Sales, Use and International Tax Activity Update - January 2010

South Carolina Clarifies Temporary Storage Exclusions

The South Carolina Department of Revenue has issued a revenue ruling to provide guidance and to clarify whether the exclusion for temporary storage applies to the sales or the use tax. The “South Carolina Sales and Use Tax Act” contains a “temporary storage” provision. In reality, this provision is an exclusion from the definitions of “use” and “storage” as defined in Code Section 12-36-140.

The purpose of this advisory opinion is to provide guidance as to the application of the “temporary storage” provision in Code Section 12-36-140 and any reference in this document to “temporary storage” means the exclusions from the use tax in (1) Code Section 12-36-140(A) for tangible personal property purchased at retail and kept or retained in South Carolina for subsequent use solely outside South Carolina, (2) Code Section 12-36-140(C)(1) for tangible personal property purchased at retail for the exclusive purpose of subsequently transporting it outside of South Carolina for first use, and (3) Code Section 12-36-140(C)(2) for tangible personal property purchased at retail for the purpose of first being manufactured, processed, or compounded into other tangible personal property to be transported and used solely outside of South Carolina.

The portion of the “temporary storage” provision concerning (1) cooperative direct mail promotional advertising materials, and (2) promotional maps, brochures, pamphlets, or discount coupons by nonprofit chambers of commerce or convention and visitor bureaus will not be discussed in this advisory opinion. The sales and use tax law also provides an exemption for such transactions in Code Section 12-36-2120(58). Since the exemption in Code Section 12-36-2120(58) is applicable to both the sales tax and the use tax, the “temporary storage” provisions discussed in this advisory opinion are not applicable to qualified purchasers of materials exempt under Code Section 12-36-2120(58).

The full revenue ruling can be viewed on the South Carolina Department of Revenue Web site.

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