Thursday, August 21, 2014
When I was a kid, I remember my elementary school teacher explaining to my class that if we can learn the English language, then we can learn almost any other language because, as she explained, English is so complicated. I remember thinking, she must be off her rocker; it didnít seem so hard to me. Of course, I grew up speaking English and knew no other language. Looking back, however, I realize what she meant. Iíve noticed over the years how easy it is for those of us who speak the same language to misinterpret the message we are hearing come from someone who speaks our own language.
This past week, I realized thereís another challenge that is just as complicated as the English language, and that is to understand the S.C. tax laws. Iím not even talking about business taxes, quarterly taxes, income or even property taxes Ė those I leave to my CPA. Then thereís the various percentages that are tacked on for sales tax when it comes to food, restaurants, hospitality accommodations, etc. Those are complicated enough but with what I experienced this past week, Iím focusing on one specific complicated S.C. tax and that is what qualifies for the maximum $300 sales cap when purchasing specific large ticket items.
Let me clarify this point, Iím not going to mention any names where these misinterpretations of the law took place, because it was unintentional and simply a misunderstanding of what qualifies and what doesnít. Itís no wonder itís misunderstood, the code is written in such a complicated way that the common man or woman who was taught the Kingís English in this very state canít clearly interpret what is written in the tax code that pertains to these details.
In one case, I would have paid too much, and the state would have received more than they were asking for, and in another case I would have paid too little and the state would have lost revenue due to this complexity. I needed to purchase a piece of equipment in my business and during the sales process I asked the salesperson what would the sales tax be on it; would it be 7 percent or would it qualify for the $300 cap? He responded that it would be 7 percent. I didnít feel confident in that answer and asked him to please double check for me. He came back after consulting with management and replied it would be 7 percent.
I left to secure financing for the equipment and asked the same question to my loan officer, who did not know the answer but was kind enough to check into it by asking a higher ranking loan officer. The second loan officer wasnít sure and called the main office to ask yet another higher ranking official with the company.
The eventual reply was 5 percent. I didnít feel confident in the 7 percent answer of the seller, I certainly didnít feel confident in the 5 percent answer of the loan officer, so I visited the S.C. tax website and was able to find a chapter 10 subsection that spoke of the maximum ďcapĒ as we have come to know it. In it, it lists all the qualifying large ticket items that would have the $300 cap applied to the sale.
When it came to the item I was looking to purchase, it described it as any self-propelled light construction equipment under 160 hp. Wow, no wonder it gets so confusing. Why donít they just say what it is? However, this encouraged me that my purchase may qualify but to be sure, I called the S.C. revenue office in Columbia and asked for clarity on the matter. The first person I spoke to didnít know, the second, wasnít sure, the third passed me on to the fourth who said, ďyeah, I think it will qualify.Ē It amazed me that no one seems to know with confidence.
I printed the page and carried it with me to show the seller and ask his opinion once again. He said yes, if you are a contractor and plan to use it in your business then it qualifies for the cap and you must sign this form to prove it. No problem there. I didnít mind signing the truth. As we dug deeper and continued to speak, the reason for the confusion came clear. The law allows a legitimate farmer to purchase such equipment with no sales tax whatsoever. Iím not a farmer.
The law states that an individual using the same equipment for personal use pays 7 percent and a contractor using the same equipment in his or her business receives the $300 cap. Moving on down to a seller of trailers and similar equipment, when asked about the tax situation, the response was the trailers receive the $300 cap. The previous search had revealed that trailers and semi-trailers were included under the cap if they were pulled by a Truck Tractor. Who talks like that? Truck Tractor!
When looking on another page to find the definition of the footnote given for Truck Tractor, it read a truck that does not have the capacity to carry a payload built within the truck. The only thing I can think of is what we call a tractor/trailer without the trailer. A pickup truck wouldnít qualify, so the only trailers that qualify are those that are pulled by a commercial tractor or a Big Rig as we know íem. You know the ones that you made the arm motion of pulling the cord for the horn to blow when you passed them as a kid; which the drivers always did for our delight. Of course there was another caveat, if you are buying a horse trailer and pulling it with a pickup truck, it qualifies for the cap.
So the next time you run into your elementary school English teacher, thank her for preparing you so well to interpret the S.C. tax code. I apologize for the length of this article but how can I make it shorter; have you seen the S.C. tax code?
JD Norris is the owner/operator of DreamMaker Bath&Kitchen and a certified S.C. Master Builder, certified ďAging in PlaceĒ Specialist and certified Green Professional. If you have any projects that you would like discussed in an upcoming article, email me at email@example.com.