• South Carolina Amends Accommodations Tax to Exempt Certain Guest Charges
  • June 2, 2014
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • On May 16, 2014, South Carolina Governor, Nikki Haley, signed House Bill 3561, amending South Carolina’s accommodations sales taxes (the “Amendment”).

    Currently, South Carolina imposes a 7 percent accommodations sales tax on the gross proceeds derived from the rental or charges for any sleeping accommodations such as hotel rooms, inns, motels and campground spaces, subject to certain exemptions. The tax does not apply to certain additional guest charges, which currently includes the following: room service, amenities, entertainment, special items in promotional tourist packages, laundering and dry cleaning services, in-room movies, telephone charges, rentals of meeting rooms, and other guest services. Current South Carolina law imposes a 5 percent sales tax on these additional guest charges.

    Under the current application of the law, whether a guest is charged this 5 percent sales tax on additional guest charges would generally depend on whether such services were billed to the room (subject to the additional sales tax) or paid directly by the guest (not subject to the additional tax). The Amendment limits the type of additional guest charges that are subject to this 5 percent sales tax, which results in more uniformity in the application of this sales tax.

    The Amendment changes the definition of “additional guest charges” to include only: room service, laundering and dry cleaning services, in-room movies, telephone services, and rentals of meeting rooms. Therefore, amenities, entertainment, special items in promotional tourist packages and other guest services will no longer be subject to the 5 percent sales tax. The Amendment also clarifies that “separately stated optional charges on a bill to a customer for amenities, entertainment, special items in promotional tourist packages and other guest services” are also not subject to the 7 percent accommodations sales tax.”

    The South Carolina Board of Economic Advisors estimates that this Amendment will cause the state to lose around $1.1 million in annual tax revenue.

    The Amendment was unanimously approved by those members of the House and the Senate who voted on the Amendment. The Amendment goes into effect on July 1, 2014.