PURCHASING CARD TAX ISSUES

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SALES AND USE TAX GUIDE FOR CREDIT CARD USERS

The University of South Carolina is designated as a State Government Organization and is not tax exempt from the application of sales and use taxes.. We are mandated by the South Carolina Department of Revenue 1976 Code of Laws to pay taxes on tangible personal property which also includes services and intangibles.

South Carolina Code Section 12-36-60 defines “Tangible personal property” as property which may be seen, weighed, measure, felt, touched, or which in any other manner perceptible to the senses.

It also includes services and intangibles including communications, laundry and related services and sales of electricity.

Our Tax Certificate # 7358(19) is a “Direct Pay” tax certificate which allows us to self assess the tax and pay directly to the S. C. Department of Revenue.

The University of South Carolina is responsible for all sales and use taxes on all incurred purchases. Despite the fact that we are a State Agency, we are not tax-exempt. Instead, the University of South Carolina possess a "Direct Pay" tax exempt certificate by which the Controller's Office staff pays the tax directly to the S.C. Department of Revenue.

For Departments, purchases must be reviewed for:

1. Is this a taxable item? (See tax rule below).
2. Did the vendor already charge taxes on the transaction (review receipt)?

If it is a taxable item and the vendor charged tax, no further action is needed. However, if the purchase is taxable, and the vendor did not charge taxes, then the department must self assess the 5% tax rate (6% if delivered to a local option county).

Unlike Purchase Orders, Direct Expenditure Vouches (DEV's) and Small Purchase Vouchers (SPV's) where the accounting staff can review and ensure the proper taxes are charged on purchases, we do not have the capability with the EAGLS Software to automatically charge the department account taxes, becuase it does not provide enough information on what was actually purchased. Therefore, it is imperative that departments become familiar with the common sales and use tax regulations.

Below is a list of taxable and nontaxable purchases. While this list below is not a complete list, it is the major categories used by departments.

Questions pertaining to sales and use tax may be referred to Clara Snider at 777-2121 or Clara.Snider@sc.edu

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TAXABLE PURCHASES

As a general rule, the sale of all tangible personal property is considered taxable. Tangible Personal Property has been defined by the SC Department of Revenue (DOR) as personal property that may be seen, weighed, measured, felt, touched, or in any manner perceptible to the senses. It also includes certain services and intangibles such as communications, laundry services, accommodations (hotels, motels, etc) and electricity.

• Supplies
  All laboratory supplies and equipment, computer supplies, office supplies as well as all educational supplies (class code 53002) which are not used in the course of instruction (classroom) are subject to the state’s tax.
• Subscriptions
  Magazines, periodicals, bulletins, etc. Also Reader guides and test sheets
• Software
  Includes only software received on magnetic tape, diskette, or cd(software received electronically is not subject to the tax).
• Maintenance
  Maintenance is taxable if purchased at the point of sale of tangible personal property
  ( i.e.: If you purchase or lease a piece of equipment and the purchase agreement requires that you also purchase a maintenance plan, the entire purchase transaction is taxable.)
• Printing
  All forms of printing are taxable. This includes catalogues, books, letterhead, bills, envelopes, folders and advertising circulars.
• Rents/Leases
  All types of rents/leases are taxable. This includes lease purchases on copiers, mail machines and all other types of equipment.
• Laundry and dry cleaning services
• Charges for computer access time
  (a/k/a database access charges).
• Special packing charges
  (this includes hazardous material charges, handling charges etc.).
• Newspapers
  This does not include magazines, periodicals, bulletins and other publications.
• Transcripts
• Freight
  When billed on a vendor's invoice with items, freight is taxable, it is considered part of the cost of goods sold. Note: Freight would be non-taxable if paid directly to the carrier. (ie. Federal Express, UPS, etc.)

NON TAXABLE PURCHASES

• Membership Dues
  Newspapers: this does not include magazines, periodicals, bulletins and other publications
• Textbooks
  textbooks must be used in the course of study (directly in the classroom) to be exempt from the sales tax.
• Software
  Software is not taxable when used as a prescribed course of study (similar to the textbook rule). Software received electronically is also exempt from sales and use tax.
• Library material
  sale of books, magazines, and periodicals (also audiotape, videotape, CD-Rom, etc.).
• Internet Access Charges
  (America On Line, Mindspring)
• Freight
  Only when paying Federal Express, UPS, or other carrier directly. This type of payment is for shipping items from the University of South Carolina to another location or a 3rd party for delivery from a vendor.