SC PRIVATE LETTER RULING #89-21



TO:           XYZ

SUBJECT:      X Computes Access Time 
              (Sales & Use)

DATE:         December 12, 1989

REFERENCE:    S.C. Code Ann. Section 12-35-1150 (1976)
              S.C. Code Ann. Section 12-35-140 (1976)
              S.C. Code Ann. Section 12-35-550(10) (Supp. 1988)

AUTHORITY:    S.C. Code Ann. Section 12-3-170 (1976)
              SC Revenue Procedure #87-3

SCOPE:        A Private Letter Ruling is a temporary document 
              issued to a taxpayer, upon request, and it applies 
              only to the specific facts or circumstances 
              related in the request.  Private Letter Rulings 
              have no precedential value and are not intended 
              for general distribution.

Question:

Are charges by XYZ for X computer access time, subject to sales and use 
tax, pursuant to Code 12-35-1150?

Facts:

XYZ owns a computer-assisted research service commonly known as "X".  X 
operates off a database which is located in another state.  XYZ grants 
licenses to persons desiring to use its service who, in turn, access the 
information via telephone lines.  User license fees are based on the time 
the X service is used to retrieve information on the database.  Users 
initiate the telephone link through the computer terminal.

Discussion:

Code Section 12-35-1150 provides a special tax imposition which reads:

         Notwithstanding any other provision of law, the gross 
         proceeds accruing or proceeding from the charges for 
         the ways or means for the transmission of the voice or 
         of messages, including the charges for use of equipment 
         furnished by the seller or supplier of the ways or 
         means for the transmission of the voice or of messages, 
         are subject to the license, sales or use tax, as 
         provided by this chapter.

The term "tangible personal property", as used in Chapter 35, is defined 
at Code Section 12-35-140, in part, as "personal property which may be 
seen, weighed, measured, felt or touched or which is in any other manner 
perceptible to the senses,..."  The last paragraph of that Section reads:

         For the purposes of this Chapter the term 'tangible 
         personal property' shall be interchangeable with and 
         apply with equal force and effect to services, 
         accommodations and intangibles including 
         communications, as are specifically provided for in 
         this chapter.  (emphasis added)

Code Section 12-35-550(10) provides the only exemption for the charges 
taxed at Section 12-35-1150.  That section exempts "[t]he gross proceeds 
from the toll charges for the transmission of voice or messages between 
telephone exchanges and telegraph messages, and carrier access charges and 
customers access line charges established by the Federal Communications 
Commission or the South Carolina Public Service Commission".

The issue is whether the charges in question are "charges for the ways or 
means for the transmission of the voice or of messages".

In Revenue Ruling #89-14, the Commission determined that certain communi- 
cation services fall within the provisions of Code Section 12-35-1150, for 
sales and use tax purposes.  One of the services held subject to the tax 
was "Database Access Transmissions", which the Commission defined as:

         Transmission of computer database information and 
         programs by and through a modem and telephone lines, 
         whether automatically transmitted or transmitted as a 
         result of a subscriber accessing a computer.  Charges 
         may be based on the amount of time the transmission is 
         utilized.

Conclusion:

Charges by XYZ for X computer access time are subject to sales and use 
tax, pursuant to Code Section 12-35-1150.

The Commission has determined that database access transmission would be 
subject to sales and use tax effective September 1, 1989; therefore, XYZ 
is liable for sales and use taxes on its computer access time effective 
September 1, 1989.





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                                  SOUTH CAROLINA TAX COMMISSION


                                                                          
                                  S. Hunter Howard, Jr., Chairman


                                                                          
                                  A. Crawford Clarkson, Jr., Commissioner


                                                                          
                                  T. R. McConnell, Commissioner


Columbia, South Carolina

December 12,           1989 




































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