What were the significant South Carolina tax-law changes from the 2014 legislative session, as summarized by the Department (per SC IL #14-12)?

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 2014 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 "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 for specific details and requirements.

The summary is divided into five categories:

1. Income Tax, Bank Tax, Withholding, and Corporate License Fees (including reenacted temporary provisos and a reminder of prior legislation first effective in 2014).
2. Property Taxes and Fees in Lieu of Property Taxes.
3. Sales and Use Taxes.
4. Miscellaneous.
5. Temporary Provisos – List.

Some notable enactments the letter describes include:

• Internal Revenue Code conformity updated so South Carolina adopts the Code as amended through December 31, 2013 (S.C. Code § 12-6-40(A)(1)).
• Income tax: a new deduction for volunteer state constables; amendments to the Manufacturers of Clean Energy Systems and Components credit and the Job Retraining credit; an amended Port Cargo credit; a new active trade or business income tax rate for pass-through entities; and a new consumer-protection-services (identity-theft) individual income tax deduction.
• Property tax: several 4% assessment-ratio eligibility changes (armed-forces members' residential property, residences rented 72 days or less, partial ownership interests, and rental of a portion of a legal residence); an exemption for property on a military base used for military housing; and an exemption for certain trusts for the benefit of a religious organization.
• Sales and use / accommodations tax: residences rented under 15 days are not subject to the accommodations tax; an amendment to "additional guest charges" at places furnishing accommodations; the phased-in exemption for certain injectable medications and biologics; a suspension of tax on viscosupplementation therapies; and a private-school use-tax exemption.

What this means for you

If you file South Carolina income tax

Check the income tax section for changes that could affect your 2014 return — updated IRC conformity, the new volunteer-constable and identity-theft-protection deductions, and amended credits. Remember several items are temporary provisos that apply for one fiscal year.

If you own real property or rent it short-term

The property-tax section changes several 4% owner-occupied assessment-ratio rules, and the sales/accommodations section changes how short-term rentals are taxed (residences rented under 15 days are not subject to the accommodations tax) — confirm which rule fits your situation.

If you sell taxable goods or services

Review the sales and use tax category for new or amended exemptions (injectable medications phase-in, viscosupplementation therapies, private-school use tax) before changing how you collect tax, and read the underlying act.

Common questions

Q: What is this letter?
A: The Department's category-by-category summary of the main South Carolina tax law changes from the 2014 legislative session.

Q: Can I rely on the summary itself?
A: No. The Department states it is a summary of the main points, not an interpretation, and you must consult the full text of each act; some items are temporary provisos.

Q: What is the updated Internal Revenue Code conformity date?
A: South Carolina adopts the Internal Revenue Code as amended through December 31, 2013 for the covered years (S.C. Code § 12-6-40(A)(1)).

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL14-12.pdf

Original ruling text

State of South Carolina

Department of Revenue
300A Outlet Pointe Blvd., P. O. Box 125, Columbia, South Carolina 29214
Website Address: www.sctax.org

SC INFORMATION LETTER #14-12

SUBJECT:

Tax Legislative Update for 2014

DATE:

September 2, 2014

AUTHORITY: S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (Supp. 2012)
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
enacted during the past legislative session. The summary is divided into categories, by subject
matter, as indicated below.
CATEGORY OF LEGISLATION

PAGE #

1. Income Tax, Bank Tax, Withholding, and Corporate License Fees
   Legislation.......................................................................................
   Reenacted Temporary Provisos ......................................................
   Reminder – Prior Legislation Effective in 2014 .............................

6
11
16

2. Property Taxes and Fees in Lieu of Property Taxes
   Legislation.......................................................................................
   Reenacted Temporary Provisos ......................................................

19
24

3. Sales and Use Taxes
   Legislation.......................................................................................
   Reenacted Temporary Provisos ......................................................
   Reminder – Prior Legislation Effective in 2014 .............................

26
27
28

4. Miscellaneous
   Administrative and Procedural Matters ..........................................
   Miscellaneous Tax Legislation .......................................................
   Other Items (including disaster work tax relief) .............................
   Regulatory Legislation ....................................................................
   Reenacted Temporary Provisos ......................................................

29
30
31
37
44

5. Temporary Provisos – List .................................................................

47

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.
Legislation regarding insurance premium taxes, unemployment taxes, distribution of funds,
millage rate changes, and other similar provisions are not summarized. There may be 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.

TEXT OF LEGISLATION:
A complete copy of the legislation discussed in this publication can be obtained from the South
Carolina Legislature website at http://www.scstatehouse.gov/ or the Department’s website at
http://www.sctax.org/Tax+Policy/New+Legislation.htm.

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LIST OF BILLS BY SUBJECT CATEGORY
A list of significant changes in tax and regulatory laws (both permanent and temporary) enacted
during the 2014 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, 2015.
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/New+Legislation.htm.

INCOME TAXES, BANK TAXES, WITHHOLDING and CORPORATE LICENSE FEES
BILL #

ACT # SUBJECT

953

126

Internal Revenue Code Conformity

3089

134

Volunteer State Constable – Eligible for Deduction

3644 – Sec. 1

279

Manufacturers of Clean Energy Systems and Components Credit – Amended

– Sec. 2

279

Biomass Resource Credit – Administration of Credit by Department

– Sec. 3

279

License Tax Credit for Infrastructure – Multi-Use Sports and Recreation Complex

– Sec. 4.A

279

Job Retraining Credit – Substantial Amendments
Job Retraining Additional Annual Fee – Requirement Change
Educational Credit for Exceptional Needs Children – Reenacted Temporary Proviso

– Sec. 4.B

279

4701 – Proviso 1.80

286

4701 – Proviso 1A.11

286

Teacher Supplies and Materials – Reimbursement Amount Not Taxable or
Refundable Income Tax Credit– Reenacted Temporary Proviso

4701 – Proviso 1A.12

286

Teacher of the Year Awards – Not Subject to South Carolina Income Tax –
Reenacted Temporary Proviso

4701 – Proviso 118.14

286

Consumer Protection Services – Individual Income Tax Deduction- Reenacted
Temporary Proviso

PROPERTY TAXES and FEES IN LIEU OF PROPERTY TAXES
BILL #

ACT # SUBJECT

437 – Sec. 1

259

Residence Rented 72 Days of Less – Eligibility for 4% Assessment Ratio

– Sec. 4

259

Exemption Added for Certain Trusts for the Benefit of a Religious Organization

– Sec. 5

259

Partial Ownership Interest in Residence – Eligibility for 4% Assessment Ratio

– Sec. 6

259

Rental of Portion of Legal Residence – Eligibility for 4% Assessment Ratio

825 – Sec. 2

289

Property on Military Base Used for Military Housing - Exempt

3027 – Sec. 1

133

Armed Forces Member Residential Property – Eligibility for 4% Assessment Ratio
Expanded

4944

277

Multiple Lot Discount – Additional Year of Eligibility

4701 – Proviso 1.62

286

Index of Taxpaying Ability – Imputed Value for Owner-Occupied Residential Property
– Reenacted Temporary Proviso

4701 – Proviso 117.41

286

Personal Property Tax Relief Fund Not Funded – Reenacted Temporary Proviso

3

SALES AND USE TAXES
BILL #

ACT # SUBJECT

437 – Sec. 3

259

Residence Rented Under 15 Days – Not Subject to Sales Tax on Accommodations

3561

172

“Additional Guest Charges” at Places Furnishing Accommodations - Amended

4701 – Proviso 117.40

286

Private Schools – Use Tax Exemption – Reenacted Temporary Proviso

4701 – Proviso 117.61

286

Respiratory Syncytial Virus Medicines Exemption – Effective Date – Reenacted
Temporary Proviso

4701 – Proviso 117.65

286

Viscosupplementation Therapies – Sales and Use Tax Suspended – Reenacted
Temporary Proviso

MISCELLANEOUS
BILL #

ACT # SUBCATEGORY SUBJECT
Administrative
& Procedural

437 – Sec. 2

259

Federal Schedule E Filed – Disclosure Permitted

985 – Sec. 3 and 4

261

“Fairness in Lodging Act” – Disclosure and Duties of the
Department

4701 – Proviso 92.10

286

2% Reduction on Interest on Tax Refunds – Reenacted
Temporary Proviso

4701 – Proviso 106.6

286

Voluntary Website Posting of Tax Return Information for
Candidates and Gubernatorial Appointees – Reenacted
Temporary Proviso

4701 – Proviso 117.91

286

Additional 1% Reduction on Interest Rate on Tax Refunds –
Reenacted Temporary Proviso

Miscellaneous
Taxes
437 – Sec. 4

259

Deed Recording Fee – Exemption for Transfers from Trust
Expanded

474

242

State Museum – Exempt from Admissions Tax

4701 – Proviso 1.17

286

Local Government School Buses – Motor Fuel Tax Exemption –
Reenacted Temporary Proviso

4701 – Proviso 33.11

286

Nursing Home Bed Franchise Fee – Suspension – Reenacted
Temporary Proviso

4701 – Proviso 106.7

286

Admissions Tax Exemption for Payment to Nonprofit Athletic
Booster Organizations for Right to Purchase Athletic Event
Season Tickets – Reenacted Temporary Proviso

4701 – Proviso 118.19

286

Admissions Tax Rebate - Motorsports Entertainment Complex
Facility - Reenacted Temporary Proviso

Other
503

188

Beach Preservation Act – New 1% Beach Preservation Fee
Remitted to Local Governing Body

809

243

Local Capital Project Sales Tax – Referendum Date Amended

940 – Sec.1

290

Education Capital Improvement Sales and Use Tax – County
Eligibility

– Sec. 2

290

Education Capital Improvement Sales and Use Tax –
Reimposition Referendum

985 – Sec. 1 and 2

261

“Fairness in Lodging Act” – New Authority to Enforce Local
Accommodations Tax

1033

220

Emergency Related Infrastructure Work by an Out of State
Business or Employee – 2013 Proviso Codified

4

1085

229

Local Sales and Use Tax for Transportation Facilities –
Referendum Date and Imposition

4871

208

Charter Schools Taxation - Amended

3512 – Sec. 1

223

Discounts on Sales of Alcoholic Liquor and Certain Nonalcoholic
Items by Premiums, Coupons or Stamps - Amended

3512 – Sec. 2, 3 and 4

223

Acquisition of Alcoholic Liquor by Retail Dealers – New
Provisions

– Sec. 5

223

Brewery – Sales for On-Premises Consumption

– Sec. 6

Regulatory

223

Sale of Alcoholic Liquor – Prohibited Days Amended

3626

199

Motorsports Entertainment Complex and Tennis Specific
Complex – New Licensing Provisions for Beer and Wine and for
Alcoholic Liquors Sold at These Locations

4399 – Sec. 1

253

Locations Seeking License to Sell Liquor for On-Premises
Consumption – Consent in Case of Proximity to Church or
Playground

– Sec. 2

253

Powdered Alcohol Unlawful – New Misdemeanor and Exceptions
Donation of Alcoholic Liquors - Reenacted Temporary Proviso

4701 – Proviso 117.116 286

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INCOME TAXES, BANK TAXES, WITHHOLDING,
and CORPORATE LICENSE FEES
Senate Bill 953 (Act No. 126)
Internal Revenue Code Conformity
Conformity Date. 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, 2013, and includes the effective date provisions
contained therein.
Extension of Expiring Federal Provisions. Code Section 12-6-40(A)(1)(c) provides that if during
2014 the federal government extends, without otherwise amending, Internal Revenue Code
provisions expired on December 31, 2013, then these sections or portions of sections which have
been adopted by South Carolina will be extended in the same manner they are for federal
income tax purposes.
Effective Date: March 4, 2014

House Bill No. 3089 (Act No. 134)
Volunteer State Constable – Eligible for Deduction
Code Section 12-6-1140(10)(a), which allows an income tax deduction for a volunteer
firefighter, rescue squad member, reserve police officer, and other specified law enforcement and
safety officers, has been amended to include a volunteer state constable appointed by the
Governor pursuant to Code Section 23-1-60 for the purpose of assisting named law enforcement
agencies and who has been designated by the State Law Enforcement Division (SLED) as a state
constable not otherwise eligible for the deduction. The deduction is determined yearly by the
Board of Economic Advisors and cannot exceed $3,000.
Code Section 12-6-1140(10)(c)(v) provides the eligibility requirements for this deduction. The
volunteer state constable must:

1. Complete a minimum logged service time of 240 hours per year;
2. Be designated by SLED as a state constable before the tax year for which the deduction is
   first claimed; and
3. Be current with the required SLED approved annual training for constables for the most
   recently completed fiscal year.
   Effective Date: Applies to tax years beginning after 2013.
   6

House Bill 3644, Section 1 (Act No. 279)
Manufacturers of Clean Energy Systems and Components Credit - Amended
Code Section 12-6-3588, providing an income tax credit to companies in the solar, wind,
geothermal, and other clean energy industries expanding or locating in South Carolina, has been
amended. The amendments include:
Act Renamed. The General Assembly has renamed the Act in Code Section 12-6-3588 from the
“South Carolina Renewable Energy Tax Incentive Program” to the “South Carolina Clean
Energy Tax Incentive Program”.
Act Extended. When enacted in 2010, the income tax credit program was for a 5 year period
beginning January 1, 2010 and ending December 31, 2015. The credit is now allowed for up to
60 months beginning with the first year for which the business is eligible to receive the credit,
providing it becomes eligible no later than the tax year ending December 31, 2020.
Credit Provisions Amended. Among the changes are:

1. The investment requirement in new qualifying plant and equipment has changed from $500
   million to at least: (a) $50 million in a Tier IV county, (b) $100 million in a Tier III county,
   (c) $150 million in a Tier II county, or (d) $200 million in a Tier I county. The county
   ranking is determined by Code Section 12-6-3360(B), the job tax credit statute.
2. The job creation requirement has changed from a business creating 1½ full time jobs for
   every $500,000 of qualifying capital investment to creating at least 1 full-time job for every
   $1 million of qualifying capital investment. The statute continues to require that the jobs pay
   at least 125% of the State’s average annual median wage as defined by the Department of
   Commerce.
3. The manufacturing requirement has changed to provide that a business must manufacture
   clean energy systems or components in South Carolina for solar, wind, geothermal, or other
   clean energy uses to be eligible for the credit. The “or” was previously an “and”.
4. The term “clean energy” has been substituted for “renewable energy.” “Clean energy
   operations” are limited to manufacturers of systems or components that are used or useful in
   manufacturing or operation of clean energy equipment for the generation, storage, testing and
   research and development, and transmission or distribution of electricity from clean energy
   sources, including specialized packaging for the clean energy equipment manufactured at the
   facility. A clean energy operation does not include generating electricity for off-site
   consumption.
   Credit Request and Approval by Department. For credits awarded after tax year 2014, to obtain
   the amount of credit, a taxpayer must notify the Department, not the State Energy Office, in
   writing, of its intention to claim the credit.

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The Department will now determine the proof necessary to meet the credit requirements.
Expenditures qualifying for the credit will be certified by the Department. A request for credit
must be submitted by January 31st to the Department for qualifying expenses incurred in the
prior calendar year. The Department will notify the taxpayer of the qualifying expenditures and
the credit amount by March 1st of that year.
Effective Date: Tax years beginning after 2013.

House Bill 3644, Section 2 (Act No. 279)
Biomass Resource Credit – Administration of Credit by Department
Code Section 12-6-3620 provides a corporation a credit against income taxes, corporate license
fees, or both, for 25% of the costs incurred for the purchase and installation of equipment used to
create power, heat, steam electricity, or another form of energy for commercial use from a fuel
consisting of 90% or more biomass resource.
A new subsection has been added to provide that for any credit requested after tax year 2013, a
taxpayer must submit a request for credit to the Department by January 31st for all qualifying
equipment placed in service in the previous calendar year. The Department must notify the
taxpayer as to whether it qualifies for the credit and the amount of credit by March 1st of that
year.
Effective Date: June 10, 2014
House Bill 3644, Section 4.A (Act No. 279)
Job Retraining Credit – Substantial Amendments
Code Section 12-10-95 provides for a job retraining “credit” to approved businesses retraining
qualifying existing employees in order for the business to remain competitive, introduce new
technologies, export products, or provide apprenticeship programs. The incentive allows a
business to obtain a refund of employee withholding to use for, or reimburse the cost of,
qualifying retraining. Code Section 12-10-95 has been substantially amended and the statute now
provides the following:
Approval of Retraining. A business negotiates with a technical college, with approval from the
State Board for Technical and Comprehensive Education. Code Section 12-10-95(A).
Annual Credit. A business may negotiate to claim a job retraining credit of $1,000 a year for
retraining of each qualifying employee. The total amount of retraining credit cannot exceed
$5,000 over 5 consecutive years for each retrained employee. Code Section 12-10-95(A).
Expenditure of Business. A qualifying business must spend at least $1.50 on retraining eligible
employees for every $1.00 claimed as a credit against withholding. Code Section 12-10-95(E).

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Eligible Employee. Retraining is limited to a production or technology first line employee or
immediate supervisor who is a full-time employee and has been employed by the business for at
least two years. Code Section 12-10-95(A).
Eligible Programs and Costs. Retraining programs that are eligible for the credit include
retraining of current employees on newly installed equipment or newly implemented technology,
such as computer platforms, software implementation and upgrades, Total Quality Management,
ISO 9000, and self-directed work teams. Executive training, management development training,
career development, personal enrichment training, and cross-training of employees on equipment
or technology that is not new to the company are not eligible for the credit. Code Section 12-1095(A)(2).
The credit is not available if the business requires the employee to reimburse or pay the employer
for the direct costs of retraining, or if the employee is required to reimburse or pay the employer
indirectly through the forfeit of leave time, vacation time, or other compensable time. Direct
costs of retraining include instructor salaries, development of retraining programs, purchase or
rental of materials and supplies, textbooks and manuals, instructional media, such as video tapes,
presentations, equipment used for retraining only, not to include production equipment, and
reasonable travel costs as limited by the state’s travel reimbursement policy. Code Sections 1210-95(A)(2) and (D).
The approving technical college may supervise the employer’s approved internal training
program. Code Section 12-10-95(C).
Annual Renewal Fee. The annual renewal fee of $250 is to be billed and collected by the
Department. Code Section 12-10-95(H).
Audit. Every 3 years, the Department must audit any business that claimed the job retraining
credit during that time period solely for the purpose of verifying the sources and uses of the
credits. Code Section 12-10-95(I)(2).
Effective Date: Tax years beginning after December 31, 2013.

House Bill 3644, Section 4.B (Act No. 279)
Job Retraining Additional Annual Fee – Requirement Change
Code Section 12-10-105 provides that a business claiming more than $10,000 of job
development credits or more than $10,000 of job retraining credits for a project in one calendar
year must remit an additional $1,000 fee to the Department. This section has been revised to
change the dollar requirement applicable to a business claiming job retaining credits to $40,000.
Effective Date: Tax years beginning after December 31, 2013.

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House Bill 3644, Section 3 (Act No. 279)
License Tax Credit for Infrastructure – Multi-Use Sports and Recreation Complex
Code Section 12-20-105 allows a taxpayer subject to the license fee imposed on South Carolina
property and gross receipts under Code Section 12-20-100, such as a power company, water
company, gas company, or telephone company, a credit against its liability for amounts paid in
cash for infrastructure for an eligible project of another taxpayer. The statute has been amended
as follows:

1. Code Section 12-20-105(B)(3) has been added to provide that in a county that collects at
   least $5 million in state accommodations tax in at least one fiscal year, a county or
   municipality owned multi-use sports and recreation complex is considered an “eligible
   project” promoting economic development for the purposes of the credit.
2. A new subsection has been added to provide that for a qualifying multi-use sports and
   recreation complex in subsection (B)(3), infrastructure includes costs of land acquisition and
   preparation, construction of facilities and venues in the complex, improvements and upgrades
   to existing facilities and venues, and any other capital costs incurred in the acquisition,
   construction, and operation of the complex, in addition to qualifying infrastructure listed in
   subsection (C) of the statute.
   Effective Date: Applies for contributions made for a multi-use sports and recreational complex
   placed in service after 2011.

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REENACTED TEMPORARY PROVISOS
The following temporary provisos were enacted in a prior legislative session
and were reenacted by the General Assembly in 2014. Temporary provisos
are effective for the State fiscal year July 1, 2014 through June 30, 2015, and
will expire June 30, 2015, unless reenacted by the General Assembly in the
next legislative session.
House Bill 4701, Part IB, Section 118, Proviso 118.14 (Act No. 286)
Consumer Protection Services – Individual Income Tax Deduction
This temporary proviso allows an individual an income tax deduction for the cost incurred to
purchase “identity theft protection” and “identity theft resolution services” by monthly or annual
contract or subscription. The deduction is equal to actual costs for the contract or subscription
incurred in the tax year, up to $300 for an individual taxpayer or up to $1,000 for a joint return or
a return claiming dependents.
The deduction is available to:

1. A taxpayer who filed a return (paper or electronic) with the Department for any tax year from
   1998 through 2012 or
2. A person whose personally identifiable information was on the return of another eligible
   person, including minor dependents.
   The deduction is not available to:
3. An individual who is enrolled in the identity theft protection and identity theft resolution
   services offered free of charge by the State.
4. An individual who deducted the same actual cost as a business expense.
   For purposes of this proviso, “identity theft protection” and “identity theft resolution services”
   are defined as follows:
   Identity theft protection. Identity theft protection means products and services designed to
   prevent an incident of identity fraud or identity theft or otherwise protect the privacy of a
   person’s personal identifying information by precluding a third party from gaining unauthorized
   acquisition of another’s personal identifying information to obtain financial resources or other
   products, benefits or services.
   Identity theft resolution services. Identity theft resolution services means products and services
   designed to assist persons whose personal identifying information was obtained by a third party,
   minimizing the effects of the identity fraud or identity theft incident and restoring the person’s
   identity to pre-theft status.
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House Bill 4701, Part IB, Section 1A, Proviso 1A.11 (Act No. 286)
Teacher Supplies and Materials – Reimbursement Amount Not Taxable or
Refundable Income Tax Credit
This temporary proviso allows for a $275 reimbursement designed to offset expenses for
teaching supplies and materials incurred by all certified public school teachers, certified special
school classroom teachers, certified media specialists, and certified guidance counselors who are
employed by a school district or a charter school as of November 30 of the current fiscal year.
The reimbursement is not considered taxable income by South Carolina.
This proviso also provides that any classroom teacher, including a classroom teacher at a South
Carolina private school, not eligible for the teacher supply reimbursement described above, may
claim a refundable income tax credit on his 2014 tax return. The credit is the lesser of $275 or
the amount spent on teacher supplies and materials. The return claiming the credit must be filed
on or before June 30, 2015. The return can be an original or amended return and may be for
expenses made after December 31, 2014.

House Bill 4701, Part IB, Section 1A, Proviso 1A.12 (Act No. 286)
Teacher of the Year Awards - Not Subject to South Carolina Income Tax
This temporary proviso provides for the following teacher of the year awards: (a) a $1,000 award
to each district Teacher of the Year, (b) a $25,000 award to the State Teacher of the Year, and (c)
a $10,000 award to each of the four Honor Roll Teachers of the Year. These awards are not
subject to South Carolina income tax.
House Bill 4701, Part IB, Section 1, Proviso 1.80 (Act No. 286)
(Similar to 2013 House Bill 3710, Part IB, Section 1, Proviso 1.85)
Educational Credit for Exceptional Needs Children
This temporary proviso provides that grants may be awarded by a nonprofit scholarship funding
organization of up to $10,000 or the total cost of tuition, whichever is less, for qualifying
students with exceptional needs to attend an independent school. A person is allowed a tax credit
against state income taxes or bank taxes for the amount of money contributed to a nonprofit
scholarship funding organization if (1) the contribution is used to provide grants for tuition,
transportation to and from school, or textbooks to exceptional needs children enrolled in eligible
schools and (2) the person does not designate a specific child or school as the beneficiary of the
contribution. The credit is available for contributions made between July 1, 2014 and June 30,
2015, unless the legislature re-enacts this temporary credit proviso in the next legislative session.

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Other requirements of the credit include:

1. The credit is limited to 60% of a taxpayer’s total income tax or bank tax liability for the tax
   year the contribution is made.
2. A corporation or entity entitled to the credit may not convey, transfer, or assign this credit to
   another entity unless all of the assets of the corporation or entity are conveyed, assigned, or
   transferred in the same transaction.
3. The total amount of tax credits authorized is $8 million.
4. The credits will be allowed on a first come, first serve basis based on an application process
   established by the Department with the receipt of the application by the Department
   determining the priority.
   The Educational Oversight Committee created under Chapter 6, Title 59, is responsible for (1)
   determining if an eligible school meets the criteria of this proviso and publishing an approved list
   of such schools, (2) providing a list of nonprofit scholarship funding organizations in good
   standing which provide grants, and (3) providing a list of approved independent schools which
   accept grants.
   Every nonprofit scholarship funding organization providing grants must have an outside auditing
   firm conduct a comprehensive financial audit of its operations in conformity with generally
   accepted accounting principles. The audit must also document the total number of grants
   awarded, the total amount of each grant, and the names of the schools receiving the grants.
   Further, every independent school accepting grants for eligible students under this proviso must
   have a compliance audit by an outside entity or auditing firm to examine its compliance with this
   proviso. The audits of the nonprofit scholarship funding organizations and independent schools
   accepting grants must be furnished within 30 days of issuance and acceptance to the Department
   and the Secretary of State and made available on their websites for public review.
   The proviso provides definitions of various terms. These include “nonprofit scholarship funding
   organization,” “exceptional needs child,” “qualifying student,” “independent school” and
   “eligible school.”
   A “nonprofit scholarship funding organization” is a charitable organization that:
5. Is an exempt organization under Internal Revenue Code Section 501(c)(3);
6. After its first year of operation, allocates at least 95% of its annual contributions and gross
   revenues received during a year to provide grants for tuition, transportation to and from
   school, and textbook expenses to children enrolled in an “eligible school” and after the first
   year of operation, does not have administrative expenses exceeding 5% of its annual
   contributions and revenues for the year;
7. Allocates all of its funds used for grants on an annual basis to “exceptional needs” students;
8. Does not provide grants solely for the benefit of one school;
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5. Does not have as a volunteer, contractor, consultant, fundraiser, or member of its governing
board a parent, guardian, or member of their immediate family who has a child who is
receiving or has received a scholarship grant authorized by this proviso within one year of
the date the person became a board member;

6. Does not have as a member of its governing board or an employee, volunteer, contractor,
   consultant, or fundraiser who has been convicted of a felony, or has declared bankruptcy
   within the last seven years;
7. Does not release personal identifiable information about students or donors or use
   information collected about students, donors, or schools for financial gain; and
8. Does not place conditions on schools concerning enrolling students receiving scholarships
   from other nonprofit scholarship funding organizations.
   An “eligible school” is an independent school including those religious in nature, other than a
   public school, at which compulsory attendance requirements of Code Section 59-65-10 may be
   met, that:
9. Is located in South Carolina;
10. Offers a general education to primary or secondary school students;
11. Does not discriminate based on race, color or national origin;
12. Has an educational curriculum that includes courses set forth in South Carolina’s diploma
    requirements and which administers national achievement or state standardized tests, or both,
    at progressive grade levels to determine student progress;
13. Has school facilities that are subject to applicable federal, state and local laws; and
14. Is a member in good standing of the Southern Association of Colleges and Schools, the SC
    Association of Christian Schools or the SC Independent Schools Association.
    A “qualifying student” is a student who: (1) is a South Carolina resident, (2) is eligible to be
    enrolled in a South Carolina secondary or elementary public school at the kindergarten level or
    above for the current school year, and (3) is a student with “exceptional needs.”
    A student with exceptional needs is defined as a child:
15. (a) who has been evaluated under the criteria of South Carolina Regulation 43-243.1, and
    determined to be eligible as a child with a disability who needs special education and related
    services in accordance with Section 300.8 of the Federal Individuals and Disabilities
    Education Act (20 U.S.C.A. Section 1400 et. seq.); or

14

(b) has been diagnosed within the last three years by a licensed speech-language pathologist,
psychiatrist, or medical, mental health, psycho-educational, or other comparable licensed
healthcare provider as having a neurodevelopmental disorder; a substantial sensory or
physical impairment (such as deaf, blind, or orthopedic disability); or some other disability or
acute or chronic condition that significantly impedes the student’s ability to succeed in
school without specialized instruction or services tailored to the childs unique needs; and

2. the child’s parents or legal guardian believes that the services provided by the school district
   of legal residence do not sufficiently meet the needs of the child.
   Prior to awarding a grant, a parent or guardian must provide documentation to the nonprofit
   scholarship funding organization that a qualifying student is an exceptional needs child. A
   portion of the scholarship funds must be returned to the nonprofit scholarship funding
   organization granting the scholarship if a qualifying student withdraws from the school before
   the end of the semester or school year.

15

REMINDER
The following provisions were enacted in a prior year, but are effective in
2014. They are summarized below for informational purposes.
House Bill 5418, Section 2 (Act No. 287)
Active Trade or Business Income of Pass through Entity – New Tax Rate
Code Section 12-6-545 provides for a reduced income tax rate on active trade or business income
of a pass through business (i.e., sole proprietorship, partnership, S corporation, or limited
liability company taxed as a sole proprietorship, partnership, or S corporation) in lieu of the
income tax rate imposed under Code Section 12-6-510 (individual income tax.) Code Section
12-6-545(B)(2) has been amended to lower the current tax rate from 5% to 3% over several
years.
The new rates are phased in as follows:
Tax Year Beginning In
2012
2013
2014 and thereafter

Tax Rate
4.33 %
3.67 %
3.00 %

House Bill 3557 (Act No. 81)
Port Cargo Credit - Amended
Code Section 12-6-3375, providing a tax credit for port cargo volume in an amount determined
by the Coordinating Council for Economic Development (Department of Commerce), has been
amended. The changes include:
Qualifying Taxpayer Expanded. A taxpayer engaged in any of the following is now eligible for
the port cargo credit: manufacturing, warehousing, freight forwarding, freight handling, goods
processing, cross docking, transloading, wholesaling of goods, or distribution, exported or
imported through port facilities in South Carolina. Previously, only a taxpayer engaged in
manufacturing, warehousing, or distribution was eligible for the credit.
Cargo Ownership Rule. The provision requiring that the taxpayer claiming the credit must own
the cargo at the time the port facilities are used has been deleted.

16

Use of Credit. The credit may now be claimed against (1) taxes imposed pursuant to Code
Section 12-6-530 (corporate income tax), (2) taxes under Code Section 12-6-545 (active trade or
business income subject to the reduced individual income tax rate), and (3) employee
withholding. Previously, the credit could be used against “income taxes” and “withholding
taxes.”
Carryover of Credit Clarified and Expanded to Withholding Tax. If the income tax credit
exceeds the taxpayer’s income tax liability for the tax year, the excess may be carried forward
and claimed against income taxes in the next 5 succeeding tax years. If the credit against
withholding tax exceeds the taxpayer’s withholding tax liability that is not otherwise refunded
for the tax quarter, the excess may be carried forward and claimed in the next 20 succeeding
quarters against withholding liability that is not otherwise refunded. Previously, an unused credit
was claimed against income tax for the next 5 tax years.
Definitions. A definition for the term “weighted twenty-foot equivalent unit” has been added.
The definitions for “base year port cargo volume” and “port cargo volume” have been amended.
Allocation of Credit by Coordinating Council – Discretionary Factors Revised. The Coordinating
Council has the sole discretion in allocating the port cargo credit and will consider the following
factors: (a) the amount of base year port cargo volume, (b) the total and percentage increase in
port cargo volume, and (c) factors related to the economic benefit of the State or other factors.
The number of qualifying taxpayers and the type of cargo transported were deleted as factors to
be considered by the Coordinating Council.
Amount of Credit to be Allocated Against Withholding Tax. The limitation that the amount of
port cargo credit allocated for use against employee withholding cannot exceed $4 million has
been deleted. The maximum amount of port cargo credit allowed to all qualifying taxpayers
continues to be $8 million for each calendar year.
Special Credit Allocation for New Warehouse or Distribution Facility against Withholding Tax –
Amended. The Coordinating Council may annually award up to $1 million of the $8 million port
cargo credit against employee withholdings, that are not otherwise refundable, to a new
warehouse or distribution facility which commits to spend at least $40 million at a single site and
create 100 new full-time jobs, if the base year cargo is not less than 5,000 twenty-foot equivalent
units or its non-containerized equivalent. If the credit exceeds the taxpayer’s withholding tax
liability for the taxable quarter that is not otherwise refundable, the excess may be carried
forward in the next 20 succeeding quarters and claimed against withholding liability that is not
otherwise refundable. If a taxpayer receives the credit but fails to timely meet the requirements,
the taxpayer must repay a pro rata portion of the credit claimed. Previously, this provision did
not specify the use of the credit against withholding tax, provide for the credit carryover against
withholding tax for 20 quarters, contain base year cargo provisions, or require credit repayment
if credit requirements were not met.

17

New Special Credit Eligibility for Anticipated Distribution Facility. A provision has been added
to allow eligibility for the port cargo credit to a taxpayer engaged in the movement of goods
imported or exported through South Carolina’s port facilities if the cargo supports a presence in
South Carolina and the taxpayer does not have a distribution center in South Carolina at the time
of initial approval of the credit provided: (1) the taxpayer employs at least 250 full-time or
full-time equivalent South Carolinians in operations statewide, (2) the taxpayer completes the
construction of the distribution facility in South Carolina, and is operational, within 5 years of
the initial approval of the credit, and (3) the base year for the taxpayer is 5,000 twenty-foot
equivalent units or its non-containerized equivalent or more. The credit certificate expires 3 years
after issuance if satisfactory proof has not been received. If a taxpayer receives the credit but
fails to meet the requirements at the end of the 5 year period, the taxpayer must repay a pro rata
portion of the credit claimed.
Effective Date: Tax years beginning after December 31, 2013.

18

PROPERTY TAXES and
FEES IN LIEU OF PROPERTY TAXES
House Bill 3027, Section 1 (Act No. 133)
Armed Forces Member Residential Property – Eligibility for 4% Assessment Ratio
Expanded
Code Section 12-43-220(c)(2)(v), allowing the 4% property tax assessment ratio for a member of
the United States Armed Forces on active duty whose permanent duty station is South Carolina,
but whose legal residence and domicile is another state, has been expanded as summarized
below.
Code Section 12-43-220(c)(2)(v)(B) has been added to provide that an active duty member of the
United States Armed Forces eligible for and receiving the 4% assessment ratio who receives
orders for a permanent change of station or a temporary duty assignment for at least one year,
may retain the 4% assessment ratio and applicable exemptions for so long as he remains on
active duty, regardless of his subsequent relocation and regardless of any rental income
attributable to the property. This provision does not apply if the member or member of his
household claims the 4% assessment ratio for any other residential property located in South
Carolina (see exception in Code Section 12-43-220(c)(2)(v)(C) discussed below). Code Section
12-43-220(c)(2)(iii) defines “a member of my household.”
Notwithstanding any other provision, Code Section 12-43-220(c)(2)(v)(C) provides that an
active duty member of the United States Armed Forces meeting all the other applicable
eligibility requirements for the 4% assessment ratio, who receives orders for a permanent change
of station or a temporary duty assignment for at least one year, may claim the 4% assessment
ratio and applicable exemptions for two residential properties located in South Carolina for no
more than two property tax years providing the member: (a) attempts to sell the first acquired
residence within 30 days of acquiring the second residence and (b) continues to attempt to sell
the first acquired residence in any year in which the 4% assessment ratio is claimed.
The member must apply for the 4% assessment ratio on both residences before the first penalty
date for the payment of taxes for the tax year for which the member first claims eligibility. The
burden of proof for eligibility on both residences is on the member. The member must provide
the proof the assessor requires, including, but not limited to, a copy of the member’s most
recently filed South Carolina individual income tax return and copies of South Carolina motor
vehicle registrations for all motor vehicles registered in the member’s name.
In order to qualify, the owner or the owner’s agent must apply to the county assessor by May 15th
of each year. Along with the application, the owner must submit a Leave and Earnings
Statement (LES) from the current calendar year. Any information contained in the LES not
related to the active duty status of the owner may be redacted. The term “owner” includes the
spouse of the active duty member who jointly owns the qualifying property.

19

The 4% assessment ratio allowed by Code Section 12-43-220(c)(2)(v) must be construed as a
property tax exemption for an amount of the fair market value of the residence sufficient to equal
a 4% assessment ratio and other exemptions allowed applicable to the qualifying property.
Effective Date: Applies to property tax years beginning after 2013.

Senate Bill 437, Section 1 (Act No. 259)
Residence Rented 72 Days of Less - Eligibility for 4% Assessment Ratio
Code Section 12-43-220(c)(2)(iv) has been amended to provide that the owner of a residence that
is not rented for more than 72 days in a calendar year is eligible for a 4% assessment ratio
provided the owner or the owner’s agent has made a proper certification as required by Code
Section 12-43-220(c)(2)(ii) in the application and the owner is otherwise eligible for the 4%
assessment ratio.
For purposes of determining eligibility, rental income, and residency, the assessor annually may
require a copy of applicable portions of the owner’s federal and state tax returns, as well as the
Schedule E, “Supplemental Income and Loss,” from the applicant’s federal tax return for the
applicable tax year.
As a result of the above amendment, Code Section 12-43-220(c)(7) has been deleted. This
provision had allowed an owner-occupied home rented for less than 15 days during the calendar
year to remain eligible for the 4% assessment ratio.
Effective Date: Applies to property tax years beginning after 2013.

Senate Bill 437, Section 5 (Act No. 259)
Partial Ownership Interest in Residence – Eligibility for 4% Assessment Ratio
Code Section 12-43-220(c)(8) provides limitations on the amount of the 4% assessment ratio
applied to the value of the residence when an individual (other than a spouse) has an ownership
interest in the residence that is less than 50%. Subitem (iii) has been added to provide that Code
Section 12-43-220(c)(8) does not apply to property held exclusively by:

1. An applicant, or the applicant and the applicant’s spouse;
2. A trust if the person claiming the 4% assessment ratio is the grantor or settlor of the trust, and
   the only beneficiaries of the trust are the grantor or settlor and any parent, spouse, child,
   grandchild, or sibling of the grantor or settlor;

20

3. A family limited partnership if the person claiming the 4% assessment ratio transferred the
subject property to the partnership, and the only members of the partnership are the person
and the person’s parents, spouse, children, grandchildren, or siblings;

4. A limited liability company (“LLC”) if the person claiming the 4% assessment ratio
   transferred the subject property to the LLC, and the only members of the LLC are the person
   and the person’s parents, spouse, children, grandchildren, or siblings; or
5. Any combination thereof.
   This exception, however, does not apply if the applicant does not otherwise qualify for the 4%
   assessment ratio, including the requirement that the applicant, nor any member of the applicant’s
   household, claims the 4% assessment ratio on another residence.
   Effective Date: Applies to property tax years beginning after 2011.
   Note: If the property tax assessor determines that a person denied the 4%
   assessment ratio in property tax years 2012 or 2013 now qualifies for the 4%
   assessment ratio under Code Section 12-43-220(c)(8), the person must be
   refunded any property taxes paid in excess of the amount owed.

Senate Bill 437, Section 6 (Act No. 259)
Rental of Portion of Legal Residence - Eligibility for 4% Assessment Ratio
Code Section 12-43-220(c)(1), which provides for a 4% property tax assessment ratio for owneroccupied legal residences, has been amended to add that if the owner applying for the 4%
assessment ratio resides in the mobile home or single family residence and only rents a portion of
it to another individual as a residence, then the 4% assessment ratio is applied to the entire
mobile home or single family residence.
The statute continues to provide that if this property has located on it any rented mobile homes or
residences which are rented or any business for profit that the 4% value does not apply to those
businesses or rental properties.
Effective Date: June 9, 2014

Senate Bill 825, Section 2 (Act No. 289)
Property on Military Base Used for Military Housing - Exempt
The “Military Family Quality of Life Enhancement Act of 2014” has added Code Section 3-1-40
to provide a property tax exemption for any real property, and improvements thereon, located
within a military base or installation that is used or owned by the U.S. Armed Forces and is used
as military housing for military-affiliated personnel and their families. Military housing includes
ancillary facilities that support the military housing.
21

This exemption continues to apply if the real property is improved, maintained, or leased to a
party that would otherwise subject the real property to tax, provided there is a contractual
agreement between a branch of the U.S. Armed Forces and the party which requires the party to
use the property for military housing.
Effective Date: Applies to property tax years beginning after 2013.

Senate Bill 437, Section 4 (Act No. 259)
Exemption Added for Certain Trusts for the Benefit of a Religious Organization
Code Sections 12-37-220(B)(16)(a) and (b) have been amended to add that the property of a trust
may qualify for the exemption providing the trust is a trust established solely for the benefit of a
religious organization.
Code Section 12-37-220(B)(16)(a) now provides an exemption for the property of any religious,
charitable, eleemosynary, educational, or literary society, corporation, trust, or other association,
when the property is used by it primarily for the holding of its meetings and the conduct of the
business of the society, corporation, trust, or association and no profit or benefit inures to the any
private stockholder or individual.
Code Section 12-37-220(B)(16)(b) now provides an exemption for the property of any religious,
charitable or eleemosynary society, corporation, trust, or other association when the property is
acquired for the purpose of building or renovating residential structures on it for not-for-profit
sale to economically disadvantaged persons.
Effective Date: Applies to property tax years beginning after 2013.

House Bill 4944 (Act No. 277)
Multiple Lot Discount – Additional Year of Eligibility
Code Section 12-43-225, which allows a discounted value for property subdivided into at least
ten building lots in a plat recorded on or after January 1, 2001, has been amended. Subsection
(A) states that the discount provided in subsection (B) applies for 5 property tax years or until the
lot is sold or a certificate of occupancy is issued for the improvement on the lot, or the
improvement is occupied, whichever is first. When the discount allowed by this section no
longer applies, the lots must be individually valued.
Subsection (D)(1) has been expanded to provide an additional year of eligibility in property tax
year 2015 and now provides that for lots that received the discount on December 31, 2011, there
is granted an additional year of eligibility for that discount in property tax year 2015, in addition
to any remaining period for the discount provided in subsection (B).

22

Subsection (C) allows the discounted value to apply to a lot sold to the holder of a residential
homebuilder’s license or a general contractor’s license through the first tax year that ends 12
months from the date of the sale under certain circumstances. Item (D)(2) has been expanded to
provide an additional year of eligibility in property tax year 2015 and now provides that lots that
received the discount after December 31, 2008 and before January 1, 2012 are allowed an
additional year of eligibility for that discount in property tax year 2015.
Effective Date: Applies to property tax years beginning after 2013.

23

REENACTED TEMPORARY PROVISOS
The following temporary provisos were enacted in prior legislative sessions
and were reenacted by the General Assembly in 2014. Temporary provisos
are effective for the State fiscal year July 1, 2014 through June 30, 2015, and
will expire June 30, 2015, unless reenacted by the General Assembly in the
next legislative session.
House Bill 4701, Part IB, Section 1, Proviso 1.62 (Act No. 286)
Index of Taxpaying Ability – Imputed Value for Owner-Occupied Residential Property
The index of taxpaying ability is used to determine state funding for education under the
Education Finance Act of 1977, Chapter 20, Title 59. This index, prepared by the Department,
shows a local school district’s relative fiscal capacity in relation to that of all other districts in the
state based on the full market value of all taxable property of the district assessed for ad valorem
taxes for the second completed property tax year preceding the fiscal year in which the index is
used.
Code Section 12-37-220(B)(47) exempts 100% of the fair market value of owner-occupied
residential property receiving a 4% assessment ratio from all property taxes imposed for school
operating purposes. School districts are reimbursed for lost revenue based on a 3 tier formula set
forth in Code Section 11-11-156.
This temporary proviso clarifies that, for the current fiscal year an index value for the exempt
owner-occupied residential property must be imputed by adding the second preceding taxable
year total school district reimbursements for Tiers 1, 2 and 3(A) of the 3 tier formula and not to
include the supplement distribution. The Department shall not include sales ratio data in its
calculation of the index of taxpaying ability. The methodology for the calculation of value for
classes of property other than exempt owner-occupied residential property is not affected by this
temporary proviso.

House Bill 4701, Part IB, Section 117, Proviso 117.41 (Act No. 286)
Personal Property Tax Relief Fund Not Funded
This temporary proviso provides that the Personal Property Tax Relief Fund established under
Code Section 12-37-2735 to help counties fund the reduction of ad valorem taxes on personal
motor vehicles is suspended.

24

This proviso continues to provide that if a county imposes a personal property tax exemption
sales tax in an effort to reduce ad valorem taxes on personal motor vehicles and the 2% sales tax
rate on gross proceeds of sales is insufficient to offset the property tax not collected, sufficient
amounts must be credited to the Trust Fund for Tax Relief established under Code Section 1111-150 to provide reimbursement to offset the shortfall in the manner provided in Code Section
4-10-540(A).
Note: As of the date of this publication, no county has reduced the ad valorem taxes on personal
motor vehicles by imposing this sales tax.

25

SALES AND USE TAXES
House Bill 3561 (Act No. 172) and Senate Bill 437, Section 3 (Act No. 259)
“Additional Guest Charges” at Places Furnishing Accommodations - Amended
Code Section 12-36-920(B), imposing a 6% sales tax on “additional guest charges” at places that
furnish accommodations to transients for a consideration unless otherwise taxed under Chapter
36, Title 12, has been substantially amended. Additional guest charges are now limited to
charges for: (1) room service, (2) laundering and dry cleaning services, (3) in-room movies, (4)
telephone service, and (5) rentals of meeting rooms. Charges for (1) amenities, (2)
entertainment, (3) special items in promotional tourist packages, and (4) other guest services are
no longer listed as an additional guest charge.
Effective Date: July 1, 2014

Senate Bill 437, Section 3 (Act No. 259) and House Bill 3561 (Act No. 172)
Residence Rented Under 15 Days - Not Subject to Sales Tax on Accommodations
Code Section 12-36-920(A), which imposes a sales tax on accommodations, has been amended
to exclude from tax the gross proceeds from rental income that is wholly excluded from the gross
income of the taxpayer pursuant to Internal Revenue Code Section 280(A)(g).
Internal Revenue Code Section 280(A)(g) allows a taxpayer to exclude from gross income the
rental income derived from a dwelling unit used during the tax year by the taxpayer as a
residence, provided that the dwelling unit is rented for less than 15 days during the tax year.
Effective Date: June 9, 2014

26

REENACTED TEMPORARY PROVISOS
The following temporary provisos were enacted in prior legislative sessions
and were reenacted by the General Assembly in 2014. Temporary provisos
are effective for the State fiscal year July 1, 2014 through June 30, 2015, and
will expire June 30, 2015, unless reenacted by the General Assembly in the
next legislative session.
House Bill 4701, Part IB, Section 117, Proviso 117.65 (Act No. 286)
Viscosupplementation Therapies - Sales and Use Tax Suspended
For this State fiscal year, the sales and use taxes on viscosupplementation therapies is
suspended. No refund or forgiveness of tax may be claimed as a result of this provision.

House Bill 4701, Part IB, Section 117, Proviso 117.61 (Act No. 286)
Respiratory Syncytial Virus Medicines Exemption - Effective Date
Act 69, Section 3.PP, of 2003 amended Code Section 12-36-2120(28)(a) to add a sales and use
tax exemption for prescription medicines used to prevent respiratory syncytial virus; it was
effective for sales on or after June 18, 2003. This temporary proviso changes the effective date of
this exemption to January 1, 1999 and provides that no refund of sales and use taxes may be
claimed as a result of this change in the effective date.

House Bill 4701, Part IB, Section 117, Proviso 117.40 (Act No. 286)
Private Schools - Use Tax Exemption
This temporary proviso exempts purchases of tangible personal property for use in private
primary and secondary schools, including kindergarten and early childhood education programs,
from the use tax if the school is exempt from income taxes under Internal Revenue Code Section
501(c)(3). This exemption does not apply to purchases subject to sales tax. See SC Regulation
117-334 for information as to which tax, the sales tax or the use tax, applies when goods are
shipped into South Carolina. This use tax exemption is also applicable to purchases occurring
after 1995; however, no refund is due any taxpayer on purchases exempted by this provision.

27

REMINDER
The following provision was enacted in a prior year but is effective in 2014 or
thereafter. It is summarized below for informational purposes.
House Bill 3747 (Act No. 235)
Certain Injectable Medications and Injectable Biologics - Exemption Phased-In
Code Section 12-36-2120(80) has been added to exempt injectable medications and injectable
biologics, so long as the medication or biologic is administered by or pursuant to the supervision
of a physician in an office which is under the supervision of a physician, or in a Center for
Medicare or Medicaid Services certified kidney dialysis facility.
For purposes of this exemption, “biologics” means the products that are applicable to the
prevention, treatment, or cure of a disease or condition of human beings and that are produced
using living organisms, materials derived from living organisms, or cellular, subcellular, or
molecular components of living organisms.
This exemption will be phased-in based on the annual general fund growth as determined by the
Board of Economic Advisors (“BEA”).
Effective Date: For sales beginning July 1 following the February 15 forecast meeting the 2%
growth requirement.
Note: On February 19, 2014, the BEA notified the Department that the requirements had been
met to implement this exemption. Accordingly, for July 1, 2014 – June 30, 2015, 50% of the
gross proceeds of qualifying sales or purchases are exempt from the State and local sales and use
taxes.
On or after July 1, 2015, qualifying sales or purchases are fully exempt from the State and local
sales and use taxes. See SC Information Letter #14-4.

28

MISCELLANEOUS
(Summarized by Subject Matter)

ADMINISTRATIVE and PROCEDURAL MATTERS
Senate Bill 437, Section 2 (Act No. 259)
Federal Schedule E Filed – Disclosure Permitted
Code Section 12-54-240(B), relating to disclosure of certain reports and returns filed with the
Department, has been amended to add an item allowing verification that federal Schedule E,
“Supplemental Income and Loss (From rental real estate, royalties, partnerships, S corporations,
estates, trusts, REMICs, etc.)”, filed with the Department is the same as the Schedule E required
by the assessor pursuant to Code Section 12-43-220(c).
Effective Date: June 9, 2014

Senate Bill 985, Sections 3 and 4 (Act No. 261)
“Fairness in Lodging Act” – Disclosure and Duties of the Department
The “Fairness in Lodging Act” was enacted in Article 8, Chapter 1, Title 6 for the purpose of
providing municipalities and counties the option of exercising additional enforcement authority
and data sharing with the Department with respect to individuals who rent residential
accommodations to tourists and fail to remit the local accommodations tax imposed under
Article 5 of Chapter 1, Title 6 and the state sales tax on accommodations under Code Section 1236-920.
A summary of the Fairness in Lodging Act applicable to counties and municipalities is provided
below in the “Other Items” section below. The Act provisions directly applicable to the
Department include:

1. Disclosure and Data Sharing. Code Section 12-54-240(B), relating to disclosure of records,
   reports, and returns filed with the Department to other agencies or persons, has been
   amended. Subitem (13) now allows the Department to disclose and share data as provided
   under the Fairness in Lodging Act.
2. Duties of the Department. Code Section 12-4-310, listing the mandated powers and duties of
   the Department, has been amended. Subitem (11) has been added to require the Department
   to provide data and assistance to municipalities and counties that have implemented the
   Fairness in Lodging Act.

29

In addition, Code Section 6-1-825 in the Fairness in Lodging Act has been added to require
the Department to identify websites containing “rent by owner” vacation rental opportunities
and request that the website post a statement that the owner of South Carolina rental
properties is required to be licensed and to collect applicable state and local taxes and fees.
Effective Date: June 9, 2014

MISCELLANEOUS TAX LEGISLATION
Senate Bill 474 (Act No. 242)
State Museum – Exempt from Admissions Tax
Code Section 12-21-2420(16) has been added to exempt admissions to the State Museum from
the admissions tax imposed on places of amusement.
Effective Date: July 1, 2014

Senate Bill 437, Section 4 (Act No. 259)
Deed Recording Fee - Exemption for Transfers from Trust Expanded
An exemption from the deed recording fee in Code Section 12-24-40(8) has been expanded to
exempt transfers of real property from a trust established for the benefit of a religious
organization to the religious organization.
Effective Date: Applies to property tax years beginning after 2013.

30

OTHER ITEMS
Senate Bill 985, Sections 1 and 2 (Act No. 261)
“Fairness in Lodging Act” – New Authority to Enforce Local Accommodations Tax
The “Fairness in Lodging Act” was enacted in Article 8, Chapter 1, Title 6 to provide
municipalities and counties the option of exercising additional enforcement authority and data
sharing with the Department with respect to individuals who rent residential accommodations to
tourists and fail to remit the local accommodations tax imposed under Article 5 of Chapter 1,
Title 6 and the state sales tax on accommodations under Code Section 12-36-920.
Applicability of Act. A municipality or county that imposes a local accommodations tax under
Article 5, Chapter 1, Title 6 may implement the provisions of the Act through an ordinance.
Once the municipality or county has provided the Director of the Department with a certified
copy of the ordinance, then the provisions of the Act will apply in the municipality or county.
Code Section 6-1-815(A).
The provisions of this Act do not apply to 4% owner-occupied real property when all rental
income from the real property is excluded from gross income for federal income tax purposes
under Internal Revenue Code Section 280A(g). Code Section 6-1-815(B).
Information Shared in Determining Noncompliance. When the Act provisions apply in a
jurisdiction, the Department and the implementing municipality or county shall share helpful
data in determining possible instances of noncompliance using returns and other documents filed
with or available to them. Code Section 6-1-820(A).
Information Included in Property Tax Notice. A municipality or county that has implemented the
Act shall include a notice with its annual property tax notices for residential real property
assessed at 6% pursuant to Code Section 12-43-220(e), as determined appropriate.
The notice must provide details of state and local accommodations taxes required to be paid by
persons renting residential real property to tourists, the intention of the municipality or county to
enforce these requirements, and specific information on obtaining additional information
regarding these requirements and the names, addresses, and telephone numbers of the municipal
or county officials able to answer questions, provide forms, and assist in compliance. Code
Section 6-1-820(B).
Additional Penalty. In addition to the other penalties and interest imposed by the municipality or
county for failure to comply with local accommodations tax requirements, the municipality or
county may impose a one-time civil penalty for noncompliance for failure to collect and remit
local accommodations tax. This additional penalty can be between $500 to $2,000 with respect to
a single rental property for each seven days the property was rented, but may not be imposed
unless the owner has received the notice required under the Act. For purposes of enforcement
and collection, this penalty is deemed a property tax on the rental property. Code Section 6-1820(C).

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Data Sharing. Code Section 6-1-120(B)(3), which provides an exception to the general
prohibition on disclosures of taxpayer information by municipal or county officials for data
sharing between public officials and employees in the performance of their duties, has been
amended to specifically include the sharing of data provided by the Fairness in Lodging Act.
Effective Date: June 9, 2014

Senate Bill 1033 (Act No. 220)
Emergency Related Infrastructure Work by an Out of State Business or Employee – 2013
Proviso Codified
General Tax, Registration and Licensing Requirements and Exemptions during Disaster Period.
Code Section 12-2-110 provides that a business that does not have a presence in, or conduct
business in, South Carolina whose services are requested by a business registered in South
Carolina or by a state or local government for purposes of performing “disaster or emergencyrelated work” in South Carolina is exempt from state and local business registration and tax
payment and filings during the “disaster period.” The “disaster period” begins within 10 days of
the first day of notification by the Governor, President, or Director of the Department of a
declared state disaster or emergency, whichever occurs first, and ends 60 days after the declared
period ends, or any longer period authorized by the designated state official or agency.
Out of State Business Disaster Period Exemptions. An out of state business performing work or
services in South Carolina related to a declared state disaster or emergency is not considered to
have established a level of presence that would require it to register, file, and remit state and
local taxes or require the business or its out of state employees to be subject to any state licensing
or registration requirement.
Out of State Employee Disaster Period Exemptions. An out of state employee is not considered
to have established residency or a presence in South Carolina that would require him or his
employer to file and pay income taxes or be subject to tax withholdings or to file and pay any
other state or local tax or fee during a disaster period resulting from his performance of disasterrelated work.
Specific Tax, Registration and Licensing Exemptions. If an out of state business qualifies under
this code section, it is exempt from all state or local business licensing or registration
requirements (including South Carolina Public Service Commission and Secretary of State
licensing and regulatory requirements) and is not required to register, file, or remit state and local
taxes or fees, including unemployment insurance, state or local occupational licensing fees, sales
and use tax, or property tax on equipment used or consumed during the disaster period. For
purposes of state or local tax measured by net or gross income or receipts, all activity of the out
of state business conducted in South Carolina pursuant to this code section is disregarded with
respect to any filing requirements for that tax including the filing required for a unitary or
combined group of which the out of state business may be a part.

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Taxes and Fees Not Covered. Out of state businesses and employees are not exempt under this
code section from transaction taxes and fees including, but not limited to, fuel taxes and fuel user
fees or sales and use taxes on materials or services subject to sales and use tax, accommodations
taxes, car rental taxes or fees that the out of state affiliated business or out of state employee
purchases for use or consumption in South Carolina during the disaster period, unless the taxes
or fees are otherwise exempt during a disaster period.
Notification of Responding Business to Department. An out of state business shall provide the
Department a notification statement that it is in South Carolina for purposes of responding to a
disaster or emergency. The statement must include the business name, state of domicile,
principal business address, federal tax identification number, date of entry, and contact
information. A registered business in South Carolina shall, upon request, provide this notification
information for an out of state affiliate that enters South Carolina and also include contact
information for the registered business.
In South Carolina After Declared Disaster. A business or employee that remains in South
Carolina after the disaster period becomes subject to South Carolina’s normal standards for
establishing presence, residency or doing business and resulting requirements. They shall notify
the Department and must comply with state and local registration, licensing, and filing
requirements resulting from establishing business presence or residency in South Carolina.
Definitions. “Disaster or emergency related work” means repairing, renovating, installing,
building, rendering services or other business activities that relate to infrastructure that has been
damaged, impaired, or destroyed by the event precipitating the declared state disaster or
emergency.
“Infrastructure” means property and equipment owned or used by communications networks,
electric generation, transmission and distribution systems, gas distribution systems, water
pipelines, and public roads and bridges and related support facilities that services multiple
customers or citizens including, but not limited to, real and personal property such as buildings,
offices, lines, poles, pipes, structures, and equipment.
“Declared state disaster or emergency” is a disaster or emergency event for which a:

1. Presidential declaration of a federal major disaster or emergency has been issued,
2. Governor’s state of emergency proclamation has been issued, or
3. Good faith response effort is required and for which the Director of the Department
   designates the event as a disaster or emergency.
   Effective Date: June 2, 2014

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House Bill 4871 (Act No. 208)
Charter Schools Taxation – Amended
Code Section 59-40-140(K), relating to the taxation of charter schools, has been amended to
read: “Charter schools are exempt from state and local taxation, except the sales tax, on their
earnings and property whether owned or leased. Instruments of conveyance to or from a charter
school are exempt from all types of taxation of local or state taxes and transfer fees.” The phrase
“whether owned or leased” has been added.
Effective Date: June 2, 2014

Senate Bill 809 (Act No. 243)
Local Capital Project Sales Tax – Referendum Date Amended
A “local capital projects sales tax” is imposed by enacting an ordinance, subject to approval by
voter referendum. Code Section 4-10-330(C) has been amended to delete a provision allowing
the referendum for the reimposition of the capital project sales tax to be held at a time the
governing body of the county and the Department determine. All referendums for which a
referendum date had not been set by June 6, 2014 must be held at the time of the general
election.
Effective Date: Applies to a referendum for which a referendum date had not been set by June
6, 2014.

Senate Bill 940, Section 1 (Act No. 290)
Education Capital Improvement Sales and Use Tax – County Eligibility
An “education capital improvements sales and use tax” may be imposed in a county upon
approval by referendum for specific education capital improvements for the school district. Code
Section 4-10-470 has been amended to expand the eligible criteria a county must meet to impose
this tax.
The statute continues to provide that a county that collected at least $7 million in state
accommodations taxes pursuant to Code Section 12-36-920(A) in the most recent fiscal year for
which full collection figures are available may impose the tax.
The following summarizes other criteria added that also allows a county to be authorized to
impose the education capital improvement tax.

1. If at the time of the referendum, no portion of the county in which the tax is imposed is
   subject to more than 2% total local sales tax and the county in which the tax is to be imposed
   is encompassed completely by one entire school district, and that school district also extends
   into one adjacent county.
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Imposition of the tax under this criteria has additional restrictions and requirements
including, the tax may not be imposed for more than 10 calendar years and no other local
sales tax may be imposed in that county if subsequent imposition causes the total sales tax to
exceed 2% in any portion of the county. Code Section 4-10-470(B).

2. If the county or school district imposed a local sales and use tax to fund education capital
   improvements on January 1, 2014. The education capital improvements sales and use tax
   may be imposed pursuant to this subsection at any time after the local sales and use tax
   terminates. Code Section 4-10-470(C).
3. If the county only has one school district which encompasses the entire county area in which
   the tax is to be imposed and the county collected at least $1 million in state accommodation
   taxes as imposed pursuant to Code Section 12-36-920(A) in the most recent fiscal year for
   which full collection figures are available. Once a county meets this threshold, it thereafter
   remains eligible to impose this tax pursuant to this subsection. Code Section 4-10-470(D).
4. If the county is comprised of more than one school district, and the county has a county
   board of education, and has no other local sales tax imposition at the time of the referendum.
   Imposition of the tax under this criteria has additional restrictions and requirements including
   that at least 10% of the proceeds must be used to provide property tax relief by using the
   proceeds to offset the existing debt service millage levy on general obligation bonds. Once a
   county meets this criteria, it remains eligible to impose this tax pursuant to this subsection.
   Code Section 4-10-470(E).
5. If immediately prior to the imposition date, if approved, the county is imposing the local
   option sales tax imposed pursuant to Article 1, Chapter 10 of Title 4 and the county has not
   imposed that tax for 20 years or more, in which any portion of a calendar year counts as a
   year, and no other local sales and use tax that is administered by the Department is imposed
   in the county and the county collected at least $100,000 in state accommodation taxes as
   imposed pursuant to Code Section 12-36-920(A) in the most recent fiscal year for which full
   collection figures are available. Once a county meets this criteria, it remains eligible to
   impose this tax pursuant to this subsection. Code Section 4-10-470(F).
   Effective Date: June 24, 2014

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Senate Bill 940, Section 2 (Act No. 290)
Education Capital Improvement Sales and Use Tax - Reimposition Referendum
Code Section 4-10-460, relating to the reimposition of the Education Capital Improvements
Sales and Use Tax, has been amended with regard to the date a referendum must be held. The
section now provides that the referendum on the question for reimposition must not be held
earlier than within the calendar year which is two years before the calendar year in which the tax
in effect is scheduled to terminate, but any reimposition is effective immediately upon the
termination of the tax previously imposed.
Effective Date: June 24, 2014

Senate Bill 1085 (Act No. 229)
Local Sales and Use Tax for Transportation Facilities – Referendum Date and Imposition
A governing body of a county may impose up to a 1% sales and use tax to raise revenue for a
transportation project. The tax is imposed by enacting an ordinance, subject to approval by voter
referendum, and must be for a specific period of time, not to exceed 25 years. Amendments to
the statute include:

1. Time of Referendum. The referendum for the initial imposition of the tax within a county and
   all subsequent referendums to impose, extend, or renew the tax must be held at the time of
   the general election. Code Section 4-37-30(A)(2).
2. Extension of Tax Imposition: If the local transportation sales and use tax has been imposed
   for less than the maximum 25 year term allowed, and the tax remains in effect, the county
   may call for a referendum to extend the term of the tax for up to 7 years, and thereafter call
   for referendums to extend the term of the tax for up to 7 years, for an aggregate total not to
   exceed 25 years. If a county extends the term of the tax, the statute establishes certain
   requirements for the referendum. Code Section 4-37-30(A)(4)(a).
3. Imposition Date: If the tax is approved in the referendum, the tax is imposed May 1st
   following the referendum. If the reimposition of the tax is approved in the referendum, the
   new or existing tax must be imposed, extended, or renewed immediately following the
   termination of the earlier imposed tax. If the certification is not made timely to the
   Department, the imposition is postponed for 12 months. Code Section 4-37-30(A)(4)(b).
   Effective Date: June 2, 2014

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Senate Bill 503 (Act No. 188)
Beach Preservation Act - New 1% Beach Preservation Fee Remitted to Local Governing
Body
The “Beach Preservation Act,” has been added to Article 6, Chapter 1 of Title 6, to provide for
the imposition, subject to a referendum, of a “beach preservation fee” not to exceed 1%.
The fee is imposed on the gross proceeds from the rental or charges for accommodations
furnished to transients within the jurisdiction of a governing body of a “qualified coastal
municipality” which are subject to the sales tax on accommodations under Code Section 12-36920(A). A “qualified coastal municipality” is a municipality bordering on the Atlantic Ocean
that has a public beach within its corporate limits and which imposes a local accommodations tax
pursuant to Code Section 6-1-520 that does not exceed 1½% pursuant to the limitation imposed
under Code Section 6-1-540.
Code Section 6-1-660 provides that the fee is remitted directly to the local governing body on a
monthly, quarterly or annual basis, depending on the estimated amount of the average of the total
of the tax imposed under Articles 5 and 6, Chapter 1 of Title 6
Effective Date: June 2, 2014

REGULATORY LEGISLATION
House Bill 4399, Section 2 (Act No. 253)
Powdered Alcohol Unlawful – New Misdemeanor and Exceptions
Code Section 61-6-4157 has been added concerning powdered alcohol, defined as alcohol
prepared or sold in a powder form for either direct use or reconstitution. It is a misdemeanor for
a person to use, offer for use, purchase, offer to purchase, sell, offer to sell, or possess powdered
alcohol. In the case of a license to sell alcoholic liquor for on-premises consumption or for offpremises consumption, it is a misdemeanor for the license holder to use powdered alcohol as an
alcoholic beverage. Exceptions are provided in the case of use of powdered alcohol for
commercial uses or bona fide research purposes by any of the following: a health care provider
that operates primarily for the purpose of conducting scientific research, a state institution, a
private college or university or a pharmaceutical or biotechnology company.

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The penalties upon conviction for a misdemeanor involving powdered alcohol are as follows:
Offense
1st offense
2nd offense
3rd or subsequent
offense

Penalty
not more than $300 or imprisonment for not more than 30 days, or both
not more than $750 or imprisonment for not more than 6 months, or both
not more than $3,000 or imprisonment for not more than 2 years, or both.

Note: Code Section 61-6-4157 is repealed effective June 6, 2015.
Effective Date: June 6, 2014

House Bill 3626 (Act No. 199)
Motorsports Entertainment Complex and Tennis Specific Complex – New Licensing
Provisions for Beer and Wine and for Alcoholic Liquors Sold at These Locations
New licensing provisions have been added to Chapter 4, Title 61 (beer and wine) and Chapter 6,
Title 61 (alcoholic liquor) for a qualifying motorsports entertainment complex or a tennis
specific complex located in this State.
Locations – Definitions. The following definitions are provided for a “motorsport entertainment
complex” and a “tennis specific complex:”
Motorsports entertainment complex: A motorsports facility, and its ancillary grounds and
facilities, that (1) is a NASCAR-sanctioned motor speedway or racetrack that hosted at least one
NASCAR Sprint Cup Series race in 2012 and continues to host at least one NASCAR Sprint Cup
Series race, or any successor race featuring the same NASCAR Cup Series; (2) has at least 3
scheduled days each calendar year of motorsports events, and ancillary and incidental events to
the motorsport events, that are sanctioned by a nationally or internationally recognized governing
body of motorsports; and (3) engages in tourism promotion. Code Sections 61-4-515(D)(1) and
61-6-2016(D)(1). See Code Section 12-21-2425.
Tennis specific complex: A tennis facility, and its ancillary grounds and facilities, that (1) has at
least 10,000 fixed seats for tennis patrons; (2) hosted one Women’s Tennis Association Premier
tournament in 2013 and continues to host one such tournament in each year; and (3) engages in
tourism promotion. Code Sections 61-4-515(D)(2) and 61-6-2016(D)(2).
Licenses – Beer and Wine. Code Section 61-4-515 was added to provide that a biennial permit
may be issued to the owner, or his designee, of a qualifying complex located in this State to sell
beer and wine for on-premises consumption at any occasion held on the grounds of the complex
year round on any day of the week. No referendum is required. The Department may require
proof that the location is a qualifying complex. The Department has discretion to specify the
terms and conditions of the permit.

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The nonrefundable filing fee and fees for the motorsports or tennis complex biennial permit are
the same as for other biennial permits for on-premises consumption of beer and wine. Revenues
from the fees must be used for the purposes provided in Code Section 61-4-510.
The permit holder is authorized to purchase beer and wine from licensed wholesalers.
The owner, or his designee, of a qualifying complex may designate particular areas within the
complex where patrons of events who have paid an admission price to attend or guests who are
attending private functions at the complex, whether or not a charge for attendance is made, may
possess and consume beer and wine provided at their own expense or at the expense of the
sponsor of the private function.
Licenses – Alcoholic Liquor by the Drink. Code Section 61-6-2016 was added to provide that a
biennial license may be issued to the owner, or his designee, of a qualifying complex located in
this State to sell alcoholic liquor by the drink for on-premises consumption at any occasion held
on the grounds of the complex under the same terms and conditions provided in Code Section
61-4-515 (summarized above). No referendum is required. The Department may require proof
that the location is a qualifying complex.
The nonrefundable filing fee and license fee are the same as for other biennial licenses for onpremises consumption of alcoholic liquor by the drink. In the event that the owner or his
designee applies for both a permit to sell beer and wine for on-premises consumption and a
license to sell alcoholic liquor by the drink for on-premises consumption, only one fee is
required, which is the same as the fee for the 52 week local option permit under Code Section
61-6-2010 with the revenue therefrom used for the same purposes as provided in Code Section
61-6-2010.
The owner, or his designee, of a qualifying complex may designate particular areas within the
complex where patrons of events who have paid an admission price to attend or guests who are
attending private functions at the complex, whether or not a charge for attendance is made, may
possess and consume alcoholic liquor by the drink provided at their own expense or at the
expense of the sponsor of the private function.
Effective Date: June 2, 2014

House Bill 3512, Sections 2, 3 and 4 (Act No. 223)
Acquisition of Alcoholic Liquor by Retail Dealers – New Provisions
The Alcoholic Beverage Control Act, Chapter 6 of Title 61, regulates alcoholic liquor in South
Carolina with provisions for licenses on three tiers including a retail dealer’s license. In
addition, as provided in Regulation 7-300.2, retail liquor dealers are barred from purchasing any
alcoholic liquor except from a licensed wholesale dealer in this State. The following provisions
of Chapter 6, Title 61 relating to acquisition of alcoholic liquor for resale by licensed retail
dealers have been added or amended.

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Transfers of Alcoholic Liquor Between Retail Dealers Prohibited - Penalties Amended.
Code Section 61-6-1500, which imposes certain restrictions on retail liquor dealers, has been
amended. A retail dealer may not sell, barter, exchange, or give alcoholic liquor (or offer or
permit these transactions) to a person the retail dealer knows is another retail dealer. Code
Section 61-6-1500(A)(1)(f). Likewise, a retail dealer may not purchase, barter, exchange or
receive alcoholic liquor (or offer or permit these transactions) from another retail dealer. Code
Section 61-6-1500(A)(5). These restrictions apply without regard to the size of the container.
Exceptions are provided for transfers between locations owned by the same retail dealer or as
provided in Code Section 61-6-950 (transfer of liquor when a license is suspended or revoked or
otherwise terminated).
New civil penalties have been added for an administrative violation license arising out of these
prohibited transfers. A third or subsequent violation of Code Section 61-6-1500(A)(1)(f) within
3 years of the first violation must result in a mandatory suspension of the license or permit for a
period of at least 30 days. A violation of Code Section 61-6-1500(A)(5) must result in a
mandatory suspension of the license or permit for a period of at least 30 days.
Retail Liquor License Applicant – Certification of Purchases Exclusively from Wholesaler
Required. Code Section 61-6-195 has been added to provide that the Department must not issue
or renew a retail dealer’s license until the applicant has certified that the applicant has not
purchased and will not purchase alcoholic liquor from another person who does not hold a
wholesaler’s license.
Notice of Prohibition of Sales Among Retail Dealers Must Be Posted. Code Section 61-6-1530,
which requires certain language to be included in signs posted in a retail liquor dealer’s place of
business, has been amended to further require this language: “The purchase of alcoholic liquors
from this location by or on behalf of another retail dealer is unlawful and will result in the
suspension of the purchaser’s retail dealer’s license.” The Department must prescribe by
regulation the size of the lettering and the location of the sign on the seller’s premises. See
Regulation 7-200.5.
Effective Date: July 1, 2014

House Bill 3512, Section 6 (Act No. 223)
Sale of Alcoholic Liquor – Prohibited Days Amended
Code Section 61-6-4160, which makes it a misdemeanor to sell alcoholic liquor on certain days,
has been amended to prohibit sales on Christmas Day. A previous prohibition of sales on
statewide election days has been omitted.
Effective Date: June 2, 2014

40

House Bill 4399, Section 1 (Act No. 253)
Locations Seeking License to Sell Liquor for On-Premises Consumption – Consent in Case
of Proximity to Church or Playground
Code Section 61-6-120, which bars new liquor licenses when the place of business is within 300
feet of any church, school or playground situated within a municipality, or 500 feet if situated
outside a municipality, has been amended. Subsection (C) has been added to provide that a
license to sell liquor for on-premises consumption may be issued if the decision-making body of
each church, and the decision-making body of the owner of each playground, within these
distance parameters affirmatively states that it does not object to issuance of the specific license
sought. The distance parameters for schools are unchanged.
This new provision only applies to a permit for on-premises consumption of alcoholic liquors. In
addition, the license applicant must provide the necessary statements from the decision-making
body of each church and the decision-making body of the owner of each playground.
The Department may promulgate regulations necessary to implement the provisions of
subsection (C).
Effective Date: June 6, 2014

House Bill 3512, Section 1 (Act No. 223)
Discounts on Sales of Alcoholic Liquor and Certain Nonalcoholic Items by Premiums,
Coupons or Stamps – Amended
Code Section 61-6-1560 provides for discounts on nonalcoholic items, as well as alcoholic
liquor, by a retail dealer, wholesaler, or producer through the use of premiums, coupons, or
stamps redeemable by mail. An amendment clarifies that “nonalcoholic items” means those
items listed in Code Section 61-6-1540(A).
In addition, Subsection (B) was added to provide that a retail dealer may offer a discount on the
sale of alcoholic liquor or nonalcoholic items, listed in Code Section 61-6-1540(A), at the
register through the use of premiums, coupons, or stamps. However, the retail dealer must
provide the premiums, coupons, or stamps and solely bear all costs related to the discount,
including, but not limited to, printing, redemption services, and the actual cost of the discount.
Moreover, the discount must not be prohibited by any federal law.
Effective Date: July 1, 2014

41

House Bill 3512, Section 5 (Act No. 223)
Brewery – Sales for On-Premises Consumption
Code Section 61-4-1515, which authorizes South Carolina breweries to offer samples of beer
brewed on the premises for on-premises consumption to consumers who tour the licensed
premises and the entire brewing process, has been amended. New parameters for retail sales
have been added, with an express provision that these parameters do not alter or amend the
structure of the three tier laws of South Carolina and that certain restrictions on businesses
operating at the producer and wholesale levels continue to apply.
Sales of Beer Brewed on the Premises. Breweries may sell beer brewed on the premises for onpremises consumption without the requirement that consumers take a full tour and without a
separate license, if the following requirements are met:

1. Sales must be made within an area of the licensed premises that has been approved by the
   rules and regulations of the Department of Health and Environmental Control governing
   eating and drinking establishments and other food service establishments.
2. The brewery must comply with all state and local laws concerning hours of operation
   applicable to eating and drinking establishments and other food service establishments
   holding permits to sell beer and wine for on-premises consumption.
3. The brewery must comply with the discount pricing provisions of Code Section 61-4-160,
   applicable to persons holding permits to sell beer and wine for on-premises consumption.
4. The price for beer sold by the brewery must approximate retail prices generally charged for
   identical beverages by on-premises retailers elsewhere in the same county.
5. Consumers must not be intoxicated or under age 21.
6. The brewery must remit appropriate excise taxes, as well as appropriate sales and use taxes
   and local hospitality taxes.
7. Signage posted at each entrance and exit and other places visible during a tour must inform
   consumers of: (a) the alcoholic content by weight of beer available in the brewery and (b) the
   penalties for conviction for driving under the influence, unlawful transport of an alcoholic
   beverage container and unlawful transfer of alcohol to minors.
8. The brewery must provide South Carolina Department of Alcohol and Other Drug Abuse
   Services (DAODAS) approved training for its server staff.
9. The brewery must maintain liability insurance coverage of at least $1 million for the biennial
   license period and provide proof of insurance to the State Law Enforcement Division (SLED)
   and the Department’s Alcoholic Beverage Licensing section within 10 days of receiving its
   biennial license.

42

10. A wholesaler must not provide and a brewery must not accept services, equipment, fixtures,
or free beer prohibited by Code Section 61-4-940(B), except those items authorized by Code
Section 61-4-940(C).

11. The brewery must not discriminate in pricing at the producer or wholesaler levels.
    Separate Permit to Sell Other Beer and Wine for On-Premises Consumption. A brewery with an
    area of its licensed premises approved by the rules and regulations of the Department of Health
    and Environmental Control governing eating and drinking establishments and other food service
    establishments may apply for a separate permit to sell beer and wine at retail for consumption
    within the approved area. The separate permit allows sales of wine and beer produced by
    another licensed producer and purchased from a wholesaler through the three tier distribution
    chain as set forth in Code Section 61-4-735 (wine) and 61-4-940 (beer).
    Effective Date: June 2, 2014

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REENACTED TEMPORARY PROVISOS
The following temporary provisos were enacted in prior legislative sessions
and were reenacted by the General Assembly in 2014. Temporary provisos
are effective for the State fiscal year July 1, 2014 through June 30, 2015, and
will expire June 30, 2015, unless reenacted by the General Assembly in the
next legislative session.
ADMINISTRATIVE and PROCEDURAL MATTERS
House Bill 4701, Part IB, Section 92, Proviso 92.10 (Act No. 286)
2% Reduction on Interest Rate on Tax Refunds
This temporary proviso decreases by 2% the interest rate for tax refunds paid during the current
fiscal year. The revenue resulting from this reduction must be used for operations of the State’s
Guardian ad Litem Program.

House Bill 4701, Part IB, Section 117, Proviso 117.91(Act No. 286)
Additional 1% Reduction on Interest Rate on Tax Refunds
This 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 92.10 (for a total
3% interest rate reduction). Of the revenue resulting from this 1% reduction, $300,000 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.
House Bill 4701, Part IB, Section 106, Proviso 106.6 (Act No. 286)
Voluntary Website Posting of Tax Return Information for Candidates and Gubernatorial
Appointees
This temporary proviso provides that the Department must develop a program to process
inquiries from a candidate for an office in South Carolina or its political subdivisions or any
gubernatorial appointee concerning that candidate’s or appointee’s state income tax filings. Upon
request by the candidate or appointee in connection with his own income tax return, the
Department must determine if the candidate or appointee has filed his annual state income tax
returns for the past ten years, paid all income taxes due during that time period, and, if
applicable, satisfied all judgments, liens, or other penalties for failure to pay income taxes when
due.

44

Unless the candidate or appointee requests otherwise, the following information will be posted
on the Department’s website:

1. The candidate or appointee’s name;
2. The years that the candidate or appointee was required to file income tax returns during the
   last ten years and any years that he was not required to file income tax returns;
3. Whether the candidate or appointee filed income tax returns in each of the ten years that he
   was required to file an income tax return;
4. Whether the candidate or appointee paid income taxes due each year that he was required to
   file an income tax return; and
5. Whether the candidate or appointee had a judgment, lien, or other penalty levied against him
   for failure to pay income taxes when due; the year of any levy; and whether the judgment,
   lien or other penalty has been satisfied.
   A candidate or appointee’s inquiry constitutes a waiver of confidentiality with the Department
   concerning the information posted. The Department may not post complete income tax returns.

MISCELLANEOUS
House Bill 4701, Part IB, Section 118, Proviso 118.19 (Act No. 286)
Admissions Tax Rebate – Motorsports Entertainment Complex Facility
This temporary proviso provides that up to $114,000 in admissions tax revenue collected
annually from all events held at a NASCAR sanctioned motor speedway or racetrack that hosts
at least one race each year featuring the preeminent NASCAR cup series must be rebated to the
motorsports entertainment complex facility in the current fiscal year to keep a NASCAR race at
the facility.

House Bill 4701, Part IB, Section 106, Proviso 106.7 (Act No. 286)
Admissions Tax Exemption for Payment to Nonprofit Athletic Booster Organizations for
Right to Purchase Athletic Event Season Tickets
Article 17, Chapter 21 of Title 12 provides for an admissions tax of 5% on paid admissions to
places of amusement within South Carolina. Code Section 12-21-2420(4) provides that the
admissions tax applies to paid admissions to all athletic events of any institution above the high
school level.

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This temporary proviso provides that any amount that an accredited college or university
requires a season ticket holder to pay to a nonprofit athletic booster organization to receive the
right to purchase athletic event tickets is exempt from admissions tax. The nonprofit athletic
booster organization must be exempt from federal income taxation.

House Bill 4701, Part IB, Section 1, Proviso 1.17 (Act No. 286)
Local Government School Buses - Motor Fuel Tax Exemption
This temporary proviso provides that motor fuel used in school buses operated by school
districts, other governmental agencies, and “head start” agencies is exempt from the state motor
fuel tax. Note: Motor fuel used in school buses owned by the state is exempt from the state
motor fuel tax under Code Section 12-28-710(12).

House Bill 4701, Part IB, Section 33, Proviso 33.11 (Act No. 286)
Nursing Home Bed Franchise Fee – Suspension
This temporary proviso reenacts the suspension of the nursing home bed franchise fee imposed
on February 1, 2002, but subsequently suspended July 1, 2002.

REGULATORY
House Bill 4701, Part IB, Section 117, Proviso 117.116 (Act No. 286)
Donation of Alcoholic Liquors
This temporary proviso provides that a wholesaler may donate beer, wine, and alcoholic liquors
to a nonprofit organization that has a license, including a temporary license, to serve the
applicable beverage. This provision only applies if the event hosted by the nonprofit
organization creates an economic impact on State revenues.

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LIST OF TEMPORARY PROVISOS
Temporary provisos are enacted as part of the 2014 annual budget - House Bill 4701, Part IB
(Act No. 286). They are effective only for the current State fiscal year (July 1, 2014 – June 30,
2015). 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 provisos can be found in this publication under the applicable subject
matter categories.

NEW PROVISOS
None

REENACTED PROVISOS
Income Taxes
Proviso 1.80
Proviso 1A.11
Proviso 1A.12
Proviso 118.14

Educational Credit for Exceptional Needs Children
Teacher Supplies and Materials - Reimbursement Amount Not Taxable or
Refundable Income Tax Credit
Teacher of the Year Awards – Not Subject to South Carolina Income Tax
Consumer Protection Services – Individual Income Tax Deduction

Property Taxes
Proviso 1.62
Index of Taxpaying Ability - Imputed Value for Owner-Occupied Residential
Property
Proviso 117.41 Personal Property Tax Relief Fund Not Funded
Sales and Use Taxes
Proviso 117.40 Private Schools - Use Tax Exemption
Proviso 117.61 Respiratory Syncytial Virus Medicines Exemption - Effective Date
Proviso 117.65 Viscosupplementation Therapies - Sales and Use Tax Suspended
Miscellaneous (Administrative, Miscellaneous Taxes, Other, and Regulatory)
Administrative:
Proviso 92.10
2% Reduction on Interest Rate on Tax Refunds
Proviso 106.6
Voluntary Website Posting of Tax Return Information for Candidates and
Gubernatorial Appointees
Proviso 117.91 Additional 1% Reduction on Interest Rate on Tax Refunds
Miscellaneous:
Proviso 1.17
Proviso 33.11

Local Government School Buses - Motor Fuel Tax Exemption
Nursing Home Bed Franchise Fees - Suspension

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Proviso 106.7

Admissions Tax Exemption for Payment to Nonprofit Athletic Booster
Organizations for Right to Purchase Athletic Event Season Tickets
Proviso 117.116 Donation of Alcoholic Liquors to Charitable Organizations
Proviso 118.19 Admissions Tax Rebate – Motorsports Entertainment Complex Facility

A complete copy of this legislation can be obtained from the South Carolina Legislature website
at http://www.scstatehouse.gov/ or the Department’s website at:
http://www.sctax.org/Tax+Policy/New+Security+and+Identity+Theft+Legislation.htm

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