from state and local
sales and use taxes.

(3)

During ninety-nine years from the effective date of this chapter, the sale on the
Reservation of all other items, made on or off the Reservation, are exempt from
state and local sales and use taxes but are subject to a special tribal sales tax levied
by the Tribe equal to the state and local sales tax that would be levied in the
jurisdiction encompassing the Reservation but for this exemption.
(a)

The South Carolina sales and use tax laws, regulations, and rulings apply to
the special tribal sales tax, and the special tribal sales tax must be
administered and collected by the South Carolina Tax Commission.

(b)

The South Carolina Tax Commission separately shall account for the special
tribal sales tax, and the State Treasurer shall remit the special tribal sales tax
revenues periodically to the Tribe at no cost to the Tribe.

(c)

The tribal sales tax does not apply to retail sales occurring on the Reservation
as a result of delivery from outside the Reservation when the gross proceeds
of sale are one hundred dollars or less. If it does not apply, the state sales tax
applies.

(d)

The Tribe shall impose a tribal use tax on the storage, use, or other
consumption on the Reservation of tangible personal property purchased at
retail outside the State when the vendor does not collect the tax. However,
use taxes collected by a vendor which is not located in the State are subject to
state use taxes, and the use tax must be remitted to the State and not the Tribe.
Use taxes not collected by the vendor and remitted to the State are subject to
the tribal use tax and must be collected directly by the Tribe.

The purpose of this document is to address certain questions that have arisen concerning the
above-quoted code section.
Questions & Answers:

1. Q. What is the implementation date of the Catawba Indian Settlement Act (“the Act”)?
   A. 1993 Act No. 142, “The Catawba Indian Settlement Act,” contains the following
   provision:
   SECTION 2. This act takes effect when the Governor certifies that the Counties of York
   and Lancaster have taken all actions required of them by the Settlement Agreement.
   However, the Governor may not make the certification until the Congress of the United

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States has passed and the President of the United States has signed into law federal
implementing legislation which he also certifies as consistent with the Settlement
Agreement.
The Governor certified the above on November 29, 1993. Therefore, the act took effect
on that date.

2. Q. Does Section 12-36-2610 (“Discount for timely payment of tax.”) apply to the tribal sales
   tax?
   A. Section 27-16-130(H)(3)(a) reads:
   The South Carolina sales and use tax laws, regulations, and rulings apply to the special
   tribal sales tax, and the special tribal sales tax must be administered and collected by the
   South Carolina Tax Commission.
   Section 12-36-2610, which pertains to the state sales and use taxes, reads in pertinent
   part:
   When a sales or use tax return required by Section 12-36-2570 and Chapter 10 of Title 4
   is filed and the taxes due on it are paid in full on or before the final due date, the taxpayer
   is allowed a discount as follows:
   (1)

on taxes shown to be due by the return of less than one hundred dollars, three
percent;

(2)

on taxes shown to be due by the return on one hundred dollars or more, two percent.

In no case is a discount allowed if the return, or the tax on it is received after the due date,
pursuant to Section 12-36-2570, or after the expiration of any extension granted by the
commission. The discount permitted a taxpayer under this section may not exceed three
thousand dollars during any one state fiscal year.
Based on the language in Section 27-16-130(H)(3)(a), the provisions of Section 12-36-2610
apply to the tribal sales tax.

3. Q. If York County, or any other county containing lands encompassing the Reservation,
   imposes the 1% local option sales and use tax, would the local option sales tax be due if a
   transaction takes place at a location on the Reservation that is within the local option tax
   county?
   A. Section 27-16-130(H)(3) provides that sales on the Reservation are exempt from the state
   and local sales and use taxes. However, that same section provides that the special tribal
   sales tax applies and that it is “equal to the state and local tax that would be levied in the
   jurisdiction encompassing the Reservation but for this exemption.” (Emphasis added.)

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As of this writing, York County has not approved the 1% local option tax as provided for
in Article 1, Chapter 10, Title 4 of the South Carolina Code of Laws. However, York
County did impose a 1% Capital Project Sales Tax as provided for in Article 3 of Chapter
10, Title 4. The 1% Capital Project Sales Tax goes into effect in York County on May 1,
1998. Therefore, sales that take place on the Reservation within York County before May
1, 1998 are subject to the tribal sales tax at a rate of 5%. Sales that take place on the
Reservation within York County on or after May 1, 1998 are subject to the tribal sales tax
at a rate of 6%.
Lancaster County imposed the 1% local option tax, as provided for in Article 1 of
Chapter 10, Title 4, effective May 1, 1992; therefore, sales on the Reservation within
Lancaster County are subject to the tribal sales tax at a rate of 6%.
NOTE: The tribal sales tax rates within the Reservation may increase dependent upon whether
additional state or local sales taxes are imposed in the future.

4. Q. What does the phrase “artifacts made by members of the Tribe,” as used in Section 2716-130(H)(2), mean?
   A. Where "the terms of a statute are clear and unambiguous and leave no room for
   construction, they must be applied according to their literal meaning." Green v.
   Zimmerman, 269 S.C. 535, 238 S.E.2d 323, 325 (1977).
   In South Carolina, it is an accepted practice to resort to the dictionary to determine the
   literal meaning of words used in statutes. For cases where this has been done, see Hay v.
   South Carolina Tax Commission, 273 SC 269, 255 S.E.2d 837 (1979); Fennell v. South
   Carolina Tax Commission, 233 S.C. 43, 103 S.E.2d 424 (1958); Etiwan Fertilizer Co. v.
   South Carolina Tax Commission, 217 SC 484, 60 S.E.2d 682 (1950).
   Because the term “artifact” is not defined in the statute and its meaning is not clear, we
   resort to the dictionary for a definition. The American Heritage Dictionary, Second
   College Edition, defines the term as: “An object produced or shaped by human
   workmanship, esp., a tool, weapon, or ornament of archaeological or historical interest.”
   Based on the above-quoted definition, the phrase “artifacts made by members of the
   Tribe” means objects, including tools, weapons and ornaments, produced or shaped by
   the workmanship of one or more members of the Catawba Indian Tribe that are
   associated with the culture or history of the Tribe.
5. Q. When tangible personal property, other than pottery and artifacts made by members of
   the Tribe, is sold and delivered outside the reservation, which tax is due - the state tax or
   the tribal tax?

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A. Section 27-16-130(H)(3) provides that sales on the Reservation of items, other than
Catawba pottery and artifacts made by members of the Tribe, are exempt from state and
local sales taxes, but they are subject to the tribal sales tax. That section does not exempt
sales of such items off the Reservation from state and local sales taxes. Therefore, sales
of items, other than Catawba pottery and artifacts made by members of the Tribe, off the
Reservation are subject to state and local sales taxes and are not subject to the tribal sales
tax.

6. Q. How are charges for sleeping accommodations provided on the Reservation to be taxed?
   A. All sales on the Reservation are exempt from state and local sales taxes, but are subject to
   the tribal sales tax. Section 27-16-130(H)(3) provides that sales on the Reservation are
   subject to the tribal sales tax “equal to the state and local sales tax that would be levied in
   the jurisdiction encompassing the Reservation.” Therefore, if accommodations are
   furnished before May 1, 1998 in an area of the Reservation that is within York County,
   the tribal sales tax rate on such charges is 7%. Accommodations furnished on or after
   May 1, 1998 in an area of the Reservation within York County are taxed at 8%.
   Likewise, the tribal sales tax rate on additional guest charges imposed on the Reservation
   within York County is 5% before May 1, 1998 and 6% on or after May 1, 1998. (See
   Answer #3 concerning the 1% Capital Project Sales Tax imposed in York County.)
   Accommodations furnished on the Reservation within Lancaster County are subject to
   the tribal sales tax at a rate of 8%. Additional guest charges imposed on the Reservation
   within Lancaster County are subject to the tribal sales tax at a rate of 6%.
7. Q. In Section 27-16-130(H)(3)(d), what is meant by the last sentence in that section which
   reads: “Use taxes not collected by the vendor and remitted to the State are subject to the
   tribal use tax and must be collected directly by the Tribe”?
   A. The subject statutory phrase means that if a vendor does not collect the state use tax on a
   transaction that is subject to the use tax, then the Tribe is required to collect the tribal use
   tax on the storage, use or other consumption on the Reservation of tangible personal
   property that has been purchased at retail outside the State. The Department of Revenue
   is not responsible for administering the tribal use tax. The Department is only
   responsible for administering the tribal sales tax.
   SOUTH CAROLINA DEPARTMENT OF REVENUE

s/Burnet R. Maybank III
Burnet R. Maybank III, Director

August 18
, 1998
Columbia, South Carolina

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