Sales Tax State Activity Update - May 2004

Use of Machinery and Equipment Exempt in South Carolina

South Carolina offers manufacturers exemptions on the purchase and use of machinery and equipment. Jurisdictions sometimes promote manufacturing exemptions to encourage businesses to relocate facilities or expand existing facilities within their boundaries.

To be considered exempt, a machine must be significantly "used in manufacturing ... tangible personal property for sale." It does not have to be exclusive use, but incidental use does not qualify.

South Carolina continues their efforts to clarify what qualifies as "machines used in manufacturing" for purposes of their sales and use tax exemption of machinery and equipment.

The Court defined the word "machine" to include "the concept of combination" and held that the statute does not necessitate a machine to have moving parts if it is an essential part of the manufacturing process and that the statute makes no dissimilarity "as to whether a machine is a fixture or personal property."

(Revenue Ruling 04-7, South Carolina Department of Revenue, 4/20/04) 05/04

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