South Carolina Rules Early Termination Charge Subject to Tax

The South Carolina Department of Revenue has advised that a charge by a telecommunication service provider for early termination was subject to tax. The charge was a fixed dollar amount multiplied by the number of months remaining on the agreement. The Department found that this charge was subject to tax as part of the “gross proceeds of sales” of a taxable communication service. (Private Letter Ruling #06-2, South Carolina Department of Revenue. November 7, 2006)

Posted on February 8, 2007