What were the significant South Carolina tax-law changes from the 2010 legislative session, as summarized by the Department (per SC IL #10-9)?
Apply this to your situation
This page answers the general question as of 2010. Ezel answers yours, under current South Carolina tax law, with citations.
Plain-English summary
This Information Letter is the Department's plain-language roundup of the significant tax and regulatory law changes enacted in South Carolina's 2010 legislative session. It is organized by subject-matter category and is meant as a starting map, not the final word — the Department says it is "intended to be a summary of the main points of the legislation; it is not an interpretation by the Department," and directs readers to the full text of each act.
The summary is divided into five categories:
- Income Taxes, Withholding, and Corporate License Fees — including updated Internal Revenue Code conformity: under § 12-6-40(A)(1)(a), South Carolina's income tax laws are conformed to the IRC as amended through December 31, 2009. Other items include an amended credit against the license fee for infrastructure and Economic Impact Zone Credit changes.
- Property Taxes and Fees in Lieu of Property Taxes.
- Sales and Use Taxes — including a new exemption for a research and testing facility and reenacted temporary provisos covering private-school use tax, respiratory syncytial virus medicine, viscosupplementation therapy, and the gun ("Second Amendment") sales tax holiday.
- Miscellaneous — administrative and procedural matters, miscellaneous tax legislation, other items (including local taxes), and regulatory legislation.
- Temporary Provisos – List — provisos enacted in the state budget that are effective only for the state fiscal year (July 1 – June 30) and expire June 30, 2011 unless re-enacted.
Because the letter is a high-level map, the practical use is to scan the category that affects you, note the relevant act or proviso, and then read the underlying legislation for the details.
What this means for you
If you are tracking how the 2010 session changed South Carolina tax law, use this letter to find the category that applies to you and the specific act involved. Two cautions from the Department carry weight: it is a summary, not an interpretation, so the controlling detail is in the act itself; and the temporary provisos are budget provisions that lapse at the end of the fiscal year (June 30, 2011) unless the General Assembly re-enacts them, so do not assume a proviso-based change is permanent.
Common questions
Q: What year of the Internal Revenue Code does South Carolina conform to under this update?
A: The IRC as amended through December 31, 2009, for South Carolina income tax purposes (§ 12-6-40(A)(1)(a)).
Q: How is the update organized?
A: Into five categories — income taxes/withholding/corporate license fees; property taxes and fees in lieu; sales and use taxes; miscellaneous; and a list of temporary provisos.
Q: Are the temporary provisos permanent?
A: No. They are enacted in the state budget, are effective only for the state fiscal year (July 1 – June 30), and expire June 30, 2011 unless re-enacted.
Q: Can I rely on this summary as the Department's interpretation?
A: No. The Department states it is a summary of the main points, not an interpretation; you must refer to the full text of each act.
Subject
Tax Legislative Update for 2010
Source
- Landing page: https://dor.sc.gov/advisory-opinion-search
- Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL10-9.pdf
Original ruling text
State of South Carolina
Department of Revenue
301 Gervais Street, P. O. Box 12265, Columbia, South Carolina 29211
Website Address: http://www.sctax.org
SC INFORMATION LETTER #10-9
SUBJECT:
Tax Legislative Update for 2010
DATE:
September 14, 2010
AUTHORITY: S.C. Code Ann. Section 12-4-320 (2000)
S.C. Code Ann. Section 1-23-10(4) (Supp. 2009)
SC Revenue Procedure #09-3
SCOPE:
An Information Letter is a written statement issued to the public to
announce general information useful in complying with the laws
administered by the Department. An Information Letter has no
precedential value.
Attached is a brief summary of most of the significant changes in tax and regulatory laws
and regulations enacted during the past legislative session. The summary is divided into
categories, by subject matter, as indicated below.
CATEGORY OF LEGISLATION & REGULATIONS
PAGE #
- Income Taxes, Withholding, and Corporate License Fees
Legislation.......................................................................................
Reminder – Prior Legislation Effective July 1, 2010 or Thereafter
6
20
- Property Taxes and Fees in Lieu of Property Taxes
Legislation.......................................................................................
21
- Sales and Use Taxes
Legislation.......................................................................................
36
- Miscellaneous
Administrative and Procedural Matters ..........................................
Miscellaneous Tax Legislation .......................................................
Other Items (including local taxes) .................................................
Regulatory Legislation ....................................................................
Regulation .......................................................................................
37
38
39
41
47
- Temporary Provisos - List .................................................................
49
1
DISCLAIMER:
This is intended to be a summary of the main points of the legislation; it is not an
interpretation by the Department. Please refer to the full text of the legislation for specific
details and requirements.
There are several instances where some tax or incentive related legislation briefly
summarized is under the jurisdiction of another state agency or political subdivision, and
not the Department. In such cases, questions concerning these provisions should be made
directly to the agency or political subdivision having primary responsibility for the
administration of these acts. Legislation regarding distribution of funds is not
summarized.
TEXT OF LEGISLATION:
A complete copy of the legislation discussed in this publication can be obtained from the
South Carolina Legislative Council’s website at http://www.scstatehouse.net/htmlpages/legpage.html.
2
LIST OF BILLS BY SUBJECT CATEGORY
A list of significant changes in tax and regulatory laws (both permanent and temporary)
and regulations enacted during the 2010 legislative session is provided below. Temporary
provisos are enacted in the State budget and are only effective for the State fiscal year
(July 1 – June 30); unless re-enacted they expire on June 30, 2011.
This list is divided by subject matter with the bills listed in numeric order. The list of bills
with a link to the full text of each act is on the Department’s website at:
http://www.sctax.org/Tax+Policy/Legislation+for+2010.htm.
INCOME TAXES, WITHHOLDING & CORPORATE LICENSE FEES
BILL #
728 - Sec. 1 - 4
850 - Sec. 1
ACT #
182
274
915
1174 - Sec. 1
- Sec. 2
248
142
142
- Sec. 3
- Sec. 4
- Sec. 5
142
142
142
- Sec. 6
142
4478 - Sec. 16
290
- Sec. 17
- Sec. 18
- Sec. 19
- Sec. 20 - 21
290
290
290
290
- Sec. 22
290
- Sec. 23
290
- Sec. 24 - 27
- Sec. 37
- Sec. 38
290
290
290
4514 - Sec. 2
150
4657 - Proviso
1A.17
4657 - Proviso
81.8
4663
291
291
232
SUBJECT
Textile mill revitalization credit - Amended
New contribution check-offs for SC Forestry Commission and
SC Department of Natural Resources
Community Development Act - Termination of Act postponed
Internal Revenue Code - Conformity
Haiti relief (charitable deduction) in federal Public Law 111-126
adopted
Internal Revenue Code - Sections not adopted
Waiver of estimated tax penalties for large corporations
2007 Act 110, Section 49 penalty provision for large corporations
deleted (See Section 4 above)
2009 Act 16, Section 3 penalty provision for large corporations
deleted (See Section 4 above)
Job tax credit amendments - New county designations & dollar
amounts, qualifying business changes, etc.
Port volume cargo increase credit - Amended
Credit against license fee for infrastructure - Amended
Job development credit - Amended
Economic impact zone investment credit replaced; Capital
investment tax credit added
Biodiesel research and development credit - Expanded to include
waste grease derived biodiesel
Manufacturers of renewable energy systems and components - New
Credit
Renewable energy manufacturing projects - Special benefits
Repeal of Act 150 of 2010 (See #4514 below)
Repeal of §12-6-3450 (military base closure) and part of Title 12,
Chapter 14 (Economic Impact Zone Credit)
Tax from new, large S corporation used for grants (Repealed by
4478)
Teacher supplies reimbursement not taxable - Reenacted temporary
proviso
No estimated tax penalty when following IRC §6654(d)(1)(D)
New temporary proviso
Fire sprinkler credits – Study Committee
3
LIST OF BILLS BY SUBJECT CATEGORY (continued)
PROPERTY TAXES and FEES IN LIEU OF PROPERTY TAXES
BILL #
405
728 - Sec. 1 - 4
728 - Sec. 5
1024
1131
4174 - Sec. 1
- Sec. 2
4478 - Sec. 2 - 12
ACT #
279
182
182
175
161
275
275
290
- Sec. 13
290
- Sec. 15B.
- Sec. 28
- Sec. 37
4514 - Sec. 1
290
290
290
150
4657 - Proviso
89.48
4663
4839
291
SUBJECT
Boats (exemption, situs, residence, and penalties)
Textile mill revitalization credit - Amended
Rehabilitated historic/low income property - Special assessment
Paraplegic or hemiplegic exemption - Expanded
Fee in Lieu - Qualified nuclear plant (Superseded by #4478)
Assessable transfers of interest in real property
Fair market value attributable to reassessment - 15% cap clarified
Fees in Lieu amendments - Additional time, appraisal of real
property, previously taxed property, etc
Manufacturing property used for warehousing/wholesale distribution –
Changes
Industrial Development Project - Definition of project
Renewable energy manufacturing facility - Depreciation rate
Repeal of Act 150 of 2010 (See #4514 below)
Fee in Lieu - Simplified Fee time period expanded (Repealed by
4478)
Personal property tax relief fund - Reenacted temporary proviso
232
264
Fire sprinkler credits - Study Committee
Medal of honor recipients - Exemption revised
SALES AND USE TAXES
BILL #
717
4657 - Proviso
89.47
4657 - Proviso
89.72
4657 - Proviso
89.77
4657 - Proviso
89.107
ACT #
280
291
SUBJECT
Research and testing facility - New exemption
Private school use tax - Reenacted temporary proviso
291
Respiratory syncytial virus medicine - Reenacted temporary proviso
291
Viscosupplementation therapy - Reenacted temporary proviso
291
Gun sales tax holiday - Reenacted temporary proviso
MISCELLANEOUS
See next page.
4
LIST OF BILLS BY SUBJECT CATEGORY (continued)
MISCELLANEOUS
BILL #
ACT #
850 - Sec. 2
274
4657 - Proviso
72.17
291
4657 - Proviso
81.6
4657 - Proviso
89.142
291
SUBCATEGORY
Administrative and
Procedural
SUBJECT
Payment by immediately available funds penalties
Interest rate paid on refunds - 2% reduction for
Guardian Ad Litem - Reenacted temporary
proviso
Political candidate tax return inquiry Reenacted temporary proviso
Interest rate paid on refunds - Additional 1%
reduction for the Joint Citizens and Legislative
Committee on Children and the Department of
Juvenile Justice
New temporary proviso
291
Miscellaneous
Taxes
3584
170
4233
4478 - Sec. 14
4657 - Proviso
1.17
4657 - Proviso
21.16
4657 - Proviso
81.7
228
290
291
4478 - Sec. 34
290
4551
135
4516
259
4572
231
4657 - Proviso
81.9
291
4837
263
Regulation Doc.
4077
7-202
Cigarette tax increase; Definition of cigarette
expanded
Beer defined for license tax purposes
State Rural Infrastructure Fund - Use expanded
Motor fuel exemption for school buses Reenacted temporary proviso
Nursing home fee suspended - Reenacted
temporary proviso
Season tickets admission tax exemption Reenacted temporary proviso
291
291
Other
Redevelopment Authority fees extended for 2
years
911 communications system - Monthly charge
Regulatory
Special permits for nonprofits; technical
correction; and repeal of §61-6-510
Beer equipment and displays; Beer tastings and
sales
Bingo License provision - §12-21-3940(D)
suspended (See #4837)
New temporary proviso
Bingo license provision - §12-21-3940(D)
repealed; nonprofit definition
Premises defined; Reg. 7-401.1 and Reg. 7-700
repealed
5
INCOME TAXES, WITHHOLDING, and
CORPORATE LICENSE FEES
House Bill 1174, Section 1 (Act No. 142)
Internal Revenue Code Conformity
Code Section 12-6-40(A)(1)(a) has been amended, except as otherwise provided, to
update South Carolina’s income tax laws to conform to the Internal Revenue Code of
1986, as amended through December 31, 2009, and includes the effective date provisions
contained therein.
Effective Date: March 31, 2010
House Bill 1174, Section 3 (Act No. 142)
Internal Revenue Code Sections Not Adopted
Four new provisions have been added to Code Section 12-6-50 which lists specific
Internal Revenue Code sections not adopted by South Carolina. Code Sections 12-6-50(4)
and (16) have been amended to specifically not adopt Internal Revenue Code Sections
85(c) and 6654(d)(1)(D). Code Sections 12-6-50(5A) and (5B) have been added to
specifically not adopt Internal Revenue Code Sections 108(i) and 163(e)(5)(F).
Internal Revenue Code sections enacted as part of the American Recovery and
Reinvestment Act of 2009, Public Law 111-5, but not adopted by South Carolina, provide
the following for federal income tax purposes:
- Internal Revenue Code Section 85(c) excludes $2,400 of unemployment
compensation from gross income for 2009. - Internal Revenue Code Section 6654(d)(1)(D) decreases required estimated tax
payments for 2009 by allowing quarterly estimated tax payments based on 90%,
rather than 100%, of the tax due on the 2008 individual income tax return for
qualified individuals. Note: See Proviso 81.8 (Act No. 291) summarized below for
penalty waiver information for qualifying individuals who complied with Internal
Revenue Code Section 6654(d)(1)(D). - Internal Revenue Code Section 108(i) relates to the deferral and ratable inclusion of
income arising from business indebtedness discharged by the reacquisition of a debt
instrument.
6
4. Internal Revenue Code Section 163(e)(5)(F) relates to original issue discount on
certain high yield obligations.
Effective Date: March 31, 2010
House Bill 4657, Part IB, Section 81, Proviso 81.8 (Act No. 291)
Penalty and Interest Waiver for Qualified Individuals for 2009 Estimated Tax
Payments
Under this temporary proviso, the Department will waive interest and penalties for state
estimated quarterly individual income tax payments for qualifying individuals who
comply with Section 1212 of federal Public Law 111-5, codified as Internal Revenue
Code Section 6654(d)(1)(D). An individual is considered a qualified individual for
purposes of South Carolina penalty waiver if the individual meets the adjusted gross
income requirement and the 50% of gross income from a small business requirement
contained in Section 1212, Public Law 111-5 for South Carolina or federal purposes.
Effective Date: This temporary proviso is effective for State fiscal year July 1, 2010
through June 30, 2011. It will expire June 30, 2011, unless reenacted by
the General Assembly in the next legislative session.
House Bill 1174, Sections 4, 5, and 6 (Act No. 142)
Penalty Waiver for Federal Changes to Corporate Estimated Tax Payments
- Code Section 12-6-3910(E) has been added to allow the Department to waive
estimated tax penalties for corporations that calculate South Carolina estimated tax
payments based on a federal law that: (a) increases estimated payments in one period
and decreases estimated payments in another period or (b) changes the dates of
estimated tax payments are due for not more than one month. - In related amendments, Section 49 of Act 110 of 2007 and Section 3 of Act 16 of
2009 are repealed. These sections provided for South Carolina estimated tax penalty
waivers associated with changes in federal estimated tax penalties for large
corporations. The federal laws were repealed before the changes were to take effect.
Effective Date: March 31, 2010
7
House Bill 850, Section 1 (Act No. 274)
Forestry Commission and Department of Natural Resources – New Check-offs
Code Section 12-6-5060, providing for various income tax check offs on South
Carolina’s individual income tax form, has been amended to provide for a designation for
a taxpayer to make a contribution to the South Carolina Forestry Commission for use in
the state forest system and the South Carolina Department of Natural Resources for use in
its programs and operations.
Effective Date: June 17, 2010
House Bill 1174, Section 2 (Act No. 142)
Charitable Deduction for Haiti Relief Adopted
South Carolina has adopted federal Public Law 111-126 which allows taxpayers the
option to deduct qualifying charitable contributions in 2009 rather than 2010 for aid to
victims of the January 12, 2010, Haiti earthquake. To qualify for the 2009 deduction, the
contributions must be in cash, must otherwise qualify for the deduction, and must be
made between January 11, 2010 and March 1, 2010.
Effective Date: March 31, 2010
House Bill 4478, Section 23 (Act No. 290)
Manufacturers of Renewable Energy Systems and Components - New Credit
Code Section 12-6-3588 has been added to provide an income tax credit to companies in
the solar, wind, geothermal, and other renewable energy industries who are expanding or
locating in South Carolina. To qualify, a company must: (1) manufacture renewable
energy systems and components in South Carolina for solar, wind, geothermal, or other
renewable energy uses; (2) invest at least $500 million in new qualifying plant and
equipment in the year the tax credit is claimed; and (3) create one and one-half full time
jobs for every $500,000 of qualifying capital investment that each pays at least 125% of
the State’s average annual median wage as defined by the Department of Commerce. A
taxpayer may separately qualify for new facilities in separate locations or for separate
expansions at existing facilities in South Carolina.
Expenditures qualifying for this credit must be certified by the State Energy Office. To
obtain the amount of credit available to a taxpayer, each taxpayer must submit a request
for the credit to the State Energy Office by January 31st for qualifying expenditures
incurred in the previous calendar year. By March 1st, the State Energy Office must notify
8
the taxpayer of the qualifying expenditures and the allocated credit amount. The credit is
claimed for the tax year which contains December 31st of the previous calendar year.
The credit is equal to 10% of the cost of the company’s total qualifying investment in
plant and equipment in South Carolina for renewable energy operations. A taxpayer’s
total credit for all expenditures allowed must not exceed $500,000 for any year and $5
million total for all years. Unused credits can be carried forward 15 years after the tax
year in which a qualified expenditure was made. This credit is in lieu of any other
applicable income tax credits or abatements allowed by state law. In the event of an
overlap or conflict in available credits or abatements, the taxpayer may select the credit
or abatement desired in the manner prescribed by the Department.
Note Expiration: “The income tax credit program is for a five-year period beginning
January 1, 2010, and ending December 31, 2015.”
Effective Date: January 1, 2011
House Bill 4478, Sections 20, 21, and 38 (Act No. 290)
Capital Investment Tax Credit - Replacing Economic Impact Zone Investment Tax
Credit. Repeal of Certain Code Sections in Economic Impact Zone Act in Chapter
14 of Title 12 and Repeal of Credit for Hiring Displaced Workers in Code Section
12-6-3450
Chapter 14 of Title 12 contains the Economic Impact Zone Community Development Act
of 1995. Chapter 14 has been substantially amended. Among the changes are the
following:
- Code Section 12-14-20, containing the purpose of the Economic Impact Zone
Community Development Act of 1995, is amended to provide that the purpose of
Chapter 14 is to establish a program of providing tax incentives for the creation of
capital investment in order to revitalize capital investment in South Carolina,
primarily by encouraging the formation of new businesses and the retention and
expansion of existing businesses; and to promote meaningful employment.
Previously, the Act’s purpose was to provide for the establishment of economic
impact zones on or in the vicinity of closed or realigned military installations in
which various tax incentives may apply to businesses and individuals located in the
economic impact zone in order to economically revitalize the area. - Code Section 12-14-60, providing for the economic impact zone investment tax
credit, has been amended to delete all references to “economic impact zone” and to
provide for a capital investment tax credit as follows:
0.5% of total aggregate bases of all qualifying 3 year manufacturing and productive
equipment property;
9
1.0% of total aggregate bases of all qualifying 5 year manufacturing and productive
equipment property;
1.5% of total aggregate bases of all qualifying 7 year manufacturing and productive
equipment property;
2.0% of total aggregate bases of all qualifying 10 year manufacturing and productive
equipment property; and
2.5% of total aggregate bases of all qualifying 15 year or greater manufacturing and
productive equipment property.
The definition of qualified manufacturing and productive equipment property in Code
Section 12-14-60(B) was amended to replace references to “economic impact zone”
with “this State.”
- To repeal the following code sections in Chapter 14 of Title 12:
a. Code Section 12-14-30. This section contained definitions of the terms “economic
impact zone,” “applicable federal military installation,” “applicable federal
facility,” and “internal revenue code.”
b. Code Section 12-14-40. This section provided for the designation and revocation
of an area as an economic impact zone.
c. Code Section 12-14-50. This section provided for an individual income tax
deduction for 20% of the purchase price of economic impact zone stock.
d. Code Section 12-14-70. This section contained definitions of the terms “economic
impact zone business,” “qualified business,” and “nonqualified financial
property” relating to the individual income tax deduction.
In a related amendment, Code Section 12-6-3450, providing a tax credit to employers
who hire persons who were employed in an economic impact region and who job was
terminated as a result of the closing or realignment of an applicable federal military
installation or applicable federal facility, has been repealed.
Effective Date: January 1, 2011, except the repeal of Code Sections 12-14-30, 12-14-40,
12-14-50, 12-14-70, and 12-6-3450 are effective June 23, 2010.
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House Bill 4478, Sections 16 and 38 (Act No. 290)
Job Tax Credit – Amended
Code Section 12-6-3360, dealing with the job tax credit, has been amended by this Act.
Among the changes are the following:
- The county rankings have been changed from five designations to four designations.
Counties will now be ranked as “Tier I,” “Tier II,” “Tier III,” and “Tier IV” counties.
“Tier I” counties are the 12 counties with a combination of the lowest unemployment
rate and highest per capita income. “Tier IV” counties are the 11 counties with a
combination of the highest unemployment rate and lowest per capita income.
Previously, counties were ranked as “developed,” “moderately developed,”
“underdeveloped,” “least developed,” and “distressed” counties. Code Section 12-63360(B). - The dollar amount of the basic job tax credit for each new job created based on the
new county designations of Tier I, II, III, and IV are:
$1,500 per year for each new full time job created in a Tier I county,
$2,750 per year for each new full time job created in a Tier II county,
$4,250 per year for each new full time job created in a Tier III county, and
$8,000 per year for each new full time job created in a Tier IV county.
Note: The credit is one-half of the dollar amount listed above for a taxpayer with 99
or fewer employees claiming the small business job tax credit under Section 12-63360(C)(2) for jobs with gross wages less than 120% of the county’s or state’s
average per capita income.
Previously, the annual basic credit amount for each new, full time job was $1,500 in a
developed county, $2,500 in a moderately developed county, $3,500 in an
underdeveloped county, $4,500 in a least developed county, and $8,000 in a
distressed county. Code Section 12-6-3360(C). - Several types of businesses qualifying for the credit have been added or changed as
follows:
a. A taxpayer that operates an “agribusiness operation” can now qualify for the job
tax credit. Code Section 12-6-3360(A).
b. A taxpayer that operates a retail facility or service-related industry can qualify for
the job tax credit only in a Tier IV county. Previously, a retail facility or service
related industry in an underdeveloped county not traversed by an interstate
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highway, least developed county, or distressed county could qualify for the job
tax credit. Code Section 12-6-3360(A).
c. The definition of “processing facility” has been expanded to include “meat,
poultry, and any other variety of food processing operations.” Processing facility
continues to mean an establishment that prepares, treats, or converts tangible
personal property into finished goods or another form of tangible personal
property. The term includes a business engaged in processing agricultural,
aquacultural, or maricultural products and specifically includes meat, poultry, and
any other variety of food processing operations. It does not include an
establishment in which retail sales of tangible personal property are made to retail
customers. Code Section 12-6-3360(M)(6).
- Special provisions have been deleted that qualify certain areas and counties for an
increased credit designation. The restriction that a county’s designation cannot be
lowered in credit amount more than one tier in the following calendar year has also
been deleted. Previously, rankings were done with equal weight given to
unemployment rate and per capita income and then adjusted in accordance with
special rules in Section 12-6-3360(B) and (L), as applicable. Code Section 12-63360(B) and former Code Section 12-6-3360(L). - Section 38 of the Act repealed Code Section 12-6-3450 concerning a tax credit for
persons terminated as a result of closing or realignment of federal military
installations. Code Section 12-6-3450(A)(1)(b) was referenced in Code Section 12-63360(F)(2)(d) and Code Section 12-6-3360(M)(3). The general definition of “new
job” in Code Section 12-6-3360(M)(3) continues to provide that “this exclusion of a
new job created by an employee shifting does not extend to a job created at a new or
expanded facility located in a county in which is located an ‘applicable federal
facility’ as defined in Section 12-6-3450(A)(1)(b).”
Effective Date: January 1, 2011, except the repeal of Code Section 12-6-3450 is
effective June 23, 2010.
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House Bill 4478, Section 17 (Act No. 290)
Port Cargo Volume Increase Credit - Amended
Code Section 12-6-3375 provides a tax credit to a taxpayer engaged in manufacturing,
warehousing, or distribution that uses a South Carolina port facility and that increases its
port cargo volume at these facilities by at least 5% in a calendar year over its base year
port cargo volume. The amount of the credit is determined by the Coordinating Council
for Economic Development (“Council”) upon application by the taxpayer. The changes
to the credit include:
- The credit has been expanded to allow it to be used against employee withholding
taxes. The total amount of credit available for all taxpayers continues to be $8
million a calendar year. Only $4 million of the $8 million may be used against
withholding. Previously, the credit could only be used against income taxes. - The time for the taxpayer to submit an application to the Council for certification of
the credit amount has changed. The taxpayer may now submit the application after
the calendar year in which the increase occurs. Prior to amendment, a taxpayer had to
submit the application by March 1st of the calendar year following the year of the
increase. - The Council continues to have the sole discretion in allocating the credit and may
now make allocations on a monthly, quarterly, or yearly basis. Previously, credits
were allocated on a yearly basis. - The provisions in subitems (A)(2) and (B)(2) that provided that a taxpayer could not
receive more than $1 million in credit a year unless the total $8 million credit had not
been allocated have been deleted. - The Council may annually award up to $1 million in credit to a new warehouse or
distribution facility which commits to spending at least $40 million at a single site
and creating 100 new full-time jobs, without regard to base year cargo requirements.
The Council can award the credit in the year the facility is announced, but cannot
tender the credit certificate until the taxpayer has provided proof that the capital
investment and job requirements have been, or will be, satisfied. Any credit
certificate expires 3 years after issuance if satisfactory proof has not been received.
Effective Date: January 1, 2011
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Senate Bill 728, Sections 1 - 4 (Act No. 182)
Textile Mill Revitalization Credit - Amended
The South Carolina Textile Communities Revitalization Act, contained in Title 12,
Chapter 65, provides a credit for the rehabilitation of abandoned textile mill sites in South
Carolina. Code Section 12-65-30 allows a taxpayer who rehabilitates an abandoned
textile mill site to choose one of the following credits: (1) a credit against income tax,
corporate license fees, or both or a credit against bank taxes or (2) a credit against real
property taxes.
General amendments applicable to the Textile Communities Revitalization Act include:
- Code Section 12-65-20(3) has been amended to provide that a “textile mill” is a
facility or facilities that were “initially” used for textile manufacturing, dying, or
finishing operations and for ancillary uses to those operations. The amendment
replaced the word “last” with “initially.” - Code Section 12-65-30(D) has been amended to add that a taxpayer is not eligible for
the credit if the facility has previously received textile mill credits. The statute
continues to provide that a taxpayer who owned the textile mill site when it was
operational and immediately prior to its abandonment is not eligible for the credit. - Code Section 12-65-60 has been added to provide a procedure which allows the
taxpayer to apply to the county or municipality in which the textile mill site is located
for certification of the site. The certification can be done by either ordinance or
binding resolution of the applicable governing body. The certification must include
findings that the site was a textile mill as defined in Code Section 12-65-20(3); that
the site is abandoned as provided in Code Section 12-65-20(1); and that the
geographic site is consistent with Code Section 12-65-20(4), which provides a
definition of textile mill site. The taxpayer may conclusively rely upon the
certification in determining the credit allowed. If the taxpayer relies on the
certification, a copy must be included with the first return on which the credit is
claimed. - Code Section 12-65-50 has been added to provide rules to determine the statutory
provisions applicable to a taxpayer.
a. The provisions of Title 12, Chapter 65 apply to all textile mill sites, or portions
thereof, placed in service on or after January 1, 2008.
b. Entire textile mill sites placed in service on or before December 31, 2007, are
governed by the former provisions of Chapter 32, Title 6 (i.e., the former statutory
provisions containing the textile revitalization credit) in effect as of December 31,
2007.
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c. If a portion of the textile mill site was placed in service on or before December
31, 2007, but not all, then the taxpayer may elect to either: (i) have the portion
that was placed in service on or before December 31, 2007, governed by the
former provisions of Chapter 32, Title 6, in effect as of December 31, 2007, as if
the portion were an entire textile mill site; or (ii) have the portion be governed by
the provisions of Title 12, Chapter 65 such that the portion must be deemed to be
a phase of the site placed in service on a date subsequent to December 31, 2007,
identified by the taxpayer.
Additional amendments that pertain only to the “income tax/corporate license fee/bank
tax” portion of this credit include:
- Code Section 12-65-30(C)(2) has been amended to revise the rules regarding the
“Notice of Intent to Rehabilitate” indicating a taxpayer’s intent to rehabilitate a textile
mill site and an estimate of expenses it will incur in the site rehabilitation. As
amended, only a taxpayer that has acquired the textile mill site after December 31,
2007, is required to give a Notice. Transfers between affiliated taxpayers of phases of
any textile mill site are not deemed an acquisition for this purpose.
A taxpayer files the Notice with the Department before receiving the building permits
for the applicable rehabilitation at the site or phase. If the Notice is not filed prior to
receiving the applicable building permits, then only rehabilitation expenses incurred
after the Notice is provided qualify. If the actual expenses of the rehabilitation
exceed 125% of the estimated expenses set forth in the Notice, the taxpayer qualifies
for the credit based on 125% of the estimated expenses as opposed to the actual
expenses incurred in rehabilitating the site. - Code Section 12-65-30(A)(2) has been expanded to allow the credit to be used
against insurance premium taxes imposed by Chapter 7, Title 38. Previously, this part
of the credit was allowed against taxes under Chapters 6 (income taxes) and 11 (bank
taxes), Title 12; license taxes under Chapter 20, Title 12, or both. - Code Section 12-65-30(C)(5) has been amended to provide that a taxpayer’s credit is
limited to 50% of each of the following: (a) tax liability under either Chapter 6 or
Chapter 11 of Title 12; (b) corporate license fee liability under Chapter 20, Title 12;
or (c) insurance premium taxes under Chapter 7, Title 38. - Code Section 12-65-30(C)(7), providing for the allocation of the credit by a taxpayer
that is partnership or a limited liability company taxed as a partnership among any of
it’s partners or members, has been amended to further provide that such taxpayer may
allocate the credit on an annual basis, including allocating the entire credit to any
partner or member who was a partner or member at any time during the year in which
the credit is allocated.
Effective Date: May 28, 2010
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House Bill 4478, Section 22 (Act No. 290)
Alternative Fuels Research and Development Credit - Extended to Waste Grease
Derived Biodiesel
Code Section 12-6-3631, providing an income tax credit for qualified expenditures a
taxpayer incurs for research and development of certain alternative energy sources, has
been amended to include certain expenditures to develop feedstocks and processes for
waste grease derived biodiesel in the definition of “qualified expenditures for research
and development.” The amendment also provides that the credit for research and
development for waste grease derived biodiesel is 10% of the qualified expenditures.
Effective Date: January 1, 2011
Senate Bill 915 (Act No. 248)
Community Economic Development Act – Termination of Act Postponed
The Community Economic Development Act enacted in 2000, authorizes grants to
community development corporations and community development financial institutions
as provided in Title 34, Chapter 43. It also provides tax credits to investors in such
entities pursuant to Code Section 12-6-3530. The amendment postpones the termination
of the Act from June 30, 2010 to June 30, 2015.
Effective Date: June 14, 2010
House Bill 4663, Section 1 (Act No. 232)
Fire Sprinkler System Tax Credit - Committee Appointed to Study Credit Use
Code Section 12-6-3622, dealing with the fire sprinkler system tax credit, has been
amended to add subsection (e) which requires the General Assembly to appoint a study
committee composed of three members appointed by the President Pro Tempore of the
Senate and three members appointed by the Speaker of the House of Representatives,
including one representative from each of the following organizations: the South Carolina
Fire Sprinkler Association, the South Carolina Home Builders Association, the South
Carolina Association of Counties, and the Municipal Association of South Carolina. The
study committee will develop strategies to increase participation in the tax credit program
by local taxing entities and to review and make recommendations for increasing the
installation of interconnected hard-wired smoke alarms. The committee will report its
findings to the General Assembly by January 20, 2011. At that time the committee will
dissolve.
Effective Date: June 7, 2010
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House Bill 4478, Section 19 (Act No. 290)
Job Development Credit Amended
Code Section 12-10-80 provides a credit against employee withholding taxes to new or
expanding businesses making qualifying investments and creating a minimum number of
new jobs in South Carolina and entering into a revitalization agreement with the
Coordinating Council for Economic Development (“Council”). Code Section 12-10-80
has been amended as follows:
- A provision has been added to provide that a company’s job development credits are
suspended during any quarter the company fails to maintain 100% of the minimum
job requirement set forth in the revitalization agreement. A company can only claim
credits on jobs, including a range of jobs approved by the Council, as set forth in the
company’s final revitalization agreement. This codifies an existing guideline of the
Council. Code Section 12-10-80(A)(6). - A provision has been added to clarify that credits may be claimed beginning with the
withholding quarter after the Council’s approval of the company’s documentation that
the minimum job and capital investment requirements have been met. This codifies
an existing guideline of the Council. Code Section 12-10-80(A)(7). - Subsection (C)(3), which provides for the eligible expenditures that can be
reimbursed from job development credits has been amended: (a) to clarify that real
property acquired by capital or operating lease with at least a 5 year term, may qualify
as an eligible expenditures if approved by the Council and (b) to provide only
employee relocation expenses for those employees to whom the company is paying
gross wages of at least twice the lower of the per capita income of the state or the
county in which the project is located, qualify as eligible expenditures.
Effective Date: January 1, 2011
House Bill 4478, Section 18 (Act No. 351)
Credit against License Fee on Utilities and Electric Cooperatives for Eligible
Infrastructure Projects - Amended
Code Section 12-20-105, which provides a credit for amounts paid in cash for qualifying
infrastructure for an eligible project against the license fee imposed on utilities and
electric cooperatives in Code Section 12-20-100, has been amended as follows:
- Subsection (B)(2), which formerly allowed an office, business, commercial, or
industrial park or combination of these parks to be considered an eligible project for
purposes of the credit, has been amended to allow a project located in an office,
business, commercial, or industrial park or combination of these parks to be
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considered an eligible project. The amendment also expands who can own or
construct a project to include agencies of the State.
- Subsection (C)(4) has been amended to allow incubator buildings owned by the
county, political subdivision, or agency of the State to qualify as eligible
infrastructure. - Section (H) was added to provided that by March 1 of each year the Department will
issue a report to the Chairman of the Senate Finance Committee, the Chairman of the
House Ways and Means Committee, and the Secretary of the Department of
Commerce outlining the history of the credit including the amount of credit allowed
and the types of infrastructure provided to eligible projects.
Effective Date: January 1, 2011
House Bill 4478, Sections 24 - 27 (Act No. 290)
Renewable Energy Manufacturing Facility - New Tax Incentives
The South Carolina Life Sciences Act in Chapter 15, Title 12, providing certain tax
benefits to life science facilities located in South Carolina, has been renamed The South
Carolina Life Sciences and Renewable Energy Manufacturing Act, and expanded to
apply to a “renewable energy manufacturing facility.”
Code Section 12-15-20(B) has been added to define “renewable energy manufacturing
facility.” It is a business which manufactures qualifying machinery and equipment for use
by solar and wind turbine energy producers. It also includes a facility manufacturing
qualifying advanced lithium ion, or other batteries for alternative energy motor vehicles
as described in Code Section 12-6-3377 or for other vehicles certified by the South
Carolina Energy Office. The South Carolina Energy Office must qualify a facility as a
renewable energy manufacturing facility and the decision is determinative as to whether
the facility qualifies for the special tax benefits.
Code Section 12-15-30 provides special tax benefits to a renewable energy
manufacturing facility that invests at least $100 million in the project, as defined in Code
Section 12-10-30(8) and creates at least 200 new full time jobs at the project with an
average cash compensation level of at least 150% of the annual per capita income (of the
state or of the county in which the facility is located, whichever is lower) based on the
most recent per capita income data available as of the end of the tax year the jobs are
filled. These benefits are:
a. Job Development Credit Expense Benefit - Employee relocation expenses that qualify
for reimbursement under Code Section 12-10-80(C)(3) include such expenses
associated with a new or expanded facility.
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Note Expiration: This incentive is only available for capital investments and new jobs
created after June 30, 2010 and before July 1, 2014.
b. Job Development Credit Retention Benefit - The Coordinating Council for Economic
Development may approve a waiver for the facility to retain 95% of their job
development credit under Code Section 12-10-80(D)(2). The “regular” job
development credit provisions allow a taxpayer to retain 55% - 100% of job
development credit benefits depending on the county in which its facility is located.
Note Expiration: This incentive is only available for capital investments and new jobs
created after June 30, 2010 and before July 1, 2014.
Code Section 12-15-40 provides special allocation and apportionment tax benefits to a
facility meeting the requirements of subitem (1)(a) of Section 12-15-20. It provides that
the Department can enter into an agreement to allow the facility to use a special method
of allocation and apportionment of income under Code Section 12-6-2320 for a period of
up to 15 years.
Note: See the “Property Tax” Section below for a summary of the amendment in House
Bill 4478, Section 28 (Act No. 290) providing for the depreciation rate for a renewable
energy manufacturing facility.
Effective Date: June 23, 2010
Senate Bill 4514, Section 2 (Act No. 150) and House Bill 4478, Section 37 (Act No. 290)
Income Tax Paid by Shareholders of Large S Corporations Used for Project
Funding
Code Section 12-6-590(C) was added to provide that half of all income taxes paid (up to
$5 million) by shareholders of an S corporation engaged in manufacturing with a new
$500 million capital investment at a single site and 400 new employees is to be placed in
a fund and distributed by the Coordinating Council for Economic Development for public
infrastructure improvements which directly support the project.
Effective Date: April 27, 2010
Note Repeal:
This provision was repealed June 23, 2010 by House Bill 4478, Section
37 (Act No. 290).
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REMINDER
The following provision was enacted in 2006, but is effective for tax
years beginning after 2010. It is summarized below for informational
purposes.
Senate Bill 91, Sections 50 through 55 (Act No. 110)
(See also House Bill 3749, Sections 55 through 60 (Act No. 116))
Single Factor Apportionment - Related Amendments Effective Upon Final Phase In
of Single Sales Factor Apportionment Method
Effective for tax years beginning after 2006, Act No. 384 of 2006 amended Code Section
12-6-2250 to enact a single factor apportionment factor for businesses dealing in tangible
personal property using the 3 factor (with double weighted sales) apportionment method.
The single factor apportionment factor is being phased in and will replace the 3 factor
(with double weighted sales) apportionment method for tax years beginning in 2011.
The following amendments, effective for tax years beginning after 2010, update cross
references from Code Section 12-6-2250 (the 3 factor apportionment method with double
weighted sales and phase in provisions of the single sales factor) to Code Section 12-62252 (the single sales factor apportionment method) for the following code sections:
- Code Section 12-6-1130(6) dealing with computation of the depletion deduction;
- Code Section 12-6-2240 dealing with apportionment of income; and
- Code Section 12-6-2290 dealing with gross receipts factor.
The following code sections will be repealed once the sales factor is fully phased in
effective for tax years beginning after 2010: - Code Section 12-6-2250 (the 3 factor apportionment method with double weighted
sales and phase in provisions of the single sales factor); - Code Section 12-6-2260 (3 factor apportionment method property factor definition); and
- Code Section 12-6-2270 (3 factor apportionment method payroll factor definition).
Effective Date: Tax years beginning after 2010.
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PROPERTY TAXES and
FEES IN LIEU OF PROPERTY TAXES
House Bill 4174, Sections 1.A, 1.B, and 1.C (Act No. 275)
Assessable Transfers of Interest in Real Property - Revisions to Included
Transactions
The fair market value of real property is generally determined as a result of a periodic
countywide reassessment program. Any increase in fair market value resulting from a
countywide reassessment program is limited to 15% within a 5 year period. However,
valuation may change as a result of an interim appraisal triggered by an assessable
transfer of interest (ATI). The 15% cap does not apply to increases in value resulting
from an interim appraisal triggered by an ATI.
Code Section 12-37-3150(A) contains a non-exhaustive list of transactions that constitute
an ATI and thus trigger a new appraisal (ATI transactions). Some ATI transactions have
specific exceptions that do not trigger a new appraisal (ATI exceptions). Certain items of
Code Section 12-37-3150(A) have been amended as follows:
Item (3) provides that a conveyance to a trust is an ATI transaction, except if the settlor
and/or the settlor’s spouse conveys the property to the trust and the settlor and/or the
settlor’s spouse is the sole present beneficiary. New subitem (b) adds another ATI
exception for conveyances by the settlor and/or the settlor’s spouse of property subject to
the special 4% assessment ratio applicable to primary residences, where there is no
present beneficiary other than a child or children of the settlor and/or the settlor’s spouse.
However, a subsequent conveyance by the beneficiary child or children is not subject to
this ATI exception.
Item (6) provides that a conveyance by distribution under a will or by intestate succession
is an ATI transaction, except if the distributee is the decedent’s spouse. New subitem (b)
adds another ATI exception if (1) each distributee is a child of the decedent, (2) the
decedent had no surviving spouse, and (3) the property is subject to the special 4%
assessment ratio applicable to primary residences. However, a subsequent conveyance
by the distributee child or children is not subject to this ATI exception.
Item (8) provides that a transfer of a majority ownership interest (greater than 50%) in a
corporation, partnership, sole proprietorship, limited liability company, limited liability
partnership or other legal entity, either in a single transaction or a part of a series of
related transactions within a 25 year period, is an ATI transaction. This ATI transaction
must be reported to the property tax assessor by the legal entity within 45 days of
transfer. Item (8) has been amended to clarify that the provision does not apply to
transfers that are not subject to federal income tax, as provided in Code Section 12-373150(B)(1), including but not limited to transfers of interests to spouses. In addition,
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item (8) has been amended to provide that failure to provide notice or accurate
information of this ATI transaction subjects the property to a civil penalty of not less than
$100 or more than $1,000 as determined by the assessor. This penalty is enforceable and
collectible as property tax and is in addition to any other applicable penalties. Failure to
provide notice is a separate offense for each year after the notice was required.
Effective Date: Applies to real property transfers after 2009. However, no refund is
allowed on account of value adjusted by the changes to the provisions of
Code Section 12-37-3150.
House Bill 4174, Section 1.D (Act No. 275)
Assessable Transfers of Interest in Real Property - Certain Transfers Excluded
Code Section 12-37-3150(B) contains a list of transactions that do not constitute an
assessable transfer of interest (ATI) and thus do not trigger a new appraisal (non-ATI
transactions). Code Section 12-37-3150(B) has been amended to add the following nonATI transactions:
Item (10) - a transfer of an undivided, fractional interest in real estate, if the ownership
interest conveyed in a single transaction or series of related transactions within a 25 year
period is not more than 50% of the entire fee simple title to the real estate.
Item (11) - transfers between a single member limited liability company that is not taxed
separately as a corporation and its single member.
Item (12) - a conveyance, assignment, release, or modification of an easement. This
includes, but is not limited to, (a) a conservation easement as defined in Chapter 8, Title
27; (b) a utitity easement; or (c) an easement for ingress, egress, or regress.
Item (13) - a transfer or renunciation by deed, release or agreement of a claim of interest
in real property for the purpose of quieting and confirming title in the name of one or
more of the existing owners or for the purpose of confirming or establishing the location
of an uncertain or disputed boundary line.
Item (14) - the execution or recording of a deed to real property for the purpose of
creating or terminating a joint tenancy with right of survivorship, provided the grantors
and grantees are the same.
Effective Date: Applies to real property transfers after 2009. However, no refund is
allowed on account of value adjusted by the changes to the provisions of
Code Section 12-37-3150.
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House Bill 4174, Section 2 (Act No. 275)
Fair Market Value of Real Property - 15% Cap Clarified
Code Section 12-37-3140(B), which provides generally for a limit of 15% on any
increase in the value of real property attributable to a periodic countywide appraisal and
equalization program, has been amended to clarify that the 15% limit must be calculated
on the land and improvements as a whole.
Effective Date: June 16, 2010
House Bill 4478, Section 13 (Act No. 290)
Manufacturers’ Real Property Used for Warehousing and Wholesale Distribution Changes to Requirements for Alternative Classification
Code Section 12-43-220(a) concerns the classification of real and personal property
owned by or leased to manufacturers and utilities and generally provides for an
assessment ratio of 10.5% on property used in the conduct of the business. Item (4) has
been amended to provide that real property owned by or leased to a manufacturer and
used primarily for warehousing and wholesale distribution is not considered used in the
conduct of the manufacturing business. Previously, this exception was available only for
property used exclusively for warehousing and wholesale distribution. Real property that
falls outside the manufacturers and utilities classification is generally taxed based on a
6% assessment ratio.
The amendment further clarifies that real property subject to this exclusion must not be
physically attached to the manufacturing plant unless the warehousing and wholesale
distribution area is separated by a permanent wall.
Effective Date: January 1, 2011
House Bill 4478, Section 28 (Act No. 290)
Renewable Energy Manufacturing Facility Machinery and Equipment Depreciation Rate
Code Section 12-37-930 provides a schedule for depreciation of manufacturers’
machinery and equipment used in the conduct of the manufacturing business. Schedule
item 35, which provides a 20% depreciation rate for machinery and equipment used
directly in the manufacturing process by a life sciences facility, has been amended to
apply the 20% depreciation rate to machinery and equipment used directly in the
manufacturing process by a renewable energy manufacturing facility.
23
To qualify as a renewable energy manufacturing facility, a business must:
(1) manufacture either qualifying machinery and equipment for use by solar and wind
turbine energy producers or qualifying batteries for alternative energy motor vehicles; (2)
invest $100 million or more in the project, as defined in Code Section 12-10-30(8); and
(3) create at least 200 new full-time jobs at the project with an average cash
compensation level of at least 150% of the annual per capita income (of the state or of the
county in which the facility is located, whichever is lower) based on the most recent per
capita income data available as of the end of the tax year in which the jobs are filled.
Note: See the “Income Tax” Section above for a summary of certain tax benefits for a
renewable energy manufacturing facility provided in House Bill 4478, Sections 24 - 28
(Act No. 290).
Effective Date: June 23, 2010
House Bill 4839 (Act No. 264)
Medal of Honor Recipients - Exemption Clarified
Code Section 12-37-220(B)(43) provides an exemption for the home and an acre or less
of land owned in fee or for life or jointly with a spouse by a resident of this State who is a
recipient of the Medal of Honor. This provision has been amended to clarify that it
applies regardless of when the Medal of Honor was awarded or the conflict involved.
Effective Date: June 11, 2010
Senate Bill 1024 (Act No. 175)
Paraplegic/Hemiplegic Persons - Exemption Expanded
Code Section 12-37-220(B)(2) allows an exemption for the home and an acre or less of
land owned in fee or for life or jointly with a spouse by a paraplegic or hemiplegic
person, including certain persons with Parkinson’s Disease, Multiple Sclerosis, or
Amyotrophic Lateral Schlerosis (ALS, also known as Lou Gherig’s Disease). This
provision has been amended to clarify that the exemption is allowed to the surviving
spouse of any qualifying person, provided the spouse does not remarry, resides in the
dwelling, and obtains the fee or a life estate in the dwelling.
Effective Date: Applies for property tax years beginning after 2009.
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Senate Bill 405, Section 2 (Act No. 279)
Boats - Local Option for In-State Situs Revised
Code Section 12-37-714(2) provides that boats and boat motors that are not currently
taxed in South Carolina and that are not used exclusively in interstate commerce (i.e.,
qualifying boats and boat motors) are subject to South Carolina property taxes if present
within the State (a) for 60 consecutive days or (b) for 90 days in the aggregate in a
property tax year. Alternatively, a county, by ordinance of the local governing body, may
subject qualifying boats and boat motors to property tax if present within the State for an
alternative period of 180 days in the aggregate.
The provision has been amended to clarify that the number of consecutive days is to be
disregarded if the county opts for the 180 day alternative period. The amendment further
allows a county, by ordinance of the local governing body, to subject qualifying boats
and boat motors to property tax if present within the State for 90 days in the aggregate,
regardless of the number of consecutive days.
Effective Date: June 16, 2010
Senate Bill 405, Sections 1 and 3 (Act No. 279)
Boats Classified as a Primary or Secondary Residence - Revised
Code Section 12-37-224, allowing certain boats or watercraft to be treated as a primary or
secondary residence for property tax purposes, and assessed at a 4% or 6% assessment
ratio, respectively, has been amended. The amendments pertaining to the assessment ratio
and valuation of these boats and watercraft are as follows:
- New subsection (B) was added to clarify that a boat or watercraft that qualifies for
classification as a primary or secondary residence is one that contains (a) a cooking
area with an onboard power source, (b) a sleeping quarter, and (c) a toilet with
exterior evacuation. Previously, Code Section 12-37-224 provided for primary or
secondary residence status if the boat or watercraft qualified for deduction of the
interest expense on a qualified primary or secondary residence pursuant to the
Internal Revenue Code. - New subsection (B) allows only an individual to claim one qualifying boat or
watercraft that he owns as a primary residence (4% assessment ratio). In addition, an
individual may claim a second qualifying boat or watercraft that he owns as a
secondary residence (6% assessment ratio). Finally, a person other than an individual
may claim a qualifying boat or watercraft that the person owns as a secondary
residence (6% assessment ratio). A “person” is defined to include an individual, a
sole proprietorship, a partnership, an S corporation, and a limited liability company
taxed as a sole proprietorship, a partnership, or an S corporation.
25
An individual claiming a boat as a primary residence must make the same
certification required to obtain the 4% assessment ratio for any other legal residence
under Code Section 12-43-220(c)(2)(ii).
- New item (B)(1) of Code Section 12-37-224 provides that the fair market value of
qualifying boats and watercraft must be determined in the manner that motor vehicles
are valued for property tax purposes (i.e., by reference annually to nationally
recognized publications except that the value may not exceed 95% of the previous
year’s value). The amendment restated but did not change the method of valuation.
In a related amendment, Code Section 12-37-220(B)(38)(b), providing that, by ordinance,
a local governing body of a county may exempt from property tax 42.75% of the fair
market value of a watercraft and its motor, has been amended to clarify that the
exemption does not apply to a boat or watercraft classified for property tax purposes as a
primary or secondary residence under Code Section 12-37-224. A corresponding
amendment was made to Code Section 12-37-224.
Effective Date: June 16, 2010
Senate Bill 405, Section 4 (Act No. 279)
Transfer of Title to Watercraft - Delinquent Property Tax Penalties Revised
Code Section 50-23-295, which prohibits transfer of title to watercraft or an outboard
motor unless the seller certifies that property taxes due for tax years beginning after 1999
have been paid and are current as of the date of sale, has been amended. The civil
penalty for falsely signing the certification has been revised and a new criminal penalty
has been added.
Civil penalty revised. As amended, subsection (B) provides that a seller who falsely
signs the certification that property taxes are current and paid on a watercraft transferred
to the buyer, is liable to the buyer for 3 times the amount of damages directly associated
with the false certification, as well as applicable costs and reasonable attorney’s fees.
This provision for damages is in addition to all applicable criminal penalties. Previously,
subsection (B) provided that, in addition to all criminal penalties, the penalty for falsely
signing the certification was a $500 fee and suspension of any title issued in the seller’s
name pending payment of the $500 fee and all taxes due.
New criminal penalty added. As amended, subsection (B) provides that a person who
knowingly sells a watercraft for which he owes unpaid and outstanding property taxes, or
on which he knows there is a property tax lien, is guilty of a misdemeanor. A person
convicted of this misdemeanor must be fined not more than $1,000 or imprisoned not
more than 30 days.
Effective Date: June 16, 2010
26
Senate Bill 728, Section 5 (Act No. 182)
Rehabilitated Historic Property and Low and Moderate Income Rental Property Special Property Valuation
Code Section 4-9-195 provides a special method for valuing rehabilitated historic
property and low or moderate income rental property for property taxes that result in a
special assessment. Under Code Section 4-9-195(E), once a property has received a final
certification and is assessed as either rehabilitated historic property or low or moderate
income property rental property, it remains certified and is granted the special assessment
until a disqualifying event occurs, including a sale or transfer of ownership during the
special assessment period other than in the ordinary course of probate proceedings.
Notifications of any change affecting ability must be given immediately to the
appropriate county and taxing authorities.
Subsection (E) has been amended to provide that the sale or transfer of the property
during the special assessment period will no longer disqualify the property from receiving
the special assessment. In addition to being applicable to future transactions, this change
applies retroactively to any special property assessment granted prior to the effective date
of the change notwithstanding any ordinance in effect to the contrary.
Effective Date: May 28, 2010
Senate Bill 728, Sections 1 - 4 (Act No. 182)
Textile Mill Revitalization Credit - Amended
The South Carolina Textile Communities Revitalization Act, contained in Title 12,
Chapter 65, provides a credit for the rehabilitation of abandoned textile mill sites in South
Carolina. Code Section 12-65-30 allows a taxpayer who rehabilitates an abandoned
textile mill site to choose one of the following credits: (1) a credit against real property
taxes or (2) a credit against income tax, corporate license fees, or both or a credit against
bank taxes.
General amendments applicable to the Textile Communities Revitalization Act include:
- Code Section 12-65-20(3) has been amended to provide that a “textile mill” is a
facility or facilities that were “initially” used for textile manufacturing, dying, or
finishing operations and for ancillary uses to those operations. The amendment
replaced the word “last” with “initially.” - Code Section 12-65-30(D) has been amended to add that a taxpayer is not eligible for
the credit if the facility has previously received textile mill credits. The statute
continues to provide that a taxpayer who owned the textile mill site when it was
operational and immediately prior to its abandonment is not eligible for the credit.
27
3. Code Section 12-65-60 has been added to provide a procedure which allows the
taxpayer to apply to the county or municipality in which the textile mill site is located
for certification of the site. The certification can be done by either ordinance or
binding resolution of the applicable governing body. The certification must include
findings that the site was a textile mill as defined in Code Section 12-65-20(3); that
the site is abandoned as provided in Code Section 12-65-20(1); and that the
geographic site is consistent with Code Section 12-65-20(4), which provides a
definition of textile mill site. The taxpayer may conclusively rely upon the
certification in determining the credit allowed. If the taxpayer relies on the
certification, a copy must be included with the first return on which the credit is
claimed.
- Code Section 12-65-50 has been added to provide rules to determine the statutory
provisions applicable to a taxpayer.
a. The provisions of Title 12, Chapter 65 apply to all textile mill sites, or portions
thereof, placed in service on or after January 1, 2008.
b. Entire textile mill sites placed in service on or before December 31, 2007, are
governed by the former provisions of Chapter 32, Title 6 (i.e., the former statutory
provisions containing the textile revitalization credit) in effect as of December 31,
2007.
c. If a portion of the textile mill site was placed in service on or before December
31, 2007, but not all, then the taxpayer may elect to either: (i) have the portion
that was placed in service on or before December 31, 2007, governed by the
former provisions of Chapter 32, Title 6, in effect as of December 31, 2007, as if
the portion were an entire textile mill site; or (ii) have the portion be governed by
the provisions of Title 12, Chapter 65 such that the portion must be deemed to be
a phase of the site placed in service on a date subsequent to December 31, 2007,
identified by the taxpayer.
Note: See the “Income Taxes, Withholding, and Corporate License Fees” Section above
for a summary of additional amendments in this Act that pertain only to the “income
tax/corporate license fee/bank tax/insurance premium tax” part of this credit.
Effective Date: May 28, 2010
House Bill 4663, Section 1 (Act No. 232)
Fire Sprinkler System Tax Credit - Committee Appointed to Study Credit Use
Code Section 12-6-3622, dealing with the fire sprinkler system tax credit, has been
amended to add subsection (e) which requires the General Assembly to appoint a study
committee composed of three members appointed by the President Pro Tempore of the
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Senate and three members appointed by the Speaker of the House of Representatives,
including one representative from each of the following organizations: the South Carolina
Fire Sprinkler Association, the South Carolina Home Builders Association, the South
Carolina Association of Counties, and the Municipal Association of South Carolina. The
study committee will develop strategies to increase participation in the tax credit program
by local taxing entities and to review and make recommendations for increasing the
installation of interconnected hard-wired smoke alarms. The committee will report its
findings to the General Assembly by January 20, 2011. At that time the committee will
dissolve.
Effective Date: June 7, 2010
House Bill 4478, Sections 2 - 5 (Act No. 290)
Little Fee - Revised for Time Limits, Valuation, and Qualifications
- Code Section 4-12-30(B)(4)(b) has been amended to provide that if a project consists
of a manufacturing, research and development, corporate office, or distribution
facility, each sponsor or sponsor affiliate is not required to invest $2.5 million, if the
total investment in the project exceeds $5 million. Previously, the total investment
had to exceed $10 million.
Effective Date: Agreements executed after January 1, 2011. However, a taxpayer and a
county may amend an existing agreement at any time prior to the
expiration of the fee to incorporate this change into the agreement. - Code Section 4-12-30(C)(4) has been amended to provide that a single piece of
property may be subject to the fee for no more than 30 years. Previously, the statute
provided that a single piece of property could be subject to the fee for up to 20 years.
By resolution on a finding of substantial public benefit, the county may agree to
extend this period for another 10 years. Corresponding amendments provide that if a
county allows the additional 10 year extension, a single piece of property can be
subject to the fee for up to 40 years, and the project itself can be subject to the fee for
up to 50 years. For the super fee, a single piece of property can be subject to the fee
for up to 40 years (with the extension) and the project itself can be subject to the fee
for up to 53 or 55 years depending on the specifics of the project. Previously, the
super fee time limits were 30 years and 43 or 45 years, respectively.
Effective Date: Effective for agreements executed after January 1, 2011. However, a
taxpayer and a county may amend an existing agreement at any time
prior to the expiration of the fee to incorporate this change into the
existing agreement.
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3. Code Section 4-12-30(D)(2)(a)(i), which provides that real property is generally
valued at original cost for the life of the fee, has been amended to provide that a
county and a sponsor or sponsor affiliate may agree (initially or by amendment) that
the value of real property subject to the fee will be determined by an appraisal
completed by the Department. If the county and the sponsor or sponsor affiliate agree
to appraisal by the Department, the property will be subject to reappraisal no more
than once every 5 years.
Effective Date: Effective in each county in the first property tax year in which a county
reassessment program is implemented after December 31, 2010.
- Code Section 4-12-30(J)(1)(b) has been amended to provide that property that has
been subject to South Carolina property taxes is eligible for the fee if it was placed in
service in the State pursuant to an inducement agreement or other preliminary county
approval before the execution of a lease agreement. Before this amendment,
previously taxed property would qualify only if it had not been placed in service.
Effective Date: January 1, 2011
House Bill 4478, Section 6 (Act No. 290)
(See also Senate Bill 1131 (Act No. 161))
Big Fee - Revised for Nuclear Power Plants, Extended Time Periods, Valuation, and
Qualification
- Code Section 4-29-67(A)(1)(d) has been added to provide a definition of a “qualified
nuclear plant facility.” A “qualified nuclear plant facility” is a nuclear electric power
generating plant regulated by the Nuclear Regulatory Commission and includes all
real and personal property incorporated into or associated with the facility located or
to be located within this State with a total minimum level of investment of $1 billion.
Senate Bill 1131 made a substantially similar change to Code Section 4-29-67.
Effective Date: May 12, 2010 (Act No. 161) and June 23, 2010 (Act No. 290) - Code Section 4-29-67(B)(4) has been amended to provide that if a project consists of
a qualified nuclear plant facility, a sponsor or sponsor affiliate is not required to
invest $45 million each, if the total investment in the project exceeds $45 million.
Senate Bill 1131 made a substantially similar change to Code Section 4-29-67.
Effective Date: May 12, 2010 (Act No. 161) and June 23, 2010 (Act No. 290) - Code Section 4-29-67(C)(3) has been amended to provide that a single piece of
property may be subject to the fee for no more than 30 years. Previously, the statute
provided that a single piece of property could be subject to the fee for up to 20 years.
By resolution on a finding of substantial public benefit, the county can agree to
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extend this period for another 10 years. Corresponding amendments provide that if a
county allows the additional 10 year extension provided for in the statute, a single
piece of property can be subject to the fee for up 40 years, and the project itself can
be subject to the fee for up to 50 years. For the super fee, a single piece of property
can be subject to the fee for up to 40 years (with the extension) and the project itself
can be subject to the fee for up to 53 or 55 years depending on the specifics of the
project. Previously, the super fee time limits were 30 years and 43 or 45 years,
respectively.
Effective Date: January 1, 2011. However, a county may amend an existing agreement
at any time prior to the expiration of the fee to incorporate this change
into the agreement.
- Code Section 4-29-67(D)(2)(a)(iii)(A) which provides that real property is generally
valued at original cost for the life of the fee, has been amended to provide that a
county and a sponsor or sponsor affiliate may agree (initially or by amendment) that
the value of real property subject to the fee will be determined by an appraisal
completed by the Department. If the county and the sponsor or sponsor affiliate agree
to appraisal by the Department, the property will be subject to reappraisal no more
than once every 5 years.
Effective Date: Effective in each county in the first property tax year in which a county
reassessment program is implemented after December 31, 2010. - Code Section 4-29-67(K)(1)(b) has been amended to provide that property that has
been subject to South Carolina property taxes, is eligible for the fee if it was placed in
service in the State pursuant to an inducement agreement or other preliminary county
approval before the execution of a lease agreement. Before this amendment,
previously taxed property would qualify only if it had not been placed in service.
Effective Date: June 23, 2010 - Code Section 4-29-67(W) now provides a qualified nuclear plant facility additional
time to enter into an initial lease agreement with the county and if the project
qualifies as a super fee, a taxpayer operating a qualified nuclear plant facility is given
additional time to make the minimum investment and complete the project. Senate
Bill 1131 made a substantially similar change to Code Section 4-29-67.
Effective Date: May 12, 2010 (Act No. 161) and June 23, 2010 (Act No. 290).
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House Bill 4478, Sections 8 - 12 (Act No. 290)
(See also Senate Bill 1131, Sections 1 - 2 (Act No. 161))
Simplified Fee - Revised for Nuclear Power Plants, Extended Time Period,
Valuation, and Qualification
- Code Section 12-44-30(17) has been added to define a “qualified nuclear plant
facility.” A “qualified nuclear plant facility” is a nuclear electric power generating
plant regulated by the Nuclear Regulatory Commission and includes all real and
personal property incorporated into or associated with the facility located or to be
located within this State with a total minimum level of investment of $1 billion. Code
Section 12-44-30(2) has been amended to provide that the “commencement date” of a
qualified nuclear plant facility is the last day of the first property tax year in which
economic development property is placed in service. Code Section 12-44-30(13) has
been amended to provide that the “investment period” for a qualified nuclear plant
facility is the period beginning with the first day that economic development property
is purchased or acquired for the qualified nuclear plant facility and ending 10 years
after the commencement date. Code Section 12-44-40(F) has been added extending
the statutory time period for a qualified nuclear plant facility to enter into a fee
agreement. Senate Bill 1131 made substantially similar amendments to Code
Sections 12-44-30 and 12-44-40.
Effective Date: May 12, 2010 (Act No. 161) and June 23, 2010 (Act No. 290). - Code Section 12-44-30(19) has been amended to provide that if a project consists of a
manufacturing, research and development, corporate office, or distribution facility,
each sponsor or sponsor affiliate is not required to invest the $2.5 minimum
investment if the total investment at the project exceeds $5 million. Previously, the
project had to exceed $10 million to qualify. This item was also amended to include
qualified nuclear plant facility as an eligible project for the reduced combined
investment. Senate Bill 1131 made a substantially similar change to Code Section
12-44-30 regarding qualified nuclear plant facilities.
Effective Date: May 12, 2010 (Act No. 161) and June 23, 2010 (Act No. 290). - Code Section 12-44-30(21) has been amended to provide that the “termination date”
is the last day of the property tax year that is the 29th year following the first property
tax year in which an applicable piece of economic development property is placed in
service. By resolution or a finding of substantial public benefit, the county may agree
to extend this period for another 10 years. Previously, the termination date was the
19th year after the economic development property is placed in service or the 29th year
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for property subject to an enhanced investment fee, and a single piece of property
could be subject to the fee for a total of 30 years.
Effective Date: January 1, 2011. However, a county and a sponsor may amend an
existing fee agreement any time before the expiration of the fee to
incorporate this change.
- Section 12-44-50(A)(1)(c)(i) which provides that real property is generally valued at
original cost for the life of the fee, has been amended to provide that a county and a
sponsor or sponsor affiliate may agree (either initially or by amendment) that real
property subject to the fee will be determined by an appraisal completed by the
Department. If the county and the sponsor or sponsor affiliate agree to appraisal by
the Department, the property will be subject to reappraisal no more than once every 5
years.
Effective Date: Effective in each county in the first property tax year in which a
countywide reassessment program is implemented after December 31,
2010. - Code Section 12-44-110(2) has been amended to provide that property that has been
subject to South Carolina property taxes, is eligible for the fee if it was placed in
service in the State pursuant to an inducement agreement or other preliminary county
approval before the execution of a lease agreement. Before this amendment,
previously taxed property would qualify only if it had not been placed in service.
Effective Date: January 1, 2011
Senate Bill 4514, Section 1 (Act No. 150) and House Bill 4478, Section 37 (Act No. 290)
Simplified Fee - “Termination Date” Definition
Code Section 12-44-30(21), defining “termination date”, has been amended to provide
that the termination date is the last day of a property tax year that is the 29th year
following the first property tax year in which an applicable piece of economic
development property is placed in service. Prior to amendment, it was the 19th year.
Effective Date: April 27, 2010
Note Repeal:
This provision was repealed June 23, 2010 by House Bill 4478, Section
37 (Act No. 290).
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House Bill 4478, Section 7 (Act No. 290)
Special Source Revenue Bonds or Credits - Eligible Uses Expanded
Code Section 4-29-68 allows a county to issue special source revenue bonds to pay for,
among other things, improved or unimproved real property associated with a
manufacturing or commercial project. Code Section 4-29-68(A)(2) has been amended to
provide that bonds may be issued, or a credit against the fee may be given, to pay for the
cost of personal property including machinery and equipment used in the operation of
such a project.
If the bonds, or monies from a credit allowed against the fee due on the property, are used
to pay for personal property, and the personal property is removed from the project
during the time the fee is in effect and the removed property is not replaced with
qualifying replacement property, the amount of the fee due for that property must be paid
for the year it is removed and for the 2 years following its removal from the project. If
any bond funds or credit fund are used to pay for both real and personal property, or
infrastructure and personal property, all of the funds will be presumed to have first been
used to pay for personal property. The fee amounts described above will be remitted to
the county in which the project is located.
Effective Date: January 1, 2011
House Bill 4478, Section 15B (Act No. 290)
Industrial Development Projects - Definition of Project Changed
Code Section 4-29-10(3), which provides a definition of project that is to be used for
industrial development projects under Chapter 29, Title 4 (including industrial
development bonds and special source revenue bonds) has been amended to provide that
for purposes of Chapter 29, Title 4, unless a different meaning clearly appears from the
context, a “project” includes any “recovery zone property” as defined in Internal Revenue
Code Section 1400U-3(b) and any “Qualified Conservation Purpose” as defined in
Internal Revenue Code Section 54D(f) or any other purposes set forth in Section 54D(e).
None of the other restrictions contained in the definition of “project” relating to the use or
the user of the project apply to “recovery zone property.”
Recovery zone property is property to which Internal Revenue Code Section 168 applies
(or would apply but for Section 179) and which was constructed or acquired for use in the
zone after the designation of the recovery zone. To qualify, the original use of the
property must commence with the taxpayer in the recovery zone and the property must be
used in the active conduct of a qualified business in the zone. A qualified business is any
trade or business except the rental of residential real property or certain leisure and other
businesses, such as country clubs, massage parlors, and stores that are primarily engaged
in the sale of alcohol.
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A “recovery zone” is an area designated by a state or local political subdivision as having
significant poverty, unemployment, home foreclosures or general distress or an area that
has already been designated as an Empowerment Zone or Renewal Community.
A “qualified conservation purpose” includes (a) expenditures incurred for certain energy
facilities and purposes; (b) research and development facilities that support alternative
energies; (c) mass commuting facilities that reduce the consumption of energy from
vehicles used for mass commuting; (d) demonstration projects for the promotion of
commercialization of certain green technologies; and (e) public education campaigns to
promote energy efficiency.
Note: The definition of “project” contained in Code Section 4-29-67(A)(1)(c), the big fee
statute, was not amended.
Effective Date: June 23, 2010
35
SALES AND USE TAXES
Senate Bill 717 (Act No. 280)
Nonprofit Research and Testing Facility - New Exemption
Code Section 12-36-2120 has been amended to add an exemption for machinery and
equipment, building and other raw materials, and electricity used in the operation of a
facility owned by a nonprofit organization exempt under Internal Revenue Code Section
501(c)(3) when the facility is principally used for researching and testing the impact of
natural hazards, such as wind, fire, water, earthquake, and hail, on building materials
used in residential, commercial, and agricultural buildings.
To qualify for this exemption, the taxpayer must send a notice to the Department of its
intent to qualify for the exemption and must invest at least $20 million in real or personal
property at a single site in this State over a 3 year period beginning on the date provided
by the taxpayer to the Department in the notice. After the taxpayer notifies the
Department of its intent to qualify and use the exemption, the Department must issue an
exemption certificate to the taxpayer to be used for qualifying exempt purchases. The
taxpayer must also send a notice to the Department within 6 months of the third
anniversary of the taxpayer’s first use of the exemption advising the Department that it
has either met or not met the $20 million investment requirement.
The Department may assess any tax due on the machinery and equipment purchased tax
free but due the State as a result of the taxpayer’s failure to meet the $20 million
investment requirement. The running of the periods of limitations for assessment of taxes
is suspended for the time period beginning with notice to the Department before the
taxpayer uses the exemption and ending with notice to the Department that the taxpayer
has either met or not met the $20 million investment requirement.
Effective Date: June 16, 2010
36
MISCELLANEOUS
(Summarized by Subject Matter)
ADMINISTRATIVE and PROCEDURAL MATTERS
House Bill 4657, Part IB, Section 89, Proviso 89.142 (Act No. 291)
Additional 1% Reduction on Interest Rate on Tax Refunds
This new temporary proviso decreases by 1% the interest rate for tax refunds paid during
the current fiscal year, in addition to the 2% reduction reauthorized in temporary Proviso
72.17 (for a total 3% interest rate reduction). Of the revenue resulting from this 1%
reduction, $250,000 must be used by the Senate for operating expenses of the Joint
Citizens and Legislative Committee on Children. The remaining revenue must be used
by the Department of Juvenile Justice for programs for mentoring or other alternatives to
incarceration. The revenue resulting from the 2% reduction continues to be used for
operations of the State’s Guardian ad Litem Program.
Effective Date: This temporary proviso is effective for State fiscal year July 1, 2010
through June 30, 2011.
Senate Bill 850, Section 2 (Act No. 274)
Failure to File and Failure to Pay Penalties and Interest for Payment in
Immediately Available Funds - Amended
Code Section 12-54-250(E) has been repealed. Code Section 12-54-250(E) provided that
when payment was made with immediately available funds, the payment of the funds and
the filing of the return were considered simultaneous acts for calculating failure to file
and failure to pay penalties and interest. As a result, penalties and interest were calculated
based on the later of the return file date or payment date. Now the failure to file penalty
will be based on the date the return is filed and the failure to pay penalty will be based on
the payment date. Code Sections 12-54-43(C) and (D).
Effective Date: June 17, 2010
37
MISCELLANEOUS TAX LEGISLATION
House Bill 3584 (Act No. 170)
Cigarette Tax Increase and Definition of Cigarette Expanded
Code Section 12-21-625 has been added to impose a surtax on cigarettes of $0.025 per
cigarette. This surtax is in addition to the $0.0035 per cigarette excise tax imposed on
cigarettes under Code Section 12-21-620.
With the new surtax, the State cigarette tax rate will increase from $0.07 to $0.57 per
pack of 20 cigarettes and from $0.0875 to $0.7125 per pack of 25 cigarettes. The new
surtax became effective July 1, 2010.
In addition, the definition of a “cigarette” was expanded to include “any roll for smoking
containing tobacco or any substitute for tobacco, wrapped in any substance, weighing 3
pounds per thousand or less, however labeled or named, which because of its appearance,
size, type of tobacco used in the filler, or its packaging, pricing, marketing, or labeling, is
likely to be offered to, or purchased by, consumers as a cigarette ….” This new definition
became effective May 13, 2010.
Effective Date: May 13, 2010; however, the cigarette tax increase became effective
July 1, 2010.
House Bill 4233 (Act No. 228)
Beer Definition Revised Retroactively for Beer License Tax Purposes
Code Section 12-21-1010(3), which contains the definition of “beer” for purposes of the
beer tax in Article 7, Chapter 21, Title 12, has been amended to provide that “beer” has
the same meaning as used in the Alcoholic Beverage Control Act in Title 61. The beer
tax now applies to:
- All beers, ales, porters, and other similar malt or fermented beverages containing not
in excess of 5% of alcohol by weight, as provided in Code Section 61-4-10(1); and - All beers, ales, porters, and other similar malt or fermented beverages containing
more than 5% but less than 14% of alcohol by weight that are manufactured,
distributed, or sold in containers of 6 ½ ounces or more or the metric equivalent, as
provided in Code Section 61-4-10(2).
Effective Date: June 7, 2010, and applies retroactively to May 2, 2007.
38
House Bill 4478, Section 14 (Act No. 290)
Rural Infrastructure Funds - Eligible Expenditures Expanded
Code Section 12-10-85, establishing the Rural Infrastructure Fund to provide funds to
local governments for infrastructure and economic development, has been amended to
expand the eligible expenditures. Eligible expenditures funds can be used for now
include: (1) site preparation, (2) acquiring or improving real property, and (3) relocation
expenses of an employee if the company pays wages to the employee that are at least
twice the State average or the county average for the county in which the project is
located, whichever is lower.
Effective Date: January 1, 2011
OTHER ITEMS (Including Local Taxes)
House Bill 4551 (Act No. 135)
911 Communications Systems - New Charge for Prepaid Wireless and Voice over
Internet Protocol
Chapter 47 of Title 23 governs local emergency telephone systems (i.e., 911 systems). It
provides, in part, that fees (“911 charges”) may be imposed to fund an emergency
telephone system with respect to the public telephone system and commercial mobile
radio service. While 911 charges imposed with respect to the public telephone system are
paid directly to the local government imposing the 911 charge, 911 charges imposed with
respect to commercial mobile radio service are paid to the Department. The Department
is required to deposit these 911 charges with the State Treasurer for distribution pursuant
to Code Section 23-47-65.
Chapter 47 has been amended to include new provisions that allow 911 charges to be
imposed on prepaid wireless telecommunications services and “Voice over Internet
Protocol” (“VoIP”).
Prepaid Wireless 911 Charge: Code Section 23-47-68 has been added with respect to the
new prepaid wireless 911 charge to provide the following:
- A prepaid wireless 911 charge is levied on each prepaid wireless retail transaction
occurring in South Carolina. This prepaid wireless 911 charge will be an amount
equal to the average commercial mobile radio service 911 charge. - A prepaid wireless seller must collect the prepaid wireless 911 charge from a prepaid
wireless consumer. The amount of the prepaid wireless 911 charge shall be either
39
separately stated on an invoice, receipt, or other similar document that is provided to
the prepaid wireless consumer by the prepaid wireless seller or otherwise disclosed to
the prepaid wireless consumer.
- The prepaid wireless retail transaction must be sourced the same as provided in Code
Section 12-36-910(B)(5)(b). - The prepaid wireless 911 charge is the liability of the prepaid wireless consumer and
not the prepaid wireless seller or any prepaid wireless provider. However, the prepaid
wireless seller is liable to remit to the Department all prepaid wireless 911 charges
that the prepaid wireless seller collects from prepaid wireless consumers. - The amount of the prepaid wireless 911 charge collected by a prepaid wireless seller
is not includable in the base for measuring any tax, fee, prepaid wireless 911 charge,
or other charge that is imposed by this State, any of its political subdivisions, or any
intergovernmental agency. The prepaid wireless 911 charge is not considered revenue
of the prepaid wireless seller. - The Department must establish procedures by which a prepaid wireless seller may
document that a sale is not a prepaid wireless retail transaction, which procedures
shall substantially coincide with the procedures for documenting sale for resale
transactions under Code Section 12-36-950. - The prepaid wireless seller must remit the prepaid wireless 911 charge to the
Department on a monthly, quarterly or annual basis; however, the prepaid wireless
seller is entitled to retain 3% of the gross prepaid wireless 911 charges remitted to the
Department as an administrative fee.
“Voice over Internet Protocol 911 Charge: Code Section 23-47-67 has been added to
impose a “Voice over Internet Protocol” (“VoIP”) 911 charge in an amount identical to
the amount of the 911 charge imposed on each local exchange access facility pursuant to
Code Sections 23-47-40(A) and 23-47-50(A). VoIP 911 charges are remitted to the local
government to which they are sourced.
Prohibition on Other 911 Charges: Code Section 23-47-69 was added to prohibit the
State, any of its political subdivisions, or an intergovernmental agency from requiring any
service provider to impose, collect, or remit a tax, fee, surcharge, or other charge for 911
funding purposes other than the 911 charges set forth in Chapter 47 of Title 23.
Advisory Committee: Code Section 23-47-65 was amended to change the name of the
“CMRS Emergency Telephone Service Advisory Committee” to the “South Carolina 911
Advisory Committee.”
Definitions: Code Section 23-47-10 was amended to add various definitions for terms
related to prepaid wireless and VoIP 911 charges.
40
Effective Date: July 1, 2011, except that the addition of, or amendments to, Code
Sections 23-47-55 (not summarized), 23-47-69, and 23-47 70 (not
summarized) are effective March 30, 2010.
House Bill 4478, Section 34 (Act No. 290)
Redevelopment Authority Fees Extended for 2 Years
Code Section 12-10-88 provides that federal employers located on a closed or realigned
military installation are to remit a portion of their employees’ South Carolina withholding
to the redevelopment authority overseeing that facility if the redevelopment authority
complies with reporting requirements. These redevelopment fees may be remitted to the
redevelopment authority beginning with the date the redevelopment authority first
submitted the required information to the Department and for 15 years thereafter or until
January 1, 2015, whichever occurs last. This provision has been amended to provide for
the collection and remittance of the redevelopment fees for the 15 year period or through
January 1, 2017, whichever occurs last.
Effective Date: January 1, 2011
REGULATORY LEGISLATION
House Bill 4837 (Act No. 263)
(See also House Bill 4657, Part IB, Section 81, Proviso 81.9 (Act No. 291))
Bingo Licenses and Definition of Nonprofit Organization - Changes
Code Section 12-21-3940(D), which concerns bingo licenses and prohibits the issuance
of a bingo license at an establishment that holds an alcoholic liquor-by-the-drink license
issued under Code Section 61-6-1820, has been repealed. Bingo licenses may now be
issued at an establishment that holds an alcoholic liquor-by-the-drink license.
Code Section 12-21-3950(5), which defines the term “nonprofit organization” for
purposes of the Bingo Tax Act of 1996 (Title 12, Chapter 21, Article 24), has been
amended to include organizations exempt from federal income taxes under Internal
Revenue Code Section 501(c)(7). For purposes of the Bingo Tax Act of 1996, a
“nonprofit organization” now means “an entity which is organized and operated
exclusively for charitable, religious, or fraternal purposes and which is exempt from
federal income taxes pursuant to Internal Revenue Code Section 501(c)(3), 501(c)(4),
501(c)(7), 501(c)(8), 501(c)(10), or 501(c)(19).”
Effective Date: June 11, 2010
41
House Bill 4516, Section 1 (Act No. 259)
Temporary Beer and Wine Permits for Special Events – Revised
Code Section 61-4-550, which authorizes the Department to issue one-day beer and wine
permits running for a period not exceeding 15 days, for a fee of $10 per day, for locations
at fairs and special functions, has been amended as follows:
Permits restricted to nonprofit organizations. Under the amendment, an applicant for this
permit must be a “nonprofit organization,” defined as:
- An entity that is organized and operated exclusively for social, benevolent, patriotic,
recreational, or fraternal purposes, and that is exempt from federal income taxes
pursuant to Internal Revenue Code Section 501(c)(3), (4), (6), (7), (8), (10), or (19);
or - Political parties and their affiliates duly certified by the Secretary of State.
Criminal records check required for all principals. The initial application must be
accompanied by a criminal records check of all principals of the organization, conducted
by the State Law Enforcement Division not more than 90 days preceding the date of the
application. Failure to comply will result in denial of the application. For a subsequent
application, a new criminal records check is required only if (a) more than 2 years have
elapsed since the most recent criminal records check was conducted or (b) the nonprofit
organization has added or replaced a principal. “Principal” has the same meaning as in
Code Section 61-2-100(H)(2). All principals are deemed to be the applicant for this
permit.
Notification of sheriff required. The applicant must give written notice to the sheriff or
sheriff’s designee in the county in which the fair or special event is to be held, a
minimum of 15 days before the first day of the event, unless the sheriff waives the 15-day
requirement. An objection by the sheriff or sheriff’s designee within 72 hours of receipt
of the notice, submitted in writing to the Department is sufficient grounds to deny the
application.
Penalties. The penalties imposed for violations of Article 1, Chapter 4, Title 61 apply to
nonprofit organizations that are granted temporary permits under Code Section 61-4-550.
Effective Date: Applies to applications for functions beginning on January 1, 2011.
42
House Bill 4516, Sections 2 - 4 (Act No. 259)
Temporary License to Sell Alcoholic Liquor by the Drink at Special Functions Revision, Repeal, and Technical Correction
The Alcoholic Beverage Control Act, Chapter 6 of Title 61, contains 2 statutes
authorizing the Department to issue licenses to sell alcoholic liquor by the drink for a
period not exceeding 24 hours. One statute has been amended and one statute has been
repealed.
Temporary License Provision Amended. Code Section 61-6-2000, which authorizes the
Department to issue licenses allowing nonprofit organizations to sell alcoholic liquor by
the drink for a $35 fee for a single function in a period not exceeding 24 hours, has been
amended as follows:
Type of function. Previously, the temporary license was allowed for a “single social
occasion.” Under the amendment, the temporary license is allowed for a “special
function,” the nature and date of which must be described in the application, and the
amendment clarifies that tickets may be sold at the door.
Deadline for application; terms and conditions on license. The Department may deny
an application if the completed application and filing fee are not submitted at least 15
days before the date of the special function. The Department may waive the 15-day
requirement on request of the applicant. The Department has discretion to specify the
terms and conditions of the license in accordance with applicable statutes and
regulations.
Definition of “nonprofit organization” added. Under the amendment, an applicant for
this permit must be a “nonprofit organization,” defined as:
- An entity that is organized and operated exclusively for social, benevolent,
patriotic, recreational, or fraternal purposes, and that is exempt from federal
income taxes pursuant to Internal Revenue Code Section 501(c)(3), (4), (6), (7),
(8), (10), or (19); or - Political parties and their affiliates duly certified by the Secretary of State.
Criminal records check requirements clarified. The initial application must be
accompanied by a criminal records check of all principals of the organization,
conducted by the State Law Enforcement Division not more than 90 days preceding
the date of the application. Failure to comply will result in denial of the application.
For a subsequent application, a new criminal records check is required only if (a)
more than 2 years have elapsed since the most recent criminal records check was
conducted or (b) the nonprofit organization has added or replaced a principal.
“Principal” has the same meaning as in Code Section 61-2-100(H)(2). All principals
are deemed to be the applicant for this license.
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Notification of sheriff required. The applicant must give written notice within 15
days to the sheriff or sheriff’s designee in the county in which the special function is
to be held, unless the sheriff waives the 15-day requirement. An objection by the
sheriff or sheriff’s designee within 72 hours of receipt of the notice, submitted in
writing to the Department, is sufficient grounds to deny the application.
Number of licenses issued pursuant to a single application. The Department may
issue up to 25 temporary licenses on one application for special functions in a 12month period to the same nonprofit organization. However, the nonprofit
organization is not prohibited from applying for additional temporary licenses in the
same 12-month period.
Penalties. The penalties imposed for violations of Article 13, Chapter 6, Title 61
apply to nonprofit organizations that are granted temporary permits under Code
Section 61-6-2000.
Repeal and Technical Correction. Code Section 61-6-510, which authorizes the
Department to issue temporary licenses allowing certain nonprofit organizations,
nonprofit educational foundations and qualified political parties to sell alcoholic liquor by
the drink for a $35 fee for a period not exceeding 24 hours, has been repealed. This
repeal is also reflected in a technical correction to Code Section 61-4-240, which
provides that a temporary permit to sell beer and wine may be issued with certain
temporary licenses to sell alcoholic liquor by the drink. The technical correction removes
a reference to Code Section 61-6-510.
Effective Date: Applies to applications for functions beginning on January 1, 2011.
House Bill 4572, Section 1 (Act No. 231)
Beer Equipment and Beer Displays - Certain Restrictions on Dealings Between Beer
Manufacturers, Wholesalers, and Retailers Revised
Code Section 61-4-940, which restricts certain dealings between beer manufacturers, beer
wholesalers and beer retailers, has been amended as follows.
- Subsection (B) prohibits manufacturers and wholesalers from furnishing fixtures and
equipment to retailers, and likewise prohibits retailers from accepting such fixtures
and equipment. The amendment to subsection (B) allows a wholesaler to store
equipment primarily used by the wholesaler to deliver and stock beer, for a temporary
period, at the retailer’s licensed location if the retailer consents. Such equipment
includes, but is not limited to, pallets, carts, and hand trucks. - Subsection (C), which allows a wholesaler to provide certain items and services at no
charge to a retailer, has been amended to allow a wholesaler to furnish a retailer with
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product displays pursuant to the provisions of 27 Code of Federal Regulations
(C.F.R.), Section 6.83, excluding electronic refrigeration equipment. Such product
displays must be furnished at no charge to the retailer. Product displays are defined
by 27 C.F.R. 6.83 as “any wine racks, bins, barrels, casks, shelving, or similar items
the primary function of which is to hold and display consumer products.” Further, 27
C.F.R. 6.83 provides value limitations and advertising requirements for the product
displays. A link to 27 C.F.R. 6.83, one of the federal “Tied House” regulations (Part
6 of 27 C.F.R.), is provided at the federal Alcohol and Tobacco Tax and Trade
Bureau website: http://www.ttb.gov/trade_practices/laws_regs_tp.shtml.
- Subection (F) has been amended to provide that no license holder on one tier of the
beer business may require a license holder on another tier to furnish the product
displays described in Subsection (C), as amended.
Effective Date: June 7, 2010
House Bill 4572, Section 2 (Act No. 231)
Breweries – Beer Tastings and Sales
Code Section 61-4-1515 has been added to allow South Carolina breweries to offer
samples, with or without cost, and retail sales of beer brewed in South Carolina on the
licensed premises.
Tastings. The following conditions apply:
- Tastings must not be offered except as part of a tour by consumers of the licensed
premises and the entire brewing process used there. - Consumers must not be intoxicated or under age 21.
- Samples must be brewed at the licensed premises and must not exceed 2 ounces per
brand of beer with an alcohol content over 8% by weight or 4 ounces of beer with an
alcohol content under 8% by weight. - Not more than 4 brands of beer brewed at the licensed premises may be sampled by a
consumer in a 24 hour period.
Retail sales. The following restrictions apply: - The beer must be brewed on the licensed premises with an alcohol content not
exceeding 14% by weight. - Beer sales must not exceed an amount equivalent to 288 ounces per individual per
day.
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3. Beer must not be sold except as part of a tour by the consumer of the licensed
premises and the entire brewing process used there.
- Beer must not be sold for other than personal use; it cannot be resold and must not be
sold to a holder of a retail beer and wine license for the purpose of resale in the
license holder’s business. - The price charged by the brewery must approximate retail prices generally charged
for identical beverages in the county in which the brewery is located. - The brewery must remit beer taxes in accordance with the provisions of Code
Sections 12-21-1020 and 12-21-1030. The brewery must also remit appropriate sales
and use taxes and local hospitality taxes.
Penalty for violation. A fine of $100 must be assessed for each violation of Code Section
61-4-1515 in addition to other applicable fines and penalties. This fine must be sent to,
and used by, the Department for the costs of alcohol licensure and regulation.
Effective Date: June 7, 2010
House Bill 4572, Section 3 (Act No. 231)
Beer Tastings at Certain Retailers – New Provision
Code Section 61-4-960 has been added to allow the holder of a retail permit for the sale
of beer for off-premises consumption, whose primary product is beer or wine, to conduct
not more than 24 beer tastings at any one retail location in a calendar quarter. The
following conditions apply:
- A notice with details of the specific date and hours of the tasting must be sent to the
State Law Enforcement Division by first class mail or by electronic mail at least 10
days before the tasting. - Tastings must be conducted by the retailer or an agent or independent contractor of
the retailer. Manufacturers, wholesalers, and their employees, agents or independent
contractors are barred from conducting a tasting. However, manufacturers (but not
wholesalers) may attend a tasting to provide information and offer educational
material on the products sampled. - The products sampled must be supplied by the retailer and may not be supplied at no
cost or reduced cost by the manufacturer or wholesaler.
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4. Not more than one container of each product to be sampled may be open at any time.
Open containers must be visible at all times and must be removed when the tasting
ends.
- Not more than 8 products may be offered for sampling at any one tasting, and no
more than 2 of those products may have an alcohol content exceeding 10% by weight. - Samples must not exceed the following quantities:
a. 2 ounces of beer with an alcohol content not exceeding 5% by weight;
b. one ounce of beer with an alcohol content between 5% and 14% by weight. - A person must not be served more than one sample of each product and must not be
allowed to loiter on the store premises. Persons who are intoxicated or under age 21
must not be offered, or allowed to consume, any sample. - A retailer must not offer more than one sampling per day or for a period exceeding 4
hours. - Tastings of beer may not be offered in conjunction with a wine tasting or with a
tasting in an adjacent retail alcoholic liquor store licensed in the same name. - The tasting must be held in an area of the retail store designated for tastings.
A fine of $100 must be assessed for each violation of Code Section 61-4-960 in addition
to other applicable fines and penalties. This fine must be sent to, and used by, the
Department for the costs of alcohol licensure and regulation.
Effective Date: June 7, 2010
Document No. 4077
Definition of “Premises” for Beer, Wine and Liquor Licenses - New Regulation
SC Regulation 7-202 has been added to revise the definition of “premises” for purposes
of licenses for beer, wine, and liquor. Previously, “premises” was defined in SC
Regulations 7-401.1 and 7-700, both of which have been repealed.
The purpose of the new regulation is the determination of the extent of the physical place
where a business or entity that has been approved to hold a license undertakes the
privileges and responsibilities associated with that license. The term “premises”
generally means all of the buildings and grounds that are both (1) subject to the direct
control of the license holder, as shown by certain documents, and (2) used by the license
holder to conduct its business.
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A presumption arises that the buildings and grounds described with particularity in the
license application are used by the license holder to conduct its business. The regulation
provides that the premises may be subject to conditions or restrictions or both imposed
under Code Section 61-2-80. In addition, there are provisions governing multiple tracts
or buildings, separate locations of a business, the premises of nonprofit organizations and
specific facilities licensed to serve alcoholic liquor by the drink, including golf courses,
fishing piers and resort complexes.
Effective Date: July 23, 2010
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LIST OF TEMPORARY PROVISOS
Temporary provisos are enacted as part of the annual budget bill, 2010 House Bill 4567,
Part IB (Act No. 291). They are effective only for the current State fiscal year (July 1,
2010 – June 30, 2011). They expire on June 30th, unless reenacted by the General
Assembly.
The following is a list of new provisos enacted during this legislative session and a list of
provisos that were enacted in prior fiscal years and reenacted during this legislative
session. A brief summary of the new provisos can be found in this publication under the
applicable subject matter categories. A summary of the reenacted provisos can be found
in SC Information Letter #09-14.
NEW PROVISOS
Income Taxes
Proviso 81.8 - No estimated tax penalty when following IRC 6654(d)(1)(D)
Miscellaneous (Administrative, Miscellaneous Taxes, Other, and Regulatory)
Proviso 89.142 - Additional 1% Interest Rate Reduction on Refunds
Proviso 81.9 - Bingo License
REENACTED PROVISOS
Income Taxes
Proviso 1A.17 - Teacher Supplies - Reimbursement Amount Not Taxable
Property Taxes
Proviso 89.48 - Personal Property Tax Relief Fund Not Funded
Sales and Use Taxes
Proviso 89.77 - Viscosupplementation Therapies - Sales and Use Tax Suspended
Proviso 89.72 - Respiratory Syncytial Virus Medicines
Proviso 89.47 - Private Schools - Use Tax Exemption
Proviso 89.107 - 2010 Sales Tax Holiday for Guns
Miscellaneous (Administrative, Miscellaneous Taxes, Other, and Regulatory)
Proviso 72.17 - 2% Reduction on Interest Rate on Tax Refunds used for operations of the
State’s Guardian ad Litem Program
Proviso 81.6 - Website Posting of Tax Return Information for Candidates and
Gubernatorial Appointees
Proviso 81.7 - Admissions Tax Exemption for Payment to Nonprofit Athletic Booster
Organizations for Right to Purchase Athletic Event Season Tickets
Proviso 1.17 - Local Government School Buses - Motor Fuel Tax Exemption
Proviso 21.16 - Nursing Home Bed Franchise Fees Suspension
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