How do I know if a project or event qualifies
as a tourism-related expenditure?
Are Municipality and County Services
is the definition of tourist?
the Tourism Expenditure Review Committee monitor local accommodations
issue of the distance a "tourist" has to travel
is concerning to some accommodations tax recipients. We know
TERC will look at individual situations, case by case, but
for the general question of how far a tourist has to travel
to be considered a "tourist" needs to be clarified.
Something in writing would be helpful, so that we have something
to give our organizations.
someone asked about applying for atax funds to fund the salary
of a staff member who does website updates and answering tourist
inquiries. Could it be applicable as long as they could give
the percentage of the staff time that actually applies to
the tourism effort?
Many counties and municipalities
continue to fund the lighting of interstate and highway exits
through state accommodations taxes. I was under the impression
that this was an acceptable expenditure?
Is it appropriate or not to fund museums,
libraries, etc. in an area of non high concentration of tourism
and can these facilities receive state accommodations tax
funding for costs incurred in building, funding of operation,
as well as cost of repairs and necessary additions to the
fireworks considered an appropriate expenditure of accommodations
welcome signs and banners considered fundable?
the operation of sporting events acceptable use of atax
historical markers or monuments fundable?
do I know if a project or event qualifies as a tourism-related
expenditure? Answer: The
committee looks to distinguish between events or activities
designed for and attended primarily by those in the local
community, from events that are designed for and attended
primarily by non-residents who come from outside the local
community. In looking to make a determination regarding
the purpose or intent of an activity or event, the Committee
looks to substantiate the promotional activities undertaken
to bring non-residents into the area to attend the funded
activity. The promotional efforts are a key indicator
of the extent to which the purpose of the funded activity
is to attract non-residents. As the statute identifies
such promotional activities to be an approved use of funds,
the Committee encourages counties and municipalities to consider
this factor in granting funds. (Read more in our Tourism
Policy, available in your reporting package).
Are Municipality and County Services Fundable?
Code Section 6-4-10 (4)(b)(4), monies in the 65% Tourism-related
Fund can be used for services normally provided by the municipality
or county only if these local governments have a high concentration
of tourism. Revenue Ruling 98-22 states that a county
or municpality has a high level of tourism when it collects
over $900,000 in accommodations tax revenue and is exempt
from Sunday “blue laws.”
Currently, the only counties that meet this
criteria are Beaufort, Charleston, Georgetown, Greenville,
Horry, and Richland.
Examples of qualifying expenditures under this category would
include salaries for extra police force during the peak tourist
season, monies spent to hire extra garbage service around
tourist facilities during the tourist season or to provide
other services that are required by high concentration of
tourism. If your local government is not located within the
“high concentration” counties you may spend accommodations
tax money for such services only for specific events
(extra police force at a music festival, for example) and
the expenditures must be based on the estimated percentage
of costs directly attributable to tourists.
a reminder, the law says that you have two years from receipt
to spend any remaining funds from the 65% tourism-related
fund, which must be used for tourism-related expenditures.
Please keep this in mind when awarding funds and reporting
this year. Should you need an extension, one may be requested
from the Tourism Expenditure Review Committee. Please bear
in mind that the funds may only be carried over beyond the
two-year limit provided the funds are designated for an approved
project or event.
is the definition of tourist?
to Section 6-4-5 (a)(4), “travel” and “tourism” mean
the action and activities of people taking trips outside their
home communities for any purpose, except daily commuting to
and from work. Because there is no clear definition of “home
community,” the Tourism Expenditure Review Committee has adopted
a guideline set by other travel industry entities, which states
that a tourist is generally one that comes from
50 miles outside of their homes. However, the Committee looks
at every event on a case-by-case basis. The Committee
considers any project or event that increases visitors to
the region and boosts the economy.
Does the Tourism Expenditure Review Committee monitor
local accommodations taxes?
No, the Committee's charge is to monitor state accommodations
tax reporting only. If an entity encounters a problem concerning
local accommodations taxes, it must be worked out from a local
The issue of
the distance a "tourist" has to travel is concerning
to some accommodations tax recipients. We know TERC will look
at individual situations, case by case, but for the general
question of how far a tourist has to travel to be considered
a "tourist" needs to be clarified. Something in
writing would be helpful, so that we have something to give
The Committee has drafted a policy on the definition of tourist,
which is posted on our website: www.atax.sc.gov. The law defines
tourists as those traveling outside of their "home communities,"
however; it does not define home community. Therefore, the
Committee has adopted the geographical definition of tourist
used by the national Tourism Industry Association and the
South Carolina Department of Parks Recreation and Tourism,
which defines a tourist essentially as a "traveler"
from 50 miles away or more. But, in the same policy, the Committee
states that it does examine every application for the economic
impact the "tourist" has on the visited community.
So in essence the tourist may be from an area closer than
the 50 miles as mentioned above but only if a significant
economic impact can be shown such as the case may be in Columbia
Is it appropriate or not to fund museums, libraries, etc.
in an area of non high concentration of tourism and can these
facilities receive state accommodations tax funding for costs
incurred in building, funding of operation, as well as cost
of repairs and necessary additions to the facility?
Tourism Expenditure Review Committee maintains a position
under Section 6-4-10 (4b3) that the following is reserved
for areas of high concentration of tourism activity: "construction,
maintenance, and operation of facilities for civic and cultural
activities including construction and maintenance of access
and other nearby roads and utilities for the facilities."
However, the Committee does examine the "tourism economic
impact". We have in the past allowed funding for facilities
such as those mentioned above, however, it is vitally important
that the facilities maintain documentation of the visitors
in order to qualify as a facility that is not simply for local
benefit. In cases where no visitor information has been generated
because the facility is new, a long range plan on how the
facility plans to promote and market itself to visitors is
Many counties and municipalities continue to fund
the lighting of interstate and highway exits through state
accommodations taxes. I was under the impression that this
was an acceptable expenditure?
the Committee has in the past found the purchase and installation
of lighting of interstate and highway exits and the installation
of landscaping an acceptable expenditure, the Committee feels
as though that the maintenance and operating costs of these
assets might not be the best use of accommodations tax funds.
Normally, this is something considered a "normal expense"
of the municipality or county. Although the Committee is not
recommending funds be withheld at this time, we would like
for entities to consider this for the future and notify the
Committee of steps being taken to fund the lights from some
source other than state accommodations tax funds.
Recently, someone asked about applying for atax funds
to fund the salary of a staff member who does website updates
and answering tourist inquiries. Could it be applicable as
long as they could give the percentage of the staff time that
actually applies to the tourism effort?
For the first part of your question we refer to Revenue Ruling
98-22, issued by the S.C. Department of Revenue. In question
19, it says "can Accommodations Tax Funds be used to
fund local government salaries?" The Answer is that "As
a general rule, no unless the county or municipality can show
that the employee's position is necessary to attract or provide
for tourists. Additionally, the salary or wage must:(a) be
for services that would normally not be provided by the county;
(b) the county or municipality must have a high concentration
of tourism activity; and (c) the amount of Tourism-related
Funds spent on the salary or wages must be based on the estimated
percentage of costs attributable to tourists. To the extent
that only a portion of the employee's salary or wages meets
the requirements listed above, only that portion of the salary
or wages that would satisfy these requirements may be paid
for out of Tourism related Funds. If a staff person's entire
time is not devoted to the promotion of tourism or the furnishing
of services to tourists, the Department would expect the employee
and the county or municipality to determine the amount of
time the employee devotes to tourism and to treat an appropriate
amount of the employee's salary as a tourism-related expenditure.
Also, in recent years, the Committee has relaxed part "B"
of the above statement if it is proven that the employee is
100% dedicated to tourism matters. If not, once again, you
would estimate the percentage of their time that went towards
tourism and fund their salary based on that.
keep in mind that if the employee is someone that would have
to be employed by the County or municipality anyway (even
if they did deal with promotion of tourism), such as the mayor,
their salary could not be funded at all.
fireworks considered an appropriate expenditure of accommodations
Answer: Fireworks expenditures may only be funded to the
extent that they attract and provide for tourism and are
a tourism-related expenditure according to Section 6-4-10
of the S.C. Code of Laws. This would include expenditures
to advertise an event to tourists or an event that has ties
to civic or cultural activities (such as a July 4th, New
Years Eve) fireworks display.
Question: Are welcome signs and banners considered
Answer: Welcome signs are not acceptable accommodations
tax expenditures, and should not be funded from accommodations
taxes. However, welcome signs when part of an overall tourism
promotion and displayed in an effort to attract tourists
may be funded. Example of appropriate expenditures would
be billboards displayed in an “out of market” advertising
area that states “come stay in xyz…” which
would state the tourist destination.
the operation of sporting events acceptable use of atax funds?
Answer: TERC maintains that if the primary purpose of the
event is to attract tourists and promote tourism to the general
area and not to fund scholarships (even though subsequently
some events that promote tourism may generate scholarships,
but that was not the primary intent), and the funds are used
strictly to promote and generate tourism than it is likely
appropriate. However, the statute makes no mention of “operational
costs” for sporting events as it does for cultural
events and the arts, so TERC maintains the operation of sporting
events is not an acceptable use of funds.
Question: Are historical markers or monuments fundable?
Answer: To answer this question, the Committee always refers
to Revenue Ruling 98-22, issued by the SC Department of Revenue,
which that it depends on the nature of the monument and the
impact it will have on tourism. If it is a single statute
dedicated to a local figure, it is unlikely that such a monument
will have any impact on tourism. However, if the monument
is in the nature of a large structure designed to honor a
group or entity, then it may be permissible to use Tourism-related
Funds for such monument. For example, a monument along the
lines of the United States Holocaust Memorial Museum or the
Vietnam Veterans Memorial may have a sufficient impact on
tourism to warrant receiving Tourism-related Funds.