What major South Carolina tax changes had been enacted by May 12 during the COVID-disrupted 2020 legislative session?

Plain-English summary

SC Information Letter #20-19 is a midyear summary of South Carolina tax legislation enacted through May 12, 2020, during a legislative session disrupted by the COVID-19 emergency. The Department cautioned that it was summarizing main points rather than interpreting the acts and would issue another update if additional tax legislation passed later.

Continuing budget during the disrupted session

Act No. 135 temporarily extended the effective dates of the prior fiscal year's appropriations provisions into the July 1, 2020-June 30, 2021 fiscal year while the General Assembly planned to reconvene and consider a full budget.

Energy-efficient manufactured homes

Act No. 138 extended two incentives through July 1, 2024:

• a $750 nonrefundable income-tax credit for qualifying ENERGY STAR or equivalent manufactured homes purchased from a licensed retail dealership for use in South Carolina; and
• the related sales-tax exemption for qualifying manufactured homes.

Angel-investor credit

Act No. 138 also reenacted the High Growth Small Business Job Creation Act after its prior repeal date. The law provided an angel investor credit equal to 35% of a qualified investment, moved the repeal date to December 31, 2025, and preserved carryforwards through the applicable 10-year period.

New affordable-housing credit

Act No. 137 created the South Carolina housing tax credit for eligible owners of qualifying low-income rental buildings. For an approved project, the state credit generally equaled the federal low-income housing credit under I.R.C. § 42.

The project needed an eligibility statement from the South Carolina Housing and Finance Development Authority. The state credit could be used against specified income, license, bank, and insurance taxes; unused credit carried forward for five years; and federal credit recapture triggered corresponding state recapture. The program applied to qualifying projects placed in service after January 1, 2020 and before December 31, 2030, with the stated eligibility-statement effective date.

Property-tax changes

The update addressed the millage transition for consolidated Clarendon County School District 4 and amended motor-vehicle valuation rules to require high-mileage adjustments in Department-provided guides. If no reasonable motorcycle adjustment source existed, the motorcycle threshold would be two-thirds of the average adjustment for other private passenger vehicles.

What this means for you

Manufactured-home buyers and dealers

The 2020 act extended both the purchaser credit and the sales-tax exemption, but the July 1, 2024 date in this historical letter has passed and current law must be checked.

Investors and affordable-housing owners

Both credits required more than an investment or building purchase. Angel-credit qualification and housing-project certification, allocation, liability, carryforward, and recapture rules applied.

Anyone using this as a complete 2020 summary

Do not. The letter expressly stopped at legislation enacted through May 12 and anticipated another update if the General Assembly passed more tax measures later.

Common questions

Q: How large was the manufactured-home income-tax credit?
A: $750 for a qualifying home under the requirements summarized in the letter.

Q: How large was the angel-investor credit?
A: 35% of a qualified investment.

Q: Did the new state housing credit equal the federal credit?
A: For a qualified approved project, the letter says the state credit equaled the federal I.R.C. § 42 credit allowed for the project.

Q: Was this the final 2020 legislative update?
A: No. It covered enactments only through May 12, 2020.

Citations and references

• Act No. 135 of 2020, House Bill 3411 — continuing budget resolution
• Act No. 138 of 2020, Senate Bill 76 — manufactured-home and angel-investor provisions
• Act No. 137 of 2020, House Bill 3998 — Workforce and Senior Affordable Housing Act
• House Bill 3695, Act No. 126 — motor-vehicle valuation changes
• Senate Bill 975 — Clarendon County school-district consolidation and millage
• S.C. Code Ann. §§ 12-6-3795, 12-36-2110(B), 12-37-2680, and 48-52-870; Title 11, Chapter 44; I.R.C. § 42

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL20-19.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC INFORMATION LETTER #20-19

SUBJECT:

Tax Legislative Update for 2020

DATE:

July 9, 2020

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
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.

Overview of the 2020 Legislative Session
South Carolina’s legislative sessions begin the second Tuesday in January and end the second
Thursday in May. Due to the public health emergency associated with the Coronavirus (COVID19), the General Assembly’s legislative activity was limited during the normal legislative
session.
On May 12, 2020, the General Assembly passed Senate Bill 1194, a concurrent resolution
allowing the General Assembly to reconvene during the upcoming months with adjournment by
November 8, 2020.
On May 18, 2020, the Governor signed House Bill 3411 (Act No. 135), a continuing resolution
to provide, in part, for the continuing budget for fiscal year July 1, 2020 – June 30, 2021 during
this challenging COVID time. This Act is temporary and provides that the effective dates of Act
No. 91 of 2019, Parts IA and IB, (the appropriations budget in effect for fiscal year July 1, 2019
– June 30, 2020) are extended. It is the intent of the General Assembly to approve a Fiscal Year
2021 budget when they reconvene in September.
2020 Legislation – As of May 12, 2020
Attached is a brief summary of Senate Bill 76, Senate Bill 975, House Bill 3695, and House Bill
3998 enacted by the General Assembly through May 12, 2020. The bills are summarized by tax
type in bill number order.

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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. A complete copy of the legislation discussed can be obtained from the South
Carolina Legislature’s website at scstatehouse.gov.
2020 Legislation – After May 2020
If additional tax or regulatory legislation that is administered by the Department is passed when
the General Assembly reconvenes in September, the Department will publish a subsequent
Information Letter.

INCOME TAXES, BANK TAXES, AND CORPORATE LICENSE FEES
Senate Bill 76, Section 1 (Act No. 138)
Energy Efficient Manufactured Home – Credit Extended
Code Section 48-52-870 was enacted in 2008 (Act No. 354) to provide a $750 nonrefundable
income tax credit to any person who purchases from a retail dealership licensed by the South
Carolina Manufactured Housing Board for use in South Carolina a manufactured home
designated by the United States Environmental Protection Agency and the United States
Department of Energy as meeting or exceeding each agency’s energy saving efficiency
requirements or designated as meeting or exceeding such requirements under each agency’s
ENERGY STAR program. The income tax credit was effective from July 1, 2009 through July 1,
2019. Act No. 91 of 2019 extended the credit for purchases of qualifying manufactured homes
through June 30, 2020.
This Act extends the income tax credit for purchases of qualifying manufactured homes through
July 1, 2024.
Effective Date: May 26, 2020

Senate Bill 76, Section 3 (Act No. 138)
High Growth Small Business Job Creation Act (“Angel Investor Credit”) – Repeal of Act
Extended and Carryforwards after Credit Repeal
The South Carolina “High Growth Small Business Job Creation Act (Title 11, Chapter 44) was
enacted in 2013 (Act No. 80) to improve the availability of early stage capital for emerging highgrowth enterprises in South Carolina. To further this goal, the Act encourages individual angel
investors to invest in early stage, high-growth, job-creating businesses by providing an angel
investor an income tax credit of 35% of its qualified investment. Act No. 80 of 2013 contained a
repeal provision stating that the Act is repealed on December 31, 2019. Any carryforward will
continue to be allowed until the 10 year period is completed.

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Under this Act, the angel investor credit is extended as it existed on December 31, 2019. The
provisions of Chapter 44, Title 11, are re-enacted and are repealed on December 31, 2025. Any
credit carry forward shall continue to be allowed until the 10 year time period in Code Section
11-44-40(B) is completed.
See SC Revenue Ruling #14-6 for more information regarding the angel investor credit.
Effective Date: Tax years beginning after 2019

House Bill 3998 (Act No. 137)
South Carolina Housing Tax Credit - New Tax Credit
The “Workforce and Senior Affordable Housing Act” has been enacted to add Code Section 126-3795 to provide a tax credit to eligible owners of residential low-income rental buildings. The
credit amount for a qualified project is equal to the federal low-income housing credit allowed
under Internal Revenue Code Section 42, “Low-Income Housing Credit.” A building owner must
obtain a housing credit allocation from the South Carolina Housing and Finance Development
Authority and certify certain information to be eligible to claim the credit.
The new South Carolina housing tax credit applies to projects placed in service after January 1,
2020 and before December 31, 2030. A sole proprietor, partnership, corporation, limited liability
company or association taxable as a business entity subject to South Carolina income tax, bank
tax, or insurance premium tax is eligible for the credit. The certification process and credit
requirements are summarized below.
Eligibility Process and Credit Certification. To be eligible for the credit, a project must receive
an “eligibility statement” issued by the South Carolina Housing and Finance Authority. The
eligibility statement certifies that a given project qualifies for the credit. The Authority may not
issue the eligibility statement until the taxpayer provides a report detailing how the credit will
benefit tenants at the project, including, reduced rent, or why the state credit is necessary to
undertake the project.
Pursuant to the Act, the Authority shall promulgate rules establishing criteria upon which the
eligibility statements are issued which must include consideration of evidence of local support
for the project.
Credit Amount and Carryforward. The eligibility statement will specify the amount of the credit
allowed for each project. The credit is equal to the federal housing tax credit allowed for the
project as provided in Internal Revenue Code Section 42. The credit may be used against
individual or corporate income taxes under Code Sections 12-6-510 and 12-6-530; corporate
license fees under Chapter 20, Title 12; bank taxes under Chapter 11, Title 12; or insurance
premium and retaliatory taxes under Chapter 7, Title 38. The total tax credit for any tax year
cannot exceed the taxpayer’s income tax liability. Any unused credit may be carried forward five
years. The taxpayer may not apply the credit against any prior years’ tax liability.

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Credit Allocation. The credit (and any recaptured credit explained below) must be allocated
among some or all of the partners, members, or shareholders of the entity owning the project in
any manner agreed to, regardless of whether such persons are allocated or allowed any portion of
the federal housing tax credit.
Credit Recapture. If a portion of any federal housing tax credit taken on a project is required to
be recaptured, the taxpayer claiming any South Carolina credit for that project also is required to
recapture a portion of any South Carolina credit.
Definitions. For purposes of this Act, “qualified project,” “project,” and “median income” are
defined as follows:
Qualified Project. A “qualified project” is a qualified low-income building as defined in
Internal Revenue Code Section 42 that is located in South Carolina and receives approval
for tax credits from the South Carolina Housing and Finance Development Authority.
Project. A project is a housing project that has restricted rents that do not exceed 30% of
income for at least 40% of its units occupied by persons or families having incomes of
60% or less of the median income, or at least 20% of the units occupied by persons or
families having incomes of 50% or less of the median income.
Median Income. Median income means those incomes that are determined by the federal
Department of Housing and Urban Development guidelines and adjusted by family size.
Credit Expiration. The tax credit is allowed for qualified projects placed in service after January
1, 2020 and before December 31, 2030.
Effective Date: Applies to qualified projects that receive an eligibility statement after
May 14, 2020

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PROPERTY TAX
Senate Bill 975, Section 5 (Act No. Unassigned)
Consolidation of Clarendon County School Districts 1 and 3 – Millage
Effective July 1, 2021, Clarendon County School District 1 and Clarendon County School
District 3 are abolished. The powers and duties of the two school districts’ respective boards of
trustees will devolve on the board of trustees of a consolidated school district to be known as
Clarendon County School District 4.
For purposes of determining the 2021 property tax millage levy of new School District 4, the
millage levy will be determined and calculated by the Department based on the 2020 levy of
School Districts 1 and 3 and the value of a mill in each district. The millage levy for 2022 must
be the millage levy for the previous year. The allowed millage levy calculated for 2021 and 2022
may be increased by the Department if necessary to comply with educational mandates imposed
by state or federal law.
Beginning in 2023, the new board of trustees is authorized to impose an annual tax levy,
exclusive of any millage imposed for bond debt service. Upon certification to the county auditor
of the tax levy to be imposed, the auditor will levy, and the county treasurer will collect, the
certified millage upon all taxable property in School District 4. School District 4 may raise its
millage by two mills or less over the millage levied for the previous year in addition to any
millage needed to adjust for the Education Finance Act inflation factor and sufficient to meet the
requirements of Code Section 59-21-1030 (level of financial effort per pupil required for each
school district). Any increase for operations above the two mill increase, may be levied only
after a majority of the registered electors of the new district vote in favor of a millage increase in
a referendum called by the district school board and conducted by the county election
commission. If these provisions conflict with the provisions of Code Section 6-1-320, relating to
millage rate increase limitations, the provisions of Code Section 6-1-320 control.
Effective Date: March 4, 2020

House Bill 3695 (Act No. 126)
Adjustments to Vehicle Valuations and Motorcycles for High Mileage
Code Section 12-37-2680, which provides for valuation of motor vehicles for personal property
tax purposes to be determined from guides or manuals provided to county auditors by the
Department, has been amended to address the following:

1. The current guides or manuals must include appropriate adjustments to those values to reflect
   high mileage for all motor vehicles in such guides or manuals.

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2. If the Department determines that there is no high mileage adjustment reasonably available
for motorcycles or motorcycle three-wheel vehicles from a specific source, then the high
mileage threshold requirements for these vehicles are deemed to be two-thirds of the average
of adjustments for other private passenger motor vehicles for which information is available
as determined by the Department.
Effective Date: March 24, 2020

SALES AND USE TAX
Senate Bill 76, Section 2 (Act No. 138)
Certain Energy Efficient Manufactured Homes – Exemption Extended
Code Section 12-36-2110(B) allows an exemption on the sale of a manufactured home
designated by the United States Environmental Protection Agency and the United States
Department of Energy as meeting or exceeding each agency’s energy saving efficiency
requirements or designated as meeting or exceeding such requirements under each agency’s
ENERGY STAR program. The exemption was effective from July 1, 2009 through July 1, 2019.
Act No. 91 extended the exemption for sales of qualifying manufactured homes until June 30,
2020.
This Act extends the exemption for sales of qualifying manufactured homes to July 1, 2024.
Effective Date: May 26, 2020

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