Opinion ID: 2396681
Heading Depth: 4
Heading Rank: 2

Heading: Within The State

Text: Next, Travelscape argues it is not subject to the Accommodations Tax because it is not engaged in business in South Carolina. Travelscape contends the phrase within the State modifies every person in subsection (E) and thus imposes the tax only on entities having a physical presence in the State. Because it does not have a physical presence in South Carolina, Travelscape asserts it is not required to remit the tax. Travelscape also contends the absence of a use tax in South Carolina and the lack of a provision dealing with out-of-state business transactions in section 12-36-920 demonstrates that the legislature did not intend to impose the Accommodations Tax on Travelscape. We disagree. The taxes imposed by this section are imposed on every person engaged or continuing within this State in the business of furnishing accommodations to transients for consideration. S.C.Code Ann. § 12-36-920(E) (emphasis added). We find the language and sentence structure of subsection (E) reveals that within this State modifies the preceding terms engaged or continuing. As such, the phrase within this State imposes the sales tax on those entities engaged or continuing in the business of furnishing accommodations in South Carolina, without regard to whether the entities maintain offices or otherwise reside in this State. In International Harvester Co. v. Wasson, this Court interpreted identical statutory language in the same manner. 281 S.C. 458, 316 S.E.2d 378 (1984). The statute in Wasson imposed a sales tax upon every person engaged or continuing within this State in the business of selling at retail any tangible personal property. Id. at 460, 316 S.E.2d at 379 (citing S.C.Code Ann. § 12-35-510 (1976)) (emphasis added). We determined the phrase within this State as found in section 12-35-510 required the plaintiff [to be] in [the] business of making retail sales in South Carolina. Wasson, 281 S.C. at 460, 316 S.E.2d at 379. We find within this State as used in section 12-36-920(E) has the same meaning. In accordance with this understanding of within the State, Travelscape will be responsible for remitting the sales tax in question if it was engaged in the business of furnishing accommodations in South Carolina. Clearly, Travelscape was engaged in the business of furnishing accommodations in South Carolina during the audit period, seeing as it: (1) entered into contracts with hundreds of hotels in South Carolina in which the hotels agreed to accept a discounted price, or net rate, for reservations made on Expedia; (2) sent employees to South Carolina for the purpose of negotiating such agreements; and (3) booked reservations in exchange for consideration at hotels located in this State. Accordingly, we find the plain language of section 12-36-920(E) imposes the sales tax on Travelscape because it was engaged in the business of furnishing accommodations in South Carolina.