State Sales Tax Law Violated First Amendment

The South Carolina law exempted sales of religious books and magazines from sales tax.

Church Law and Tax 1992-07-01 Recent Developments

Taxation – Sales

The South Carolina Supreme Court ruled that a state law exempting sales of religious books and magazines from sales tax violated the nonestablishment of religion clause of the first amendment. A South Carolina law exempted “religious publications” from sales and use taxes. “Religious publications” were defined to include “books, periodicals, pamphlets and other printed matter, which are devoted to man’s relationship to Divinity; to reverence, worship, obedience and submission to mandates and precepts of supernatural or superior beings.” The state supreme court ruled that this exemption violated the first amendment’s nonestablishment of religion clause. The court observed that its decision was controlled by a 1989 decision of the United States Supreme Court, in which the Court ruled that an exemption granted by Texas law to periodicals published or distributed by a “religious faith and that consist wholly of writings promulgating the teaching of the faith and books that consist wholly of writings sacred to a religious faith” violated the nonestablishment of religion clause. The South Carolina Supreme Court concluded: “Reading South Carolina’s exemption and regulations together, we can discern no substantive difference between the statute at issue in [the Texas Monthly case] and [the South Carolina exemption statute] as it regards religious publications. Like the Texas exemption, [the South Carolina exemption] is confined impermissibly to publications advancing the tenets of a religious faith.” The United States Supreme Court conceded in the Texas Monthly decision that a sales tax exemption benefitting a broad class of charitable, educational, and religious organizations could be constitutionally permissible. However, the South Carolina exemption, by singling out religious publications rather than exempting a broad class of exempt publications (including religious publications) did not satisfy the requirements of the Texas Monthly decision. Further, the court concluded that the first amendment’s guaranty of religious freedom does not require a state to exempt religious materials from sales and use taxes. In summary, the South Carolina statute exempting religious publications from sales and use taxes is unconstitutional. However, the state is free to rewrite its exemption statute in a way that exempts a broad class of publications, including religious publications. According to the United States Supreme Court’s decision in the Texas Monthly case, such a statute would be permissible. Thayer v. South Carolina Tax Commission, 413 S.E.2d 810 (S.C. 1992).

See Also: State Sales Taxes

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