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A41, R44, H3007
STATUS INFORMATION
General Bill
Sponsors: Reps. Wilkins, W.D. Smith, Harrell, Cato, Chellis, Harrison, Townsend, Witherspoon, G.R. Smith, Vaughn, Sandifer, Coates, Barfield, Young, Kirsh, Leach, E.H. Pitts, Battle, Viers, Clyburn, Littlejohn, Taylor, Rice, Hinson, Clark, Walker, Bales, Simrill, Mahaffey, Toole, Talley, Umphlett, Brady, Bailey, Hagood, Edge, Clemmons, Huggins, Neilson, Vick and Delleney
Document Path: l:\council\bills\ggs\22792htc05.doc
Introduced in the House on January 11, 2005
Introduced in the Senate on February 3, 2005
Last Amended on April 6, 2005
Passed by the General Assembly on April 12, 2005
Governor's Action: April 14, 2005, Signed
Summary: Income tax rate
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
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12/8/2004 House Prefiled
12/8/2004 House Referred to Committee on Ways and Means
1/11/2005 House Introduced and read first time HJ-41
1/11/2005 House Referred to Committee on Ways and Means HJ-42
1/12/2005 House Member(s) request name added as sponsor: Talley
1/13/2005 House Member(s) request name added as sponsor: Umphlett
1/18/2005 House Member(s) request name added as sponsor: Brady
1/19/2005 House Committee report: Favorable with amendment Ways and
Means HJ-11
1/25/2005 House Member(s) request name added as sponsor: Bailey, Hagood
1/26/2005 House Member(s) request name added as sponsor: Edge, Clemmons,
Huggins
1/26/2005 House Requests for debate-Rep(s). Harrell, Scott, Weeks,
Miller, McLeod, Ott, JE Smith, Jennings, Hayes,
Battle, Littlejohn, Leach, Anderson, GR Smith,
Davenport, Anthony, Phillips, Mack, Breeland, Young
and Clyburn HJ-34
1/26/2005 House Debate adjourned until Thursday, January 27, 2005 HJ-42
2/1/2005 House Member(s) request name added as sponsor: Neilson, Vick
2/1/2005 House Debate adjourned until Wednesday, February 2, 2005 HJ-27
2/2/2005 House Member(s) request name added as sponsor: Delleney
2/2/2005 House Amended HJ-22
2/2/2005 House Read second time HJ-55
2/2/2005 House Roll call Yeas-73 Nays-39 HJ-55
2/3/2005 House Read third time and sent to Senate HJ-32
2/3/2005 Senate Introduced and read first time SJ-8
2/3/2005 Senate Referred to Committee on Finance SJ-8
3/30/2005 Senate Committee report: Favorable with amendment Finance SJ-20
3/31/2005 Scrivener's error corrected
4/5/2005 Senate Special order, set for 04/05/05 SJ-18
4/6/2005 Senate Amended SJ-26
4/6/2005 Senate Read second time SJ-26
4/6/2005 Senate Unanimous consent for third reading on next legislative
day SJ-26
4/7/2005 Senate Read third time and returned to House with amendments
SJ-20
4/7/2005 Scrivener's error corrected
4/12/2005 House Concurred in Senate amendment and enrolled HJ-15
4/12/2005 Ratified R 44
4/14/2005 Signed By Governor
4/20/2005 Scrivener's error corrected
4/22/2005 Copies available
4/22/2005 Effective date 04/14/05
4/25/2005 Act No. 41
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
12/8/2004
1/19/2005
2/2/2005
3/30/2005
3/31/2005
4/6/2005
4/7/2005
(A41, R44, H3007)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-6-545 SO AS TO PHASE IN OVER FOUR TAXABLE YEARS BEGINNING IN 2006 A FIVE PERCENT STATE INDIVIDUAL INCOME TAX ON SOUTH CAROLINA TAXABLE INCOME ATTRIBUTABLE TO THE ACTIVE TRADE OR BUSINESS INCOME OF A PASS-THROUGH BUSINESS, TO DEFINE PASS-THROUGH BUSINESSES AS SOLE PROPRIETORSHIPS, PARTNERSHIPS, "S" CORPORATIONS, AND LIMITED LIABILITY COMPANIES WHEN SUCH COMPANIES ARE TAXED AS SOLE PROPRIETORSHIPS, PARTNERSHIPS, AND "S" CORPORATIONS AND TO DEFINE ACTIVE TRADE OR BUSINESS INCOME OR LOSS.
Be it enacted by the General Assembly of the State of South Carolina:
Separate income tax rate
SECTION 1. Article 5, Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-545. (A) As used in this section:
(1) 'Active trade or business income or loss' means income or loss of an individual, estate, trust, or any other entity except those taxed or exempted from tax pursuant to Sections 12-6-530 through 12-6-550 resulting from the ownership of an interest in a pass-through business. Active trade or business income or loss does not include:
(a)(i) passive investment income as defined in Internal Revenue Code Section 1362(d) generated by a pass-through business and income of the same type regardless of the type of pass-through business generating it; and
(ii) expenses related to passive investment;
(b) capital gains and losses;
(c) any payments for services referred to Internal Revenue Code Section 707(c);
(d) amounts reasonably related to personal services. All amounts paid as compensation are deemed to be reasonably related to personal services. In addition, if an owner of a pass-through entity who performs personal services for the entity is not paid a reasonable amount for those personal services as compensation or payments referred to in Internal Revenue Code Section 707(c), all of the owner's income from the entity is presumed to be amounts reasonably related to personal services.
(2) 'Pass-through businesses' mean sole proprietorships, partnerships, and 'S' corporations, including limited liability companies taxed as sole proprietorships, partnerships, or 'S' corporations.
(B)(1) Notwithstanding Section 12-6-510, an income tax at the rate provided in item (2) of this subsection is imposed annually on active trade or business income received by the owner of a pass-through business. The amount subject to tax pursuant to this section is not subject to tax pursuant to Section 12-6-510.
(2) The rate of the income tax imposed pursuant to this subsection is:
Taxable Year Beginning in Rate of Tax
2006 6.5 percent
2007 6 percent
2008 5.5 percent
after 2008 5 percent
(C) Notwithstanding any other provision of this chapter, active trade or business loss must first be deducted, dollar for dollar against active trade or business income. Any remaining active trade or business loss is multiplied by a fraction, the numerator of which is the rate of tax imposed pursuant to subsection (B)(2) of this section, and the denominator of which is the highest income tax rate imposed pursuant to Section 12-6-510. The resulting amount is deductible from income taxed under Section 12-6-510 if otherwise allowable."
Time effective
SECTION 2. This act takes effect upon approval by the Governor.
Ratified the 12th day of April, 2005.
Approved the 14th day of April, 2005.
This web page was last updated on Friday, December 4, 2009 at 3:24 P.M.