Taxpayer’s Services Qualify as Nontaxable Professional Services in South Carolina

Sales of a taxpayer’s services were not subject to South Carolina sales and use tax since the true object of the transaction was the provision of nontaxable professional services. The taxpayer develops surveys tailored to its clients, conducts surveys, gathers data from other sources, analyzes the data and provides the results and other information to its clients. The taxpayer provides its clients access to survey data and configurable reports through its online reporting software which is included in the cost of the services. The taxpayer grants clients a temporary license to access the reporting software during the contract period. The true object of the transaction is the provision of nontaxable services. The portion of the charges attributable to providing clients online access to its reporting software is incidental to the provision of professional services. The client is providing professional services, not a taxable communication service. As a result, the entire charge for the services is exempt from South Carolina sales and use tax. (Private Letter Ruling #19-1, South Carolina Department of Revenue, June 13, 2019)

Posted on August 12, 2019