SCDOR, Grooms dispute over tax code law language
When a person buys a TV or refrigerator, often times he or she will go back to purchase an extended warranty on that tangible item. However, according to Berkeley Senator Larry Grooms, some stores are charging sales taxes on those items, and some aren’t. Grooms says five years ago the South Carolina Department of Revenue came to the General Assembly saying some “language” in a tax code bill needed to be cleaned up.
It was a complex bill, 61 sections. And, one of the sections that the Department of Revenue came to the General Assembly with said: ‘We’ve got a problem with unequal applications of sales taxes being collected or not being collected when someone buys the extended warranty for a television or refrigerator.’
Grooms explains what these extended warranty taxes mean:
When you get the TV it has a one-year warranty, they will ask you at the counter: ‘Would you like to extend that warranty?’ So, that extra warranty becomes part of that tangible property, that television; therefore that is sales tax.
Grooms says the problem sometimes lies within the timing of the purchase.
But, some people were coming back a week later and saying: ‘I think I want an extended warranty. Some stores were charging a sales tax, and some were not. So, it was unequal application and the DOR said: ‘This language right here will make certain that it is very clear that those extended warranties for those items would be sales tax charged.
Grooms says the Department of Revenue has contradicted themselves. He says the Revenue Department went to a judge and said they should be able to tax on service and maintenance as well. Grooms says that is not what they agreed to.
The Revenue Department has called on writers of the law to settle the dispute. Department of Revenue spokesperson Adrienne Farewell says the accounts under review are for tangible personal property.
The state Department of Revenue says their interpretation was held up by an administration law court– but would rather the General Assembly clarify the meaning of the law they wrote more than five years ago.
