S 675 Session 110 (1993-1994)
S 0675 General Bill, By Land
Similar(H 3914)
A Bill to amend Title 12, Code of Laws of South Carolina, 1976, relating to
taxation, by adding Chapter 8, 10, and 20, so as to revise, reorganize, and
recodify state tax laws imposing the individual and corporate income tax,
providing for the withholding of income taxes, and imposing the corporation
license tax; to amend Title 12 of 1976 Code by adding Chapters 56 and 58,
which shall contain respectively the former provisions of Article 3 of Chapter
54, the Setoff Debt Collection Act and Article 5 of Chapter 54, the South
Carolina Taxpayers' Bill of Rights; to amend Chapter 54 of Title 12 of the
1976 Code by adding Sections 12-54-15, 12-54-17, 12-54-42, 12-54-47, 12-54-85,
12-54-127, and 12-54-135 so as to move enforcement provisions to the Chapter
constituting the uniform method of collection and enforcement of taxes levied
and assessed by the South Carolina Tax Commission; to amend the 1976 Code by
adding Section 50-1-280, so as to move the provisions relating to the nongame
wildlife and natural areas fund to the appropriate location in Title 50,
relating to fish, game, and watercraft; to amend Section 12-4-330, relating to
witnesses before the Tax Commission, so as to allow Commissioners and
designated officers to administer oaths and take acknowledgments; to amend
Sections 11-35-5230, 12-37-220, as amended, 12-54-30, as amended, 12-54-40,
12-54-55, as amended, 12-54-120, as amended, 12-54-210, 12-54-240, as amended,
41-44-10, 41-44-20, and 41-44-70, all relating to taxation, so as to conform
the Sections to the recodified Chapters added by this Act, to provide that a
repeal of a Section of the 1976 Code by this Act does not prevent the
assessment or collection of any tax, interest, or penalties due before the
effective date of this Act, to provide for the continual application of
certain Tax Commission regulations promulgated pursuant to the predecessor
provisions of the Chapters added by this Act, to provide for cross references
and the duties of the Code Commissione r in the recodification accomplished by
this Act; and to repeal Chapters 7, 9, and 19 of Title 12 and Sections
41-44-30, 41-44-40, 41-44-50, 41-44-90, and 41-44-100, all of the 1976 Code,
and all relating to taxation, effective for taxable years beginning after
1992.
04/13/93 Senate Introduced and read first time SJ-11
04/13/93 Senate Referred to Committee on Finance SJ-12
02/09/94 Senate Committee report: Favorable with amendment
Finance SJ-18
02/10/94 Senate Amended SJ-25
02/10/94 Senate Read second time SJ-102
02/10/94 Senate Ordered to third reading with notice of
amendments SJ-102
05/25/94 Senate Read third time and sent to House SJ-21
05/26/94 House Introduced, read first time, placed on calendar
without reference HJ-13
Indicates Matter Stricken
Indicates New Matter
INTRODUCED
May 26, 1994
S. 675
Introduced by SENATOR Land
S. Printed 5/26/94--H.
Read the first time May 26, 1994.
A BILL
TO AMEND TITLE 12, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO TAXATION, BY ADDING CHAPTERS 8, 10,
AND 20, SO AS TO REVISE, REORGANIZE, AND RECODIFY
STATE TAX LAWS IMPOSING THE INDIVIDUAL AND
CORPORATE INCOME TAX, PROVIDING FOR THE
WITHHOLDING OF INCOME TAXES, AND IMPOSING THE
CORPO RATI ON LICENSE TAX; TO AMEND TITLE 12 OF THE
1976 CODE BY ADDING CHAPTERS 56 AND 58, WHICH SHALL
CONTAIN RESPECTIVELY THE FORMER PROVISIONS OF
ARTICLE 3 OF CHAPTER 54, THE SETOFF DEBT COLLECTION
ACT AND ARTICLE 5 OF CHAPTER 54, THE SOUTH CAROLINA
TAXPAYERS' BILL OF RIGHTS; TO AMEND CHAPTER 54 OF
TITLE 12 OF THE 1976 CODE BY ADDING SECTIONS 12-54-15,
12-54-17, 12-54-42, 12-54-47, 12-54-85, 12-54-127, AND 12-54-135
SO AS TO MOVE ENFORCEMENT PROVISIONS TO THE
CHAPTER CONSTITUTING THE UNIFORM METHOD OF
COLLECTION AND ENFORCEMENT OF TAXES LEVIED AND
ASSESSED BY THE SOUTH CAROLINA TAX COMMISSION; TO
AMEND THE 1976 CODE BY ADDING SECTION 50-1-280, SO AS
TO MOVE THE PROVISIONS RELATING TO THE NONGAME
WILDLIFE AND NATURAL AREAS FUND TO THE
APPROPRIATE LOCATION IN TITLE 50, RELATING TO FISH,
GAME, AND WATERCRAFT; TO AMEND SECTION 12-4-330,
RELATING TO WITNESSES BEFORE THE TAX COMMISSION, SO
AS TO ALLOW COMMISSIONERS AND DESIGNATED OFFICERS
TO ADMINISTER OATHS AND TAKE ACKNOWLEDGMENTS; TO
AMEND SECTIONS 11-35-5230, 12-37-220, AS AMENDED,
12-54-30, AS AMENDED, 12-54-40, 12-54-55, AS AMENDED,
12-54-120, AS AMENDED, 12-54-210, 12-54-240, AS AMENDED,
41-44-10, 41-44-20, AND 41-44-70, ALL RELATING TO
TAXATION, SO AS TO CONFORM THE SECTIONS TO THE
RECODIFIED CHAPTERS ADDED BY THIS ACT, TO PROVIDE
THAT A REPEAL OF A SECTION OF THE 1976 CODE BY THIS
ACT DOES NOT PREVENT THE ASSESSMENT OR COLLECTION
OF ANY TAX, INTEREST, OR PENALTIES DUE BEFORE THE
EFFECTIVE DATE OF THIS ACT, TO PROVIDE FOR THE
CONTINUAL APPLICATION OF CERTAIN TAX COMMISSION
REGULATIONS PROMULGATED PURSUANT TO THE
PREDECESSOR PROVISIONS OF THE CHAPTERS ADDED BY
THIS ACT, TO PROVIDE FOR CROSS REFERENCES AND THE
DUTIES OF THE CODE COMMISSIONER IN THE
RECODIFICATION ACCOMPLISHED BY THIS ACT; AND TO
REPEAL CHAPTERS 7, 9, AND 19 OF TITLE 12 AND SECTIONS
41-44-30, 41-44-40, 41-44-50, 41-44-90, AND 41-44-100, ALL OF
THE 1976 CODE, AND ALL RELATING TO TAXATION,
EFFECTIVE FOR TAXABLE YEARS BEGINNING AFTER 1992.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 12 of the 1976 Code is amended by adding:
"CHAPTER 8
South Carolina Income Tax Act
Article 1
Adoption of Internal Revenue Code-Definitions
Section 12-8-10. This chapter may be cited as the `South Carolina
Income Tax Act'.
Section 12-8-20. The department shall administer and enforce the
taxes imposed by this chapter. The department shall make and publish
rules and regulations, not inconsistent with this chapter, necessary to
enforce its provisions. These rules and regulations have the force of
law.
Section 12-8-30. As used in this chapter, the following words have
the meaning provided unless otherwise required by the context:
(1) `Taxpayer' includes an individual, trust, estate, partnership,
association, company, corporation or any other entity subject to the tax
imposed by this chapter or required to file a return.
(2) `Resident individual' means an individual domiciled in this State.
A `nonresident individual' means an individual other than a resident
individual or a part-year resident.
(3) `Part-year resident' means an individual who is a resident
individual for only a portion of the tax year.
(4) `Resident estate' means the estate of a decedent who was
domiciled in this State at death. `Nonresident estate' means an estate
other than a resident estate.
(5) `Resident trust' means a trust administered in this State.
`Nonresident trust' is a trust other than a resident trust.
(6) `Resident beneficiary' means a beneficiary of an estate or trust
who is a resident individual, resident estate, resident trust, resident
partnership, or resident corporation. `Nonresident beneficiary' means a
beneficiary other than a resident beneficiary.
(7) `Resident partner' means a partner who is a resident individual,
resident estate, resident trust, or resident corporation or resident
partnership during the taxable year. `Nonresident partner' means a
partner other than a resident partner.
(8) `Resident corporation' means a corporation whose principal
place of business, as defined in item (9), is located within this State.
`Nonresident corporation' means a corporation other than a resident
corporation.
(9) `Principal place of business' means the domicile of a corporation.
However, when none of the business of the corporation is conducted in
the state of domicile, the department shall determine the principal place
of business of the corporation based upon the available evidence.
(10) `Business' includes trade, profession, occupation, or
employment.
(11) `Tangible property' includes real property and corporeal personal
property but does not include money, bank deposits, shares of stock,
bonds, credits, evidences of debt, choses in action, or evidences of an
interest in property.
(12) `Intangible property' means all property other than tangible
property.
Section 12-8-40. (A) `Internal Revenue Code' means the Internal
Revenue Code of 1986 as amended through December 31, 1992, except
as provided in Section 12-8-50.
(B) All elections made for federal income tax purposes in connection
with Internal Revenue Code Sections adopted by this State automatically
apply for South Carolina income tax purposes unless otherwise
provided. A taxpayer may not make an election solely for South
Carolina income tax purposes except for elections not applicable for
federal purposes, including filing a combined or composite return as
provided in Sections 12-8-4110 and 12-8-4120, respectively.
(C) For purposes of Internal Revenue Code Sections 67 (Two
Percent Floor on Miscellaneous Itemized Deductions), 71 (Alimony and
Separate Maintenance Payments), 85 (Unemployment Compensation),
165 (Losses), 170 (Charitable Contributions), 213 (Medical and Dental
Expenses), 219 (Retirement Savings), 469 (Passive Activity Losses and
Credits Limited), and 631 (Gain or Loss in the Case of Timber, Coal, or
Domestic Iron Ore), `Adjusted Gross Income' for South Carolina income
tax purposes means a taxpayer's adjusted gross income for federal
income tax purposes without regard to the adjustments required by
Article 9 and Article 18 of this chapter.
(D) For a taxpayer utilizing the provisions of Internal Revenue Code
Section 1341 (Computation of Tax where Taxpayer Restores Substantial
Amount Held under Claim of Right) for South Carolina tax purposes the
phrase `taxes imposed by this chapter' means taxes imposed by Chapter
8 of this title.
(E) The terms defined in Internal Revenue Code Sections 7701, 7702,
and 7703 have the same meaning for South Carolina income tax
purposes, unless a different meaning is clearly required.
(F) If a taxpayer complies with the provisions of Internal Revenue
Code Section 367 (Foreign Corporations), it is not necessary for the
taxpayer to obtain the approval of the department. The taxpayer shall
attach a copy of the approval received from the Internal Revenue Service
to its next South Carolina income tax return.
Section 12-8-50. For purposes of this chapter, except as otherwise
specifically provided, the following Internal Revenue Code Sections are
specifically not adopted by this State:
(1) Sections 1(a) through 1(e), 3, 11, and 1201 relating to federal tax
rates;
(2) Sections 22 through 53, 515, 853, 901 through 908, and 960
relating to tax credits;
(3) Sections 55 through 59 relating to minimum taxes;
(4) Sections 78, 86, 87, 196, and 280C;
(5) Sections 72(m)(5)(B), 72(f), 72(o), 72(q), and 72(t), relating to
penalty taxes on certain retirement plan distributions;
(6) Section 172(b)(1) relating to net operating loss carrybacks;
(7) Sections 531 through 564 relating to certain special taxes on
corporations;
(8) Sections 581, 582, and 585 through 596 relating to the taxation
of banking institutions;
(9) Sections 665 through 668 relating to taxation of certain
accumulation distributions from trusts;
(10) Sections 801 through 845 relating to taxation of insurance
companies;
(11) Sections 861 through 908, 912, and 931 through 989 relating to
the taxation of foreign income;
(12) Sections 1401 through 1494;
(13) Sections 1501 through 1505 relating to consolidated tax returns;
and
(14) Sections 2001 through 7655, 7801 through 7871, and 8001
through 9602, except for Sections 6013(e), 6654 and 6655 which are
adopted as provided in Section 12-8-3210.
Article 5
Tax Rates and Imposition
Section 12-8-510. (A) For taxable years beginning after 1993, a tax
is imposed on the South Carolina taxable income of individuals, estates,
and trusts and any other entity except those taxed or exempt from
taxation under Sections 12-8-530 through 12-8-550 computed at the
following rates with the income brackets indexed in accordance with
Section 12-8-520:
Not over $2,170 2.5 percent of
taxable income
over $2,170 but $54 plus 3 percent of
not over $4,340 the excess over $2,170
over $4,340 but $119 plus 4 percent of
not over $6,510 the excess over $4,340
over $6,510 but $206 plus 5 percent of
not over $8,680 the excess of $6,510
over $8,680 but $315 plus 6 percent of
not over $10,850 the excess over $8,680
over $10,850 $445 plus 7 percent of
the excess over $10,850.
(B) The department may prescribe tax tables consistent with the rates
set pursuant to subsection (A).
Section 12-8-520. Each December 15, the department shall
cumulatively adjust the brackets in Section 12-8-510 in the same manner
that brackets are adjusted in Internal Revenue Code Section (1)(f).
However, the adjustment is limited to one-half of the adjustment
determined by Internal Revenue Code Section (1)(f), may not exceed
four percent a year, and the rounding amount provided in (1)(f)(6) is ten
dollars. The brackets, as adjusted, apply in lieu of those provided in
Section 12-8-510 for taxable years beginning in the succeeding calendar
year. Inflation adjustments must be made cumulatively to the income
tax brackets.
Section 12-8-530. An income tax is imposed annually at the rate of
five percent on the South Carolina taxable income of every corporation,
other than those described in Sections 12-8-540 and 12-8-550, and any
other entity taxed using the rates of a corporation for federal income tax
purposes, transacting, conducting, or doing business within this State or
having income within this State, regardless of whether these activities
are carried on in intrastate, interstate, or foreign commerce. The terms
`transacting', `conducting', and `doing business' include transacting or
engaging in any activity for the purpose of financial profit or gain.
Section 12-8-540. An income tax is imposed annually at the rate of
five percent on the South Carolina taxable income of an organization
described in Internal Revenue Code Sections 501 through 528 (Exempt
Organizations) and 1381 (Cooperatives) as computed under Internal
Revenue Code Sections 501(b) (unrelated business income), 1382 and
1383 (taxation of cooperatives) with the modifications provided in
Article 9 of this chapter and subject to allocation and apportionment as
provided in Article 18 of this chapter.
Section 12-8-550. The following corporations are exempt from the
tax imposed by Section 12-8-530:
(1) banks as defined in Section 12-11-10;
(2) building and loan associations as defined in Section 12-13-10;
(3) insurance companies;
(4) nonprofit corporations organized pursuant to Sections
33-35-10 through 33-35-170 for the purpose of providing water supply
and sewerage disposal or a combination of those services;
(5) organizations exempt from income taxes pursuant to Section
33-49-120.
Section 12-8-560. A resident individual's South Carolina gross
income, adjusted gross income, and taxable income is computed as
determined under the Internal Revenue Code with the modifications
provided in Article 9 of this chapter and subject to allocation and
apportionment as provided in Article 18 of this chapter.
Section 12-8-570. A nonresident individual, nonresident trust,
nonresident estate, and nonresident beneficiary's gross income, adjusted
gross income, and taxable income is computed as provided in Section
12-8-1420.
Section 12-8-580. A corporation's South Carolina gross income,
taxable income, and the unrelated business income of a corporation
exempt from taxation under Internal Revenue Code Section 501 et seq.,
is computed as determined under the Internal Revenue Code with the
modifications provided in Article 9 of this chapter and subject to
allocation and apportionment as provided in Article 18 of this chapter.
Section 12-8-590. (A) Except as provided in Section 12-8-1000(F),
an `S' Corporation having a valid federal election under the Internal
Revenue Code Subchapter `S' is not subject to tax under this chapter to
the extent it would be exempt from federal corporate income tax. Each
shareholder shall include its share of South Carolina `S' Corporation
income on the shareholder's income tax return. All of the provisions of
the Internal Revenue Code apply to determine the gross income,
adjusted gross income, and taxable income of an `S' Corporation and its
shareholders subject to the modifications provided in Article 9 of this
chapter and subject to allocation and apportionment as provided in
Article 18 of this chapter.
(B) If Internal Revenue Code Section 1374 (Tax Imposed on Certain
Built-In Gains and Capital Gains) or 1375 (Tax Imposed on Certain
Passive Investment Income) imposes a federal income tax, a South
Carolina tax is similarly imposed using the rates set forth in Section
12-8-530. If the exception in Internal Revenue Code Section 1374(c) is
effective for federal tax purposes, then this exception is applicable for
South Carolina income tax purposes.
Section 12-8-600. An entity treated as a partnership for federal
income tax purposes is not subject to tax under this chapter. Each
partner shall include its share of South Carolina partnership income on
the partner's respective income tax return. All of the provisions of the
Internal Revenue Code apply to determine the gross income, adjusted
gross income, and taxable income of a partnership and its partners,
subject to the modifications provided in Article 9 of this chapter and
subject to allocation and apportionment as provided in Article 18 of this
chapter.
Section 12-8-610. A resident estate or resident trust's South Carolina
gross income and taxable income is computed as determined under the
provisions of the Internal Revenue Code, including the provisions of
Internal Revenue Code Section 584 (Common Trust Funds), with the
modifications provided in Article 9 of this chapter and subject to
allocation and apportionment as provided in Article 18 of this chapter.
Section 12-8-620. A nonresident individual, nonresident trust, and
nonresident estate's South Carolina gross income, adjusted gross income,
and taxable income is computed as provided in Section 12-8-1420.
Section 12-8-630. Entities, other than those specified in Sections
12-8-560 through 12-8-620 and those specifically excluded from income
taxation under Section 12-8-550, are taxed as provided in the Internal
Revenue Code with the modifications provided in Article 9 of this
chapter and subject to allocation and apportionment as provided in
Article 18 of this chapter.
Article 9
Taxable Income Calculation
Section 12-8-910. For South Carolina income tax purposes, gross
income, adjusted gross income, and taxable income as calculated under
the Internal Revenue Code are modified as provided in this article and
subject to allocation and apportionment as provided in Article 18 of this
chapter.
Section 12-8-920. South Carolina gross income is computed by
making modifications to gross income provided in the Internal Revenue
Code as follows:
(1) The exclusion from gross income authorized by Internal Revenue
Code Section 103 (Interest on State and Local Bonds) is modified to
exempt only interest on obligations of this State or any of its political
subdivisions, and to exempt interest upon obligations of the United
States. This modification applies to all Internal Revenue Code Sections
referencing Section 103.
(2) South Carolina gross income does not include any state income
tax refund included in federal gross income.
(3) The exclusion permitted by Internal Revenue Code Section 1031
is not permitted for the sale or exchange of real estate located in this
State unless the real estate received in the exchange is located in this
State.
(4) South Carolina gross income is determined without application of
Internal Revenue Code Sections 78 (Gross-up of Dividends received
from Certain Foreign Corporations), 86 (Social Security and Tier 1
Railroad Retirement Benefits), and 87 (Alcohol Fuel Credit).
(5) The exclusions permitted by Internal Revenue Code Sections 912
(Exemptions for Certain Allowances for Citizens or Residents of the
United States Living Abroad) and 931 through 936 (Income from
Possessions of the United States) are not permitted.
(6) A beneficiary of a trust shall exclude from South Carolina taxable
income any excess distributions by trusts included in the beneficiary's
federal taxable income by reason of Internal Revenue Code Sections 665
through 669 (Treatment of Excess Distributions by Trusts) or any
comparable provisions.
(7) South Carolina gross income does not include compensation or
retirement benefits received from the United States or any state for
service in a state National Guard or a reserve component of the Armed
Forces of the United States. This exclusion only applies to compensation
and retirement benefits received for the customary annual training period
not to exceed fifteen days for guard members or fourteen days plus
travel time for reserve members, week-end drills, and inactive duty
training. National Guard or reserve members that are called to active
duty are allowed to deduct fifteen days of active duty pay if they have
not excluded pay for the annual training period for the same taxable
year.
(8) Each partner in the Palmetto Seed Capital Fund Limited
Partnership (Fund) established under Section 41-44-60 shall exclude
from South Carolina gross income, seventy-five percent of the partner's
proportionate share of income that the fund derives from a South
Carolina business which is either established and operated in a less
developed county as defined in Section 12-8-2770, invested in
agriculture, aquaculture, or a related business or in a business created by
a socially or economically disadvantaged individual as defined in 13
Code of Federal Regulations Sections 124.105(A) and 124.106 (1987).
Section 12-8-930. South Carolina taxable income is computed by
making modifications to deductions provided in the Internal Revenue
Code as follows:
(1) The disallowance of deductions relating to tax-exempt income
required by Internal Revenue Code Section 265 applies if the related
income is exempt for South Carolina income tax purposes, whether or
not the income is exempt for federal purposes. If an expense or interest
is disallowed under Section 265 for federal purposes, but is related to
income taxed in South Carolina, that expense or interest may be
deducted for South Carolina income tax purposes.
(2) The deduction for taxes permitted by Internal Revenue Code
Section 164 is computed in the same manner as Section 164 except there
is no deduction for state and local income taxes, or state and local
franchise taxes measured by net income, or any income taxes, or any
taxes measured by or with respect to net income.
This modification is limited for individual taxpayers to the excess of
itemized deductions over the standard deduction that would be allowed
if the taxpayer had used the standard deduction for federal income tax
purposes.
(3) For purposes of computing the deduction for estate taxes allowed
by Internal Revenue Code Section 691(c), `estate tax' means the South
Carolina Estate Tax including any South Carolina generation-skipping
transfer tax.
(4) A net operating loss deduction is computed in accordance with
the Internal Revenue Code except that:
(a) All items of income and deductions used in computing the net
operating loss deduction are adjusted as provided in this article.
(b) No carrybacks are allowed.
(c) A federal election to carryback a net operating loss deduction
does not affect the computation of this deduction for South Carolina
income tax purposes.
(d) A net operating loss is subject to allocation and apportionment
under Article 18 of this chapter in the year the loss is incurred.
(5) A corporation may not carry back a net capital loss as permitted
by Internal Revenue Code Section 1212(a). A net capital loss may be
carried forward to future years to the extent provided in Internal
Revenue Code Section 1212(a).
(6) In computing the depletion deduction pursuant to Internal
Revenue Code Sections 611 through 613, a taxpayer who allocates or
apportions income under the provisions of Article 18 of this chapter has
the option of:
(a) apportioning the deduction according to the appropriate South
Carolina apportionment percentage provided in Sections 12-8-1850
through 12-8-1900; or
(b) allocating the deduction to South Carolina with respect to
mines, oil and gas wells, and other natural deposits located in this State.
The amount allocated to South Carolina may not exceed fifty percent of
the net income apportioned to South Carolina by Sections 12-8-1850
through 12-8-1900.
(7) The limiting provisions of Internal Revenue Code Section 280C
for certain expenses for which credits are allowable do not apply.
(8) Adjusted gross income and taxable income are computed without
the deductions for certain unused business credits authorized by Internal
Revenue Code Section 196.
(9) If for federal income tax purposes a taxpayer claims a credit
which requires a reduction of basis to Section 38 property under Internal
Revenue Code Section 48(q) or 49(d), the taxpayer may deduct the
amount of the basis reduction for South Carolina income tax purposes
by the amount of the basis reduction in the tax year in which basis is
reduced for federal income tax purposes. If a taxpayer makes an election
under Internal Revenue Code Section 48(q)(4) to reduce the credit and
not the basis, this subitem does not apply.
(10) If for federal income tax purposes a taxpayer's mortgage interest
deduction is reduced pursuant to Internal Revenue Code Section 163(g),
the taxpayer may deduct the amount of the federal interest deduction
reduction.
Section 12-8-940. There is allowed as a deduction in computing
South Carolina taxable income of an individual the following:
(1) a net long term capital gain deduction as provided in Section
12-8-950;
(2) a deduction for retirement income as provided in Section
12-8-960;
(3) amounts included in South Carolina gross income received for
disability retirement due to permanent and total disability by a person
who could qualify for the homestead exemption under Section
12-37-250 by reason of being classified as totally and permanently
disabled;
(4) expenses incurred by taxpayers as provided in Internal Revenue
Code Section 162(h) without regard to limitations in Section 162(h)(4);
(5) a subsistence allowance of five dollars a day for federal, state,
and local law enforcement officers paid by a political subdivision of this
State, the government of this State, or the federal government for each
regular work day in a taxable year;
(6) (a) Two thousand dollars for each adopted special needs child
who is:
(i) dependent upon and receiving chief support from the
taxpayer;
(ii) under the age of twenty-one; and
(iii) enrolled in an accredited school or college or is incapable
of self-support because of mental or physical defects.
(b) For purposes of this item, a special needs child is a person
who is:
(i) under eighteen at the time of adoption;
(ii) the dependent of a public or private nonprofit adoption
agency prior to the adoption;
(iii) legally free for adoption; and
(iv) unlikely to be adopted without assistance as determined by
the South Carolina Department of Social Services because of conditions
such as ethnic minority status, age, sibling group membership, medical
condition, or physical, mental, or emotional handicaps.
(c) The entire deduction is allowed for a taxable year even if the
special needs child survives for only part of the taxable year.
Section 12-8-950. (A) Individuals, estates, and trusts are allowed
a deduction from South Carolina taxable income equal to twenty-nine
percent of net capital gain recognized in this State during taxable years
beginning in 1991, 1992, or 1993 and forty-four percent for taxable
years beginning after 1993. In the case of estates and trusts, the
deduction is applicable only to income taxed to the estate or trust or
individual beneficiaries and not income passed through to nonindividual
beneficiaries.
(B) (1) South Carolina income includes capital gains and losses
from partnerships and `S' Corporations.
(2) Net capital gain is defined in the Internal Revenue Code,
as amended through December 31, 1988, except that the required
holding period is two or more years.
Section 12-8-960. An individual is allowed an annual deduction
from South Carolina taxable income for retirement income received as
follows:
(1) For taxable years after 1992 and beginning on the first taxable
year a taxpayer receives retirement income, the taxpayer may:
(a) deduct up to three thousand dollars of retirement income that
is included in South Carolina taxable income; or
(b) irrevocably elect to defer the annual retirement income
deduction until the taxable year in which the taxpayer reaches age
sixty-five. Beginning in the year in which the taxpayer reaches age
sixty-five, the taxpayer may deduct up to ten thousand dollars of
retirement income that is included in South Carolina taxable income.
(2) Taxpayer's are deemed to have made the election provided in
subitem (1)(b) and may deduct up to ten thousand dollars of retirement
income included in South Carolina taxable income if:
(a) the taxpayer does not claim a retirement income deduction
before the taxable year he reaches age sixty-five; or
(b) the taxpayer reaches age sixty-five before 1994.
(3) As used in this section, all references to age sixty-five apply to
taxpayers born before 1943. For taxpayers born in 1943 through 1959,
the applicable age for determining the retirement income deduction is
age sixty-six and age sixty-seven for taxpayers born after 1959.
(4) The term `retirement income', as used in this section, means the
total of all otherwise taxable income not subject to a penalty for
premature distribution received by the taxpayer or the taxpayer's
surviving spouse in a taxable year from qualified retirement plans which
include those plans defined in Internal Revenue Code Sections 401, 403,
408, and 457, and all public employee retirement plans of the federal,
state, and local governments, including military retirement.
(5) A surviving spouse receiving retirement income that is
attributable to the deceased spouse shall apply this deduction in the same
manner that the deduction applied to the deceased spouse. If a surviving
spouse has retirement income in addition to the retirement income from
the deceased spouse, the surviving spouse is allowed an exemption for
the retirement income of the deceased spouse as well as his own
retirement income.
(6) The department shall prescribe the method of making the
election to defer the retirement income deduction and may require the
taxpayer to provide information necessary for proper administration of
this election.
Section 12-8-970. (A) Property acquired as the result of a like-kind
exchange which qualified under Internal Revenue Code Section 1031,
but which did not qualify as a like-kind exchange in South Carolina
because of Section 12-8-920(3), has a basis for South Carolina income
tax purposes as determined by the taxable South Carolina exchange.
(B) If a taxpayer disposes of an asset that has a different South
Carolina basis and federal basis, the South Carolina gain or loss is
adjusted to reflect the difference in basis.
(C) For purposes of determining gain, the basis of an asset acquired
before January 1, 1921, is its fair market value on that date, if fair
market value was higher than cost.
Section 12-8-980. Retirees receiving benefits from the various state
retirement systems or any other retirement plan maintained by a political
subdivision of this State who have recovered all or a part of their
recoverable costs in their retirement benefits for federal income tax
purposes before January 1, 1989, are considered to have recovered those
costs for purposes of the state income tax. For taxable years beginning
after 1988, cost recovery of these retirement benefits is the same for both
state and federal income tax purposes.
Section 12-8-990. South Carolina taxable income does not include
amounts excluded from federal income tax by reason of a treaty of the
United States.
Section 12-8-1000. (A) If as of January 1, 1985, a taxpayer is for
federal income tax purposes amortizing a capital expense paid or
incurred before January 1, 1985, as provided in Internal Revenue Code
Sections 171 (Amortization of Bond Premium), 174 (Research and
Experimental Expenditures), 185 (Amortization of Railroad Grading and
Tunnel Bores), 189 (Amortization of Real Property Construction Period
Interest and Taxes), or 194 (Amortization of Reforestation
Expenditures), the taxpayer is allowed to deduct for South Carolina
income tax purposes the amount amortized and deducted for federal
income tax purposes. At the expiration of the amortization for federal
income tax purposes, the taxpayer may continue to amortize, for South
Carolina income tax purposes, the balance of the capital expense, if any,
using the same rate of amortization until the cost of the item has been
fully amortized for South Carolina income tax purposes.
(B) Except as provided in subsection (C), if, as of January 1, 1985,
a taxpayer is deducting the cost of personal property placed in service
before 1985 or the cost of improvements to real property paid or
incurred before January 1, 1985, as provided in Internal Revenue Code
Section 168, the taxpayer is allowed for South Carolina income tax
purposes the same annual deduction as allowed for federal tax purposes.
Beginning with the year following the expiration of the deductions for
federal tax purposes, the balance of the deductible cost, if any, may be
deducted at the rate of fifty percent a year for personal property and
twenty percent a year for real property improvements, until the entire
deductible cost has been deducted for South Carolina income tax
purposes. The deduction authorized by this subsection may not exceed
the taxpayer's depreciable basis.
(C) If a taxpayer has a higher basis in assets for South Carolina
income tax purposes, the taxpayer may continue to depreciate the assets,
to the extent depreciable, in the manner in which the assets were being
depreciated before January 1, 1985, if the higher basis is the result of:
(1) a taxable corporate liquidation before January 1, 1985;
(2) an exchange of property before January 1, 1985, that qualified
under Internal Revenue Code Section 1031, but did not similarly qualify
under Section 12-7-930, as in effect on December 31, 1984, as a result
of the property received in the exchange not having a situs in South
Carolina; or
(3) Internal Revenue Code Section 179 before January 1, 1985.
(D) If a taxpayer is reporting income from a corporate liquidation
distribution under Internal Revenue Code Section 337 using the
installment method of reporting or from an installment sale under
Internal Revenue Code Section 453, and the taxpayer has previously
reported all the gain for South Carolina income tax purposes, then South
Carolina taxable income must be reduced by the amount of the
installment gain. If a taxpayer has elected installment sale reporting for
South Carolina purposes and not federal purposes, the taxpayer shall
continue to report gain on the South Carolina tax return in addition to
income otherwise taxable.
(E) A taxpayer reporting income or deducting expenses over a time
period as a result of a change of accounting method or accounting year,
shall report income or deduct expenses in the manner provided in the
Internal Revenue Code and approved by the Internal Revenue Service.
At the expiration of the authorized adjustment period, the balance of the
income or expense must be reported or deducted in the same manner and
amount for South Carolina income tax purposes until all of the income
or expenses have been fully reported or deducted.
(F) If a South Carolina taxpayer had a valid `S' election in effect for
federal tax purposes before January 1, 1985, but has not elected that
treatment for South Carolina income tax purposes, the taxpayer may at
its option continue to be subject to the tax provided in Section 12-8-530
or the taxpayer may affirmatively elect South Carolina `S' Corporation
status. The election may be made by filing a statement or federal `S'
Corporation election with all of the shareholders consenting to the state
election or all shareholders can indicate their consent by reporting the `S'
Corporation income or loss on their individual or composite South
Carolina return(s).
(G) If before January 1, 1985, a taxpayer has made an election
pursuant to Internal Revenue Code Section 83(b) (Election to Include
Property Transferred in Connection with Performance of Services in the
Year of Transfer), the election is not effective for South Carolina income
tax purposes unless the taxpayer reported income in a manner consistent
with the election on the South Carolina income tax return for the year of
the election. Otherwise, the taxpayer is taxed under the provisions of
Internal Revenue Code Section 83 when income is otherwise realized
and recognized as though no Section 83(b) election had been made.
(H) An incentive stock option issued under Internal Revenue Code
Section 422A is considered a qualified option or incentive stock option
for South Carolina income tax purposes whether granted before or after
January 1, 1985.
(I) A taxpayer may not deduct a capital loss carryover under
Internal Revenue Code Section 1212 from a tax year before January 1,
1985, for South Carolina income tax purposes.
(J) A net operating loss carryforward under Section 12-7-705 as in
effect on December 31, 1984, is allowed for South Carolina income tax
purposes before loss carryforwards pursuant to the Internal Revenue
Code Section as modified by Article 9 of this chapter, but the same loss
may not be deducted more than once. A net operating loss that has not
expired before January 1, 1985, expires under the rules provided in
Internal Revenue Code Section 172.
(K) A taxpayer receiving an annuity before January 1, 1985, that is
subject to tax pursuant to Internal Revenue Code Section 72 shall
continue to report income from the annuity in the manner provided in
Section 12-7-560(2) in effect on December 31, 1984.
(L) If a taxpayer is subject to the provisions of Internal Revenue
Code Sections 483 (Interest on Certain Deferred Payments) or 1271
through 1288 (Special Rules for Bonds and Other Debt Instruments) as
a result of a contract entered into before 1985, then no recomputation of
principal and income is required.
(M) For a taxable year beginning after December 31, 1984, to the
extent gross income, adjusted gross income, or taxable income of any
taxpayer is affected by a provision of federal law enacted before January
1, 1985, which provision is not contained in the Internal Revenue Code,
the provision is applicable in determining the South Carolina gross,
adjusted gross, and taxable income of the taxpayer in the appropriate
taxable year.
Article 14
Nonresident and Part-Year Resident Individuals
Section 12-8-1410. An individual who is a part-year resident of
South Carolina may:
(1) report and compute South Carolina tax as if the individual was
a resident for the entire year and use the credit provided in Section
12-8-2810; or
(2) report and compute South Carolina tax as a nonresident
individual as provided in Section 12-8-1420, except that for purposes of
this computation, South Carolina taxable income for that period during
which the individual was a resident includes all items of income, gain,
loss, or deductions that a resident would be required to include under
Section 12-8-560.
Section 12-8-1420. A nonresident individual, a nonresident trust, a
nonresident estate, and a nonresident beneficiary shall report and
compute South Carolina taxable income as a resident taxpayer of this
State subject to the following modifications:
(1) South Carolina taxable income, gains, losses, or deductions
include only amounts attributable to:
(a) the ownership of any interest in real or tangible personal
property located in this State;
(b) a business, trade, profession, or occupation carried on in this
State or compensation for services performed in this State. If a business,
trade, profession, or occupation is carried on or compensation is for
services performed partly within and partly without this State, the
amount allocable or apportionable to this State under Article 18 of this
chapter must be included in South Carolina income;
(c) income from intangible personal property, including annuities,
dividends, interest, and gains that is derived from property employed in
a trade, business, profession, or occupation carried on in this State. For
purposes of this item, a taxpayer, other than a dealer holding property
primarily for sale to customers in the ordinary course of the
nonresident's trade or business, is not considered to carry on a business,
trade, profession, or occupation in South Carolina solely by reason of the
purchase and sale of property for the nonresident's own account;
(d) the distributive share of the South Carolina portion of
partnership, `S' Corporation, estate, and trust income, gains, losses, and
deductions.
(2) The South Carolina taxable income of a nonresident individual,
nonresident estate, or nonresident trust must be adjusted as follows:
(a) (i) For a nonresident individual, the personal exemptions
and the applicable standard deduction or itemized deductions must be
reduced to an amount which is the same proportion as South Carolina
adjusted gross income is to federal adjusted gross income.
(ii) For a nonresident estate or nonresident trust, the personal
exemption and itemized deductions must be reduced to an amount which
is the same proportion as South Carolina gross income is to federal gross
income.
(b) For purposes of the computation in item (2)(a), South Carolina
adjusted gross income means the adjusted gross income of the taxpayer
calculated as provided in Section 12-8-1420(1). Adjustments to gross
income authorized by Internal Revenue Code Section 62 must be
apportioned based on the ratio of South Carolina gross income to federal
gross income. However, if the adjustment is directly connected with an
item of gross income, the adjustment is allowed only to the extent the
item of income is taxable in this State.
(3) The South Carolina taxable income of a nonresident estate or
nonresident trust as determined in items (1) and (2) of this section must
be allocated among the estate or trust and its beneficiaries, including
solely for purposes of this allocation, resident beneficiaries, in
proportion to their respective shares of federal distributable net income.
If for the taxable year the estate or trust does not have distributable
net income for federal tax purposes, the South Carolina taxable income
must be allocated between the estate or trust and its beneficiaries as
follows:
(a) The personal representative or trustee shall recompute
distributable net income in the same manner as federal distributable net
income but including only those items which enter into the computation
of the South Carolina taxable income of a nonresident estate or
nonresident trust.
(b) The South Carolina taxable income of a nonresident estate or
nonresident trust must then be allocated among the estate or trust and its
beneficiaries, including solely for purposes of this allocation, resident
beneficiaries, in proportion to their respective shares of this recomputed
distributable net income.
Article 18
Allocation and Apportionment
Section 12-8-1810. (A) If the entire business of a taxpayer is
transacted or conducted within this State, the income tax as provided in
this chapter is measured by the entire net income of the taxpayer for the
taxable year. The entire business of the taxpayer is transacted and
conducted within the State if the taxpayer is not subject to a net income
tax or a franchise tax measured by net income in another state, the
District of Columbia, a territory or possession of the United States, or a
foreign country, or would not be subject to a net income tax in another
such taxing jurisdiction if the other taxing jurisdiction adopted the net
income tax laws of this State.
(B) If a taxpayer is transacting or conducting business partly within
and partly without this State, the South Carolina income tax is imposed
upon a base which reasonably represents the proportion of the trade or
business carried on within this State. A taxpayer subject to taxation
under this section is considered to have been transacting or conducting
business partly within and partly without the State if the taxpayer is
subject to a net income tax or a franchise tax measured by net income in
another state, the District of Columbia, a territory or possession of the
United States, or a foreign country, or would be subject to the net
income tax in any other taxing jurisdiction if the other taxing jurisdiction
adopted the net income tax laws of this State.
Section 12-8-1820. The following items of income must be directly
allocated and excluded from the apportioned income and the
apportionment factors:
(1) Interest received from intangible property not connected with the
taxpayer's business, less all related expenses, is allocated to the state of
the corporation's principal place of business as defined in 12-8-20(9) or
the domicile of an individual taxpayer.
(2) Dividends received from corporate stocks owned, less all related
expenses, are allocated to the state of the corporation's principal place
of business as defined in 12-8-20(9) or the domicile of an individual
taxpayer.
(3) Rents and royalties received from the lease or rental of real estate
or tangible personal property, less all related expenses, are allocated to
the state where the property was located at the time the income was
derived providing the property was not used in or connected with the
taxpayer's trade or business during the taxable year.
(4) Gains and losses from the sale of real property less all related
expenses are allocated to the state in which the real property is located
except to the extent that gain represents the return of amounts deducted
as depreciation. The amount of gain which represents the return of
amounts deducted as depreciation is allocated to this State to the extent
of depreciation previously deducted in computing South Carolina
taxable income.
(5) Gains and losses from sales of intangible personal property not
connected with the business of the taxpayer and not held for sale to
customers in the regular course of business, less all related expenses, are
allocated to the state of the corporation's principal place of business as
defined in 12-8-20(9) or the domicile of an individual taxpayer.
(6) All income from personal services received by a resident
individual is allocated to this State. All income from personal services
received by a nonresident individual for services rendered in this State
is allocated to this State.
Section 12-8-1830. Any income, less all related expenses, which is
not allocated under Section 12-8-1820 and not properly includable in the
net apportionable income of taxpayers engaged in interstate commerce
under the Constitution of the United States because it is unrelated to the
business activity of the taxpayer conducted partly within and partly
without this State, is allocated to the state in which the business situs of
the investment is located. If the business situs of the investment is partly
within and partly without South Carolina, the investment is apportioned
using the same formula used for apportioning the net income of the
corporation.
Section 12-8-1840. All income remaining after allocation under
Sections 12-8-1820 and 12-8-1830 is apportioned in accordance with
Sections 12-8-1850, or one of the special apportionment formulas
provided in Sections 12-8-1890 through 12-8-1900.
Section 12-8-1850. A taxpayer whose principal business in this State
is
(1) manufacturing, collecting, buying, assembling or processing
goods and materials, including electricity, within this State, or
(2) selling, distributing, or dealing in tangible personal property,
including electricity, within this State, shall apportion its remaining
income using the arithmetical average of the three factors provided in
Sections 12-8-1860 through 12-8-1880.
Section 12-8-1860. (A) The property factor is a fraction in which the
numerator is the average value of the taxpayer's real and tangible
personal property owned or rented and used in this State during the
taxable year and the denominator is the average value of all of the
taxpayer's real and tangible personal property owned or rented and used
during the taxable year. The property factor does not include property
which produces income that is allocated rather than apportioned.
(B) As used in this section, tangible personal property means
corporeal property such as machinery, tools, implements, equipment,
goods, wares, and merchandise, but does not include cash, shares of
stock, bonds, notes, accounts receivables, credits, special privileges,
franchises, goodwill, or evidences of debt.
(C) The average value of property is determined by averaging the
values at the beginning and end of the taxable year. If this average does
not fairly represent the yearly average because of material changes
during the year, the average must be determined on a monthly or daily
basis.
(D) For purposes of this section, value of property is determined as
follows:
(1) Inventory is valued using the taxpayer's book accounting
practices unless in the department's opinion a different method more
accurately reflects net income. If the taxpayer does not take or keep
records of periodic inventories or if the method and time of taking the
inventories does not accurately reflect the true average inventory, the
department may determine the average inventory from information
available.
(2) For property owned other than inventory, value is the original
cost plus any additions or improvements without regard to deductions
for depreciation, amortization, write-downs or similar charges. If this
method of valuation results in the taxation of more than one hundred
percent of the income of the taxpayer in all the states in which the
taxpayer files a return, the department may in its discretion adjust the
value of property within this State to bring the percentage to one
hundred percent, but in no case can the property in this State be valued
at less than eighty percent of the value as defined in this subsection.
(3) For rented and leased real and personal property, value is the
net annual rental rate multiplied by eight. For rented or leased personal
property the department may require a factor other than a multiplier of
eight to be used if it better reflects the value.
Net annual rental rate means the gross annual rate paid by the
taxpayer, less the gross annual rental rate received by the taxpayer for
any subrentals of real estate.
(4) In determining the value of property, no deduction may be
made for encumbrances on the property.
(5) Inventories of unmanufactured tobacco stored in a warehouse
in this State for subsequent shipment to a manufacturer in another state,
are not considered property used in this State.
Section 12-8-1870. (A) The payroll factor is a fraction in which the
numerator is the total amount paid by the taxpayer for compensation in
this State during the taxable year and the denominator is the total
compensation paid everywhere during the taxable year.
(B) Compensation includes salaries, wages, commissions, and other
personal service compensation paid or incurred in connection with the
taxpayer's trade or business. For purposes of this article, all
compensation paid to employees chiefly working at, sent out from, or
chiefly connected with an office, agency, or place of business of the
taxpayer in this State is deemed to be in connection with the trade or
business of the taxpayer in this State.
(C) Compensation paid to general executive officers having
company-wide authority is excluded from the payroll factor.
(D) All compensation in connection with income separately allocated
is excluded from the payroll factor.
Section 12-8-1880. (A) The sales factor is a fraction in which the
numerator is the total sales of the taxpayer in this State during the
taxable year and the denominator is the total sales of the taxpayer
everywhere during the taxable year.
(B) The term `sales in this State' includes sales of goods,
merchandise, or property received by a purchaser in this State other than
the United States Government. The place where goods are received by
the purchaser after all transportation is completed is considered as the
place at which the goods are received by the purchaser. Direct delivery
into this State by the taxpayer to a person designated by a purchaser
constitutes delivery to the purchaser in this State.
(C) The word `sales' includes, but is not limited to:
(1) rentals from tangible personal property located in this State
which are not separately allocated; and
(2) sales of intangible personal property and receipts from
services if the entire income-producing activity is within this State. If
the income-producing activity is performed partly within and partly
without this State, sales are attributable to this State to the extent the
income-producing activity is performed within this State.
Section 12-8-1890. If the principal profits or income of a taxpayer are
derived from sources other than those described in Section 12-8-1850 or
Section 12-8-1900, the taxpayer shall apportion its remaining net income
using a fraction in which the numerator is gross receipts from within this
State during the taxable year and the denominator is total gross receipts
from everywhere during the taxable year.
Section 12-8-1900. The income remaining after allocation for the
following companies must be apportioned using the following factors:
(1) (a) Railroad companies shall use a fraction in which the
numerator is railway operating revenue from business done within this
State during the taxable year and the denominator is total railway
operating revenue from all business done by the taxpayer as shown by
its records kept in accordance with the Uniform System of Accounts
prescribed by the Interstate Commerce Commission.
(b) If the department finds that the accounting records of a
taxpayer do not accurately reflect the division of revenue by state lines
as to each transaction involving interstate revenue, the department may
adopt rules and promulgate regulations which determine averages which
approximate with reasonable accuracy the proportion of interstate
revenue actually earned upon lines in this State.
(c) For purposes of this item:
(i) `Railway operating revenue from business done within
this State' means railway operating revenue from business wholly within
this State, plus the equal mileage proportion within this State of each
item of railway operating revenue received from the interstate business
of the taxpayer.
(ii) `Equal mileage proportion' means the proportion which
the distance of movement of property and passengers over lines in this
State bears to the total distance of movement of property and passengers
over lines of the taxpayer receiving the revenues.
(iii) `Interstate business' means railway operating revenue
from the interstate transportation of persons or property into, out of, or
through this State.
(2) Motor carriers of property and passengers shall use a fraction in
which the numerator is vehicle miles within this State during the taxable
year and the denominator is total vehicle miles everywhere during the
taxable year.
(3) Telephone service companies shall use a fraction in which the
numerator is gross receipts in this State during the taxable year and the
denominator is total gross receipts everywhere. The term `gross
receipts in this State' includes gross revenues derived from services
rendered wholly within this State, plus that portion of the company's
interstate revenues attributable to this State in accordance with the
Federal Communications Standard Classification of Accounts.
(4) Pipeline companies shall use a fraction in which the numerator
is the revenue ton miles (one ton of solid property transported one mile),
revenue barrel miles (one barrel of liquid property transported one mile),
or revenue cubic foot miles (one cubic foot of gaseous property
transported one mile) within this State during the taxable year and the
denominator is the total revenue ton miles, revenue barrel miles, or
revenue cubic foot miles, of the taxpayer everywhere during the taxable
year.
(5) Airline companies shall use a fraction in which the numerator is
revenue tons loaded and unloaded in this State during the taxable year,
and the denominator is revenue tons loaded and unloaded everywhere
during the taxable year. A revenue ton is a short ton (two thousand
pounds) and is computed by using a standard weight of one hundred
ninety pounds a passenger (including free baggage) multiplied by the
number of passengers loaded and unloaded plus the tons of airmail,
express, and freight loaded and unloaded within and without this State.
(6) Shipping lines. Where the income is derived principally from
the operation of a shipping line, the corporation shall apportion its net
apportionable income to South Carolina on the basis of the ratio of
revenue tons loaded and unloaded within and without the State for such
year. A revenue ton is a short ton (two thousand pounds) and must be
computed using a standard weight of one hundred ninety pounds per
passenger (including free baggage) multiplied by the number of
passengers loaded and unloaded.
Section 12-8-1910. When a taxpayer maintains books of accounts
and records in a manner which clearly reflects the true net income from
sources within this State, the return may, with the approval of the
department, be based and the tax calculated on the income determined
using those books of account or records.
When the department finds the books of account and records are
sufficiently clear, in its opinion, to show the true net income arising
from sources within this State, it may require the return to be filed and
the tax calculated on the net income so determined.
Article 23
Foreign Trade Receipts
Section 12-8-2310. Payment of tax otherwise due under this chapter
on income attributable to the increase in gross income from foreign
trading receipts may be deferred until the taxpayer intentionally ceases
exporting property, or until after three taxable years in which the
taxpayer has no gross income from foreign trading receipts, whichever
is earlier, provided the base amount defined Section 12-8-2350(C) does
not exceed five million dollars, and the taxpayer pays interest annually
on the aggregate deferred tax at the base period T-bill rate. The interest
is due on the date the taxpayer is required to file the annual return
required by this chapter without regard to any extension.
Section 12-8-2320. (A) All deferred tax payments attributable to a
particular taxable year are due and payable no later than the annual
return filing date for the fifth taxable year following the taxable year for
which the payment of the tax was first deferred. A taxpayer may pay
deferred taxes at an accelerated rate. Failure to pay deferred taxes as
required renders the taxpayer ineligible to defer payment of taxes for a
subsequent tax year.
(B) If the taxpayer fails to pay the interest as required in Section
12-8-2310, all taxes deferred pursuant to this article are due and payable
on the due date of the unpaid interest and may be collected as taxes are
collected. No interest is due on amounts deferred for less than an entire
taxable year.
Section 12-8-2330. The three-year limitation on assessment and
collection of taxes in Sections 12-8-4940 and 12-54-80 do not apply to
the assessment of taxes deferred pursuant to this article. The three-year
assessment period for purposes of the article begins when a return is
filed under Section 12-8-2320.
Section 12-8-2340. This article:
(1) is effective for taxable years beginning after December 31, 1985,
and
(2) does not apply to taxpayers who form domestic international
sales corporations or foreign sales corporations pursuant to the Internal
Revenue Code.
Section 12-8-2350. For purposes of this article:
(1) `Export property' means property manufactured, produced,
grown, or extracted to which value is added in this State for direct use,
consumption, or disposition outside the United States.
(2) `Foreign trading receipts' means receipts from invoices issued by
a seller directly to an unrelated purchaser outside the United States from:
(a) the sale, exchange, or other disposition of export property
outside the United States;
(b) the lease or rental of export property that is used by the lessee
outside the United States;
(c) the performance of services that is related and subsidiary to
the sale, exchange, lease, rental, or other disposition of export property
outside the United States by the South Carolina taxpayer, including, but
not limited to, maintenance and training services;
(d) the performance of engineering, architectural, or consulting
services for projects located outside the United States.
(3) `Increase in gross income from foreign trading receipts' is the
amount by which the gross income from foreign trading receipts during
the applicable tax year exceeds a base amount equal to the average of
annual gross income from foreign trading receipts over the three taxable
years before the applicable taxable year.
(4) `Base period T-bill rate' means the annual rate of interest
determined by the department to be equivalent to the average investment
yield of United States Treasury bills with maturities of fifty-two weeks
which were auctioned during the one-year period ending on September
thirtieth of the calendar year ending with or of the most recent calendar
year ending before the close of the tax year of the taxpayer.
Article 27
Credits
Section 12-8-2710. All credits allowed in this article are
nonrefundable and useable only in the year generated unless otherwise
provided.
Section 12-8-2720. The provisions of Internal Revenue Code Section
383 (Special Limitations on Certain Excess Credits) are applicable to all
income tax credits available to a corporation for South Carolina income
tax purposes.
Section 12-8-2730. (A) Married individuals are allowed a two wage
earner credit against South Carolina income tax if both spouses have
South Carolina earned income and a joint return is filed under the
provisions of Section 12-8-4090.
(B) The credit is limited to seven-tenths of one percent multiplied by
the lesser of:
(1) thirty thousand dollars; or
(2) the South Carolina qualified earned income of the spouse with
the lower South Carolina qualified earned income for the taxable year.
(C) (1) South Carolina qualified earned income is computed as
follows:
(a) South Carolina earned income of the spouse for the
taxable year as defined in subsection (C)(2); less
(b) the sum of the deductions described in Internal Revenue
Code Section 62 (a) paragraphs (1) (Trade and Business Deductions), (2)
(Certain Trade and Business Deductions of Employees), (6) (Pension,
Profit-sharing and Annuity Plans of Self-Employed Individuals), (7)
(Retirement Savings), and (12)(Certain Required Repayments of
Supplemental Unemployment Compensation Benefits) to the extent the
deductions are properly allocable to or chargeable against South
Carolina earned income.
(2) The term `South Carolina earned income' means income
which is earned income within the meaning of Internal Revenue Code
Section 911(d)(2) or 401(c)(2)(C) which is taxable in this State, except
that:
(a) it does not include an amount:
(i) received from a retirement plan or an annuity;
(ii) paid or distributed from an individual retirement plan as
defined in Internal Revenue Code Section 7701(a)(37);
(iii) received as deferred compensation; or
(iv) received for services performed by an individual
employed by his spouse within the meaning of Internal Revenue Code
Section 3121(b)(3)(A) in effect on December 31, 1987; and
(b) Internal Revenue Code Section 911(d)(2)(B) must be
applied without regard to the phrase `not in excess of thirty percent of
his share of net profits of such trade or business.'
(D) No credit is allowed under this section for a taxable year if either
spouse claims the benefits of Internal Revenue Code Sections 911
(Citizens or Residents of the United States Living Abroad) or 931
(Income for Sources within Guam, America Samoa, or the Northern
Mariana Islands) for the taxable year.
Section 12-8-2740. (A) A taxpayer may claim as a credit twenty-five
percent of all expenditures paid or incurred during the taxable year for
the purchase and installation of the following energy conservation and
renewable energy production measures:
(1) conservation tillage equipment;
(2) drip/trickle irrigation systems to include all necessary
measures and equipment including, but not limited to, dams, pipes,
pumps, wells, installation charges and other related expenses; and
(3) dual purpose combination truck and crane equipment.
(B) In the case of pass-through entities, the credit is determined at
the entity level and is limited to two thousand five hundred dollars. The
maximum amount of credit for all taxpayers, including any credit passed
through to the taxpayer from a partnership, `S' Corporation, estate, or
trust, is also limited to two thousand five hundred dollars.
(C) The credit may be claimed only one time for each of the three
measures.
(D) If the credit exceeds the taxpayer's tax liability for the taxable
year, the excess amount may be carried forward for credit against
income taxes in the next five succeeding taxable years.
Section 12-8-2750. (A) Taxpayers having contracts with this State
who subcontract with minority firms are eligible for an income tax credit
equal to four percent of the payments to a minority subcontractor for
work pursuant to the state contract. The subcontractor must be certified
as a minority firm as defined in Section 11-35-5010 and regulations
thereunder.
(B) The credit is limited to a maximum of twenty-five thousand
dollars annually. A taxpayer is eligible to claim the credit for six taxable
years beginning with the taxable year in which the credit is first claimed.
After the above six taxable years, the taxpayer is no longer eligible for
the credit regardless of whether or not the taxpayer claimed the credit in
a year subsequent to the year in which the credit was first claimed.
(C) A taxpayer claiming the credit shall maintain evidence of work
performed for a state contract by the minority subcontractor and shall
present the evidence at the time of filing its state income tax return in a
manner prescribed by the department.
Section 12-8-2760. (A) Insurance companies and corporations that
operate manufacturing, tourism, processing, warehousing, distribution,
research and development, and corporate office facilities are allowed an
annual job tax credit as provided in this section. Credits under this
section can be claimed against income taxes imposed by Section
12-8-530 and insurance premium taxes imposed pursuant to Chapter 7
of Title 38 and are limited in use to fifty percent of the taxpayer's South
Carolina corporate income tax or insurance premium tax liability.
(B) The department shall rank and designate the state's counties by
December thirty-first each year using data from the South Carolina
Employment Security Commission and the United States Department of
Commerce. The counties are ranked using data from the most recent
thirty-six month period with equal weight given to unemployment rate
and per capita income as follows:
(1) The sixteen counties with a combination of the highest
unemployment rate and lowest per capita income are designated less
developed counties.
(2) The fifteen counties with a combination of the next highest
unemployment rate and next lowest per capita income are designated
moderately developed counties.
(3) The fifteen counties with a combination of the lowest
unemployment rate and the highest per capita income are designated
developed counties. The designation by the department is effective for
corporate taxable years which begin after the date of designation.
(C) A job tax credit is allowed for five years beginning in year two
after the creation of the job for each new full-time job created if the
minimum level of new jobs is maintained. The amount of the initial job
credit and the minimum level of new jobs required is:
(1) One thousand dollars for each new full-time job created in less
developed counties. The credit is only available to corporations that
increase employment by ten or more, and no credit is allowed for the
year or any subsequent year in which the net employment increase falls
below the minimum level of ten.
(2) Six hundred dollars for each new full-time job created in
moderately developed counties. The credit is only available to
corporations that increase employment by eighteen or more, and no
credit is allowed for the year or any subsequent year in which the net
employment increase falls below the minimum level of eighteen.
(3) Three hundred dollars for each new full-time job created in
developed counties. The credit is only available to corporations that
increase employment by fifty or more, and no credit is allowed for the
year or any subsequent year in which the net employment increase falls
below the minimum level of fifty.
(D) If the taxpayer qualifying for the new jobs credit under
subsection (C) creates additional new full-time jobs in years two through
six, the taxpayer may obtain a credit for those new jobs for five years
following the year in which the job is created. The amount of the credit
for each new full-time job is the same as provided in subsection (C).
(E) Corporations which qualify for the job tax credit provided in
subsection (C) and which are located in a business or industrial park
jointly established and developed by a group of counties pursuant to
Section 13 of Article VIII of the Constitution of this State are allowed:
(1) the credit in subsections (B) and (C) based on the location of
any county in the group which qualifies for the largest credit regardless
of whether the corporation is actually located in another of the
participating counties; and
(2) an additional five hundred dollar credit for each new full-time
job created. This additional credit is permitted for five years beginning
in the taxable year following the creation of the job.
(F) The number of new and additional new full-time jobs is
determined by comparing the monthly average number of full-time
employees subject to South Carolina income tax withholding in the
applicable county for the taxable year with the monthly average in the
prior taxable year. For purposes of calculating the monthly average
number of full-time employees in the first year of operations in this
State, a company may use the actual months in operation or a full
twelve-month period. If a taxpayer's business is only in operation for
less than twelve months a year, the number of new and additional new
full-time jobs is determined using the monthly average for the months
the business is in operation.
(G) Except for credits carried forward under subsection (H), the
credits available under this section are only allowed for the job level that
is maintained in the taxable year that the credit is claimed. If the job
level for which a credit was claimed decreases the five-year period for
eligibility for the credit continues to run.
(H) A credit claimed under this section but not used in a taxable year
may be carried forward ten years from the taxable year in which the
credit is earned by the corporation. Credits which are carried forward
must be used in the order earned and before jobs credits claimed in the
current year.
(I) The sale, merger, acquisition, or bankruptcy of a corporation
may not create new eligibility in a succeeding corporation, but an
unused job tax credit eligibility and jobs credit carryovers may be
transferred and continued by a transferee of the corporation subject to
the limitations of Section 12-8-2720. The appropriate agency shall
determine whether or not qualifying net increases or decreases have
occurred and may require reports, promulgate rules or regulations, and
hold hearings as needed for substantiation and qualification.
(J) For a corporation which plans a significant expansion in its labor
forces at a location in this State, the appropriate agency shall prescribe
certification procedures to ensure that the corporation can claim credits
in future years even if a particular county is removed from the list of less
developed or moderately developed counties.
(K) (1) If a corporation qualifies to use the fee in lieu of property
taxes provided in Section 4-29-67 and fails to qualify for a credit under
this section solely because it is an `S' corporation, then each of the
shareholders of the `S' corporation qualifies for a nonrefundable credit
against taxes imposed pursuant to Section 12-8-510.
(2) The amount of the credit allowed a shareholder by this
subsection is equal to the shareholder's percentage of stock ownership
for the taxable year multiplied by the amount of the credit the
corporation would have been entitled to if it were not an `S' corporation.
(3) A credit claimed under this subsection but not used in a
taxable year may be carried forward for ten years from the close of the
tax year in which the credit is earned by the `S' Corporation. However,
the credit established by this section taken in one tax year may not
exceed fifty percent of the taxpayer's tax liability under Section
12-8-510.
(L) As used in this section:
(1) `Corporation' means a business entity subject to South
Carolina income taxes under Section 12-8-530 or insurance premium
taxes under Chapter 7 of Title 38.
(2) `Appropriate Agency' means the Department of Revenue and
Taxation for corporations subject to tax under Section 12-8-530 and the
Department of Insurance for corporations subject to the premium tax
under Chapter 7 of Title 38.
(3) `New job' means a job created in this State at the time a new
facility or an expansion is initially staffed. The term does not include a
job created when an employee is shifted from an existing location in this
State to a new or expanded facility. The term `new job' also includes
existing jobs at a facility of an employer which are reinstated after the
employer has rebuilt the facility due to its destruction by accidental fire,
natural disaster, or act of God. Destruction for purposes of this provision
means that more than fifty percent of the facility was destroyed. The
year of reinstatement is considered to be the year of creation of the job.
All such jobs so reinstated qualify for the credit under this section, and
no comparison is required to be made between the number of full-time
jobs of the employer in the taxable year and the number of full-time jobs
of the employer with the corresponding period of the prior taxable year.
(4) `Full-time' means a minimum of thirty- five hours of an
employee's time a week for the entire normal year of company
operations or a job requiring a minimum of thirty-five hours of an
employee's time a week for a year in which the employee was initially
hired or transferred to the facility in this State.
(5) `Manufacturing facility' means an establishment where
tangible personal property is produced or assembled.
(6) `Processing facility' means an establishment engaged in
services such as manufacturing-related, computer-related,
communication-related, energy-related, or transportation-related
services, but the term `processing facility' does not include an
establishment where retail sales of tangible personal property or services
are made to retail customers. The term also includes a business entity
engaged in processing agricultural, aquacultural, or maricultural
products.
(7) `Warehousing facility' means an establishment where tangible
personal property is stored but does not include any establishment where
retail sales of tangible personal property are made to retail customers.
(8) `Distribution facility' means an establishment where shipments
of tangible personal property are processed for delivery to customers.
The term does not include an establishment where retail sales of tangible
personal property are made to retail customers except for a facility
which processes customer sales orders by mail, telephone, or electronic
means, if the facility also processes shipments of tangible personal
property to customers and if at least seventy-five percent of the dollar
amount of goods sold through the facility are sold to customers outside
of South Carolina.
(9) `Research and development facility' means an establishment
engaged in laboratory, scientific, or experimental testing and
development related to new products, new uses for existing products, or
improving existing products. The term does not include an establishment
engaged in efficiency surveys, management studies, consumer surveys,
economic surveys, advertising, promotion, or research in connection
with literary, historical, or similar projects.
(10) `Corporate office facility' means the location where corporate
managerial, professional, technical and administrative personnel are
domiciled, and employed, and where corporate financial, personnel,
legal, technical, support services, and other business functions are
handled. Support services include, but are not limited to, claims
processing, data entry, word processing, sales order processing, and
telemarketing. The term does not include an establishment where retail
sales of tangible personal property or retail services are made to retail
customers except for a facility which processes customer sales orders by
mail, telephone, or electronic means, if the facility also processes
shipments of tangible personal property to customers and if at least
seventy-five percent of the dollar amount of goods sold through the
facility are sold to customers outside of this State.
(11) The terms `retail sales' and `tangible personal property' for
purposes of this section are defined in Chapter 36 of Title 12.
(12) `Tourism facility' means an establishment used for a theme
park; amusement park; historical, educational, or trade museum;
botanical garden; cultural center; theater; motion picture production
studio; convention center; arena; auditorium; or a spectator or
participatory sports facility; and similar establishments where
entertainment, education, or recreation is provided to the general public.
Tourism facility also includes new hotel and motel construction, except
that to qualify for the credits allowed by this section and regardless of
the county in which the facility is located, the number of new jobs that
must be created by the new hotel or motel is twenty or more. It does not
include that portion of an establishment where retail merchandise or
retail services are sold directly to retail customers.
Section 12-8-2770. (A) A taxpayer may claim a credit for
twenty-five percent of all expenditures for the construction, installation,
or restoration of ponds, lakes, other water impoundments, and water
control structures designed for the purposes of water storage for
irrigation, water supply, sediment control, erosion control or aquaculture
and wildlife management, providing these items are not located in or
adjacent to and filled primarily by coastal waters of the State.
(B) In the case of pass-through entities, the credit is determined at
the entity level and is limited to two thousand five hundred dollars. The
maximum amount of credit for all taxpayers, including any credit passed
through to the taxpayer from a partnership, `S' Corporation, estate, or
trust, is also limited to two thousand five hundred dollars.
(C) If the credit exceeds the taxpayer's tax liability for the taxable
year, the excess amount may be carried forward for credit against
income taxes in the next five succeeding taxable years.
(D) To qualify for the credit the taxpayer must obtain a construction
permit issued by the Department of Health and Environmental Control
or a local Soil and Water Conservation District.
Section 12-8-2780. An individual may claim an income tax credit for
child and dependent care expenses. The credit is computed as provided
in Internal Revenue Code Section 21, except that the term `applicable
percentage' means seven percent and is not reduced, and only expenses
that are directly attributable to items of South Carolina gross income
qualify for the credit.
If a nonresident taxpayer is a resident of a state which does not allow
a resident of this State credit for child and dependent care expenses, the
nonresident taxpayer is not allowed credit on the South Carolina income
tax return for child and dependent care expenses.
Section 12-8-2790. An individual taxpayer may claim an income tax
credit for twenty percent of the expenses paid by the taxpayer for his
own support or the support of another to an institution providing
nursing facility level of care or to a provider for in-home or community
care for persons determined to meet nursing facility level of care criteria
as certified by a licensed physician. The credit is limited to three
hundred dollars each taxable year. However, no credit is allowed for
expenses paid from public source funds.
Section 12-8-2800. (A) (1) Resident individuals are allowed a
credit against the taxes imposed by this chapter for income taxes paid to
another state on income from sources within that state which is taxed
under both this chapter and the laws of that state regardless of the
taxpayer's residence.
(2) The credit allowed is the lesser of:
(a) the product of the fraction in which the numerator is total
South Carolina income which is subject to income tax in another state
and the denominator is total federal income adjusted by the
modifications provided in Article 9 of this chapter and subject to
allocation and apportionment as provided in Article 18 of this chapter,
multiplied by South Carolina income tax before the credit allowed by
this section; or
(b) the income tax actually paid to the other state on income
taxed under this chapter.
(3) A copy of the income tax return filed with the other state must
be filed with the South Carolina tax return at the time credit is claimed.
If the credit is claimed because of a deficiency assessment notice, a copy
of the notice and a receipt showing the payment must be filed.
(B) If a taxpayer is refunded or credited taxes paid to another state
for which a credit has been allowed under this section, then a tax equal
to that portion of the credit allowed is due and payable from the
taxpayer within sixty days from the date the refund or the notice of the
credit is received. If the amount of the tax is not paid within sixty days
of receipt or notice, the taxpayer is subject to penalties and interest for
failure to pay provided in Chapter 54 of this title.
(C) When a taxpayer is considered a resident of this State and is also
considered a resident of another state under the laws of the other state,
the department may, at its discretion, allow a credit against South
Carolina income taxes for those taxes paid to the other state on income
taxed under this chapter.
Section 12-8-2810. (A) A corporation establishing a corporate
headquarters in this State, or expanding or adding to an existing
corporate headquarters, is allowed a credit against any tax due pursuant
to Section 12-8-530 or Section 12-20-50 as set forth in this section.
(B) In order to qualify for this credit, each of the following criteria
must be satisfied:
(1) The qualifying real property costs of the corporate
headquarters establishment, expansion, or addition must be at least fifty
thousand dollars. Qualifying real property costs are:
(a) costs incurred in the design, preparation, and
development of establishing, expanding, or adding to a corporate
headquarters, and
(b) (i) direct construction costs, or
(ii) with respect to leased facilities, direct lease costs
during the first five years of operations for the corporate headquarters.
(2) The headquarters establishment, expansion, or addition
must result in the creation of:
(a) at least seventy-five new jobs performing headquarters
related functions and services or research and development related
functions and services. These jobs must be permanent, full-time
positions located in this State, and
(b) at least forty of the above-referenced new jobs must
be classified as headquarters staff employees.
(C) The amount of the credit is equal to twenty percent of the
qualifying real property costs listed in subsection (B)(1).
(D) A headquarters establishment, expansion, or addition which
meets the criteria of subsection (B) of this section is entitled to an
additional credit equal to twenty percent of cost for tangible personal
property if the following conditions are met:
(1) the personal property is:
(a) capitalized as personal property for income tax purposes
under the Internal Revenue Code; and
(b) purchased for the establishment, expansion, or addition of
a corporate headquarters, or for the establishment, expansion, or addition
of a research and development facility which is part of the same
corporate project as the headquarters establishment, addition, or
expansion; and
(c) used for corporate headquarters related functions and
services or research and development related functions and services in
South Carolina.
(2) The establishment, expansion or addition of a corporate
headquarters or research and development facility must result in:
(a) the creation of at least one hundred fifty new full-time jobs
performing headquarters related functions and services or research and
development related functions and services which have an average cash
compensation level of more than one and one-half times the per capita
income of this State at the time the jobs are filled; and
(b) an average South Carolina employee cash compensation
level for all employees in this State of more than twice the per capita
income in the State at the time the newly created jobs are filled.
(E) (1) (a) For facilities which are constructed, the credit can only
be claimed for the taxable year when the headquarters establishment,
expansion, or addition, and the research and development facility
establishment, expansion, or addition, in the case of corporations
qualifying under subsection (D), is placed in service for federal income
tax purposes. For construction projects completed in phases and placed
in service for federal income tax purposes in more than one taxable year,
the corporation can claim the credit on the South Carolina income tax
return for the taxable year in which property, which qualifies for the
credit, is placed in service. Credits cannot be obtained for costs incurred
more than three taxable years after the taxable year in which the first
property for which the credit is claimed is placed in service.
Notwithstanding any other provisions of this subsection, if the entire
project is not completed by the end of the three taxable years, the
corporation may claim the credit for all property placed in service within
the time limitation set forth in the preceding sentence. The credit may
not be claimed for personal property which is replacing personal
property for which the credit can be claimed. The department may for
good cause extend the time for incurring additional costs and for
claiming the credit if the project is not completed within the time period
allowed by this subsection. For purposes of this subsection the term
`property' includes qualifying real property and, where the conditions of
subsection (D) are met, personal property.
(b) For leased real property the credit must be claimed in the
taxable year in which the first direct lease costs are incurred.
(2) The corporation must meet the staffing requirements of
subsections (B)(2) and, if applicable, (D)(2), by the end of the second
taxable year following the last taxable year for which the credit is
claimed. The corporation must have documented plans to meet the
initial staffing requirements at the time the credit is claimed. If the
corporation fails to meet the staffing requirements within the time
required by this subsection, the corporation must increase its tax liability
for the current taxable year by an amount equal to the amount of credit,
or any portion of the credit for which the corporation would not qualify,
which was used to reduce tax in the earlier years.
(F) The credit provided in this section is nonrefundable, but an
unused credit may be carried forward for ten years. An unused credit
may be carried forward fifteen years if the criteria set forth in subsection
(D)(2) are met. No credit may be claimed for a taxable year during
which the corporation fails to meet the qualifying employment
requirements provided in this section and the carry forward period is not
extended for any year in which the credit may not be claimed for failure
to meet the employment requirements. The credit may be claimed for
a taxable year in the unextended carry forward period if the corporation
requalifies for the credit by meeting the employment requirements
during that taxable year.
(G) If a fee-in-lieu arrangement under Section 4-29-67 is entered into
with respect to all or part of property involving a corporate headquarters,
and the corporation claiming the credit provided under this section is
treated as the owner of the property for federal income tax purposes,
then the corporation must be treated as the owner of the property for
purposes of the credit provided by this section.
(H) To the extent that this credit applies to the cost of certain
property, the basis of the property for South Carolina income tax
purposes must be reduced by the amount of the credit claimed with
respect to the property. This basis reduction does not reduce the basis
or limit or disallow any depreciation allowable under the law of this
State for other than income tax purposes, even if the depreciation is
based upon or otherwise relates to income tax depreciation including,
without limitation, basis or depreciation which is allowable under this
title for property tax purposes. If the corporation fails to meet the
staffing requirements of subsection (E)(2), the corporation may increase
the basis of the property by the amount of the original basis reduction
with regard to that property in the year in which the credit is recaptured.
(I) The amount of a credit allowed under this section must be
reduced by the amount of any past-due debt owed this State by the
taxpayer.
(J) As used in this section:
(1) `Corporate headquarters' means the facility or portion of a
facility where corporate staff employees are physically employed, and
where the majority of the company's financial, personnel, legal,
planning, or other headquarters related functions are handled either on
a regional or national basis. A corporate headquarters must be a regional
corporate headquarters or a national corporate headquarters as defined
below:
(a) National corporate headquarters must be the sole corporate
headquarters in the nation and handle headquarters related functions on
a national basis. A national headquarters shall be deemed to handle
headquarters related functions on a national basis from this State if the
corporation has a facility in this State from which the corporation
engages in interstate commerce by providing goods or services for
customers outside of this State in return for compensation.
(b) Regional corporate headquarters must be the sole corporate
headquarters within the region and must handle headquarters related
functions on a regional basis. For purposes of this section, `region' or
`regional' means a geographic area comprised of either:
(i) at least five states, including this State, or
(ii) two or more states, including this State, if the entire
business operations of the corporation are performed within fewer than
five states.
(2) `New job' means a job created by an employer in this State at
the time a new facility, expansion, or addition is initially staffed, but
does not include a job created when an employee is shifted from an
existing location in this State to work in a new or expanded facility. An
employee may be employed at a temporary location in this State pending
completion of the new facility, expansion, or addition.
(3) `Full-time' means a job requiring a minimum of thirty-five
hours of an employee's time a week for the entire normal year of
corporate operations or a job requiring a minimum of thirty-five hours
of an employee's time for a week for a year in which the employee was
initially hired for or transferred to the corporate headquarters or research
and development facility in this State.
(4) `Headquarters related functions and services' are those
functions involving financial, personnel, administrative, legal, planning,
or similar business functions.
(5) `Headquarters staff employees' means executive,
administrative, or professional workers performing headquarters related
functions and services.
(a) An executive employee is a full-time employee in which at
least eighty percent of his business functions involve the management
of the enterprise and directing the work of at least two employees. An
executive employee has the authority to hire and fire or has the authority
to make recommendations related to hiring, firing, advancement, and
promotion decisions, and an executive employee must customarily
exercise discretionary powers.
(b) An administrative employee is a full-time employee who is
not involved in manual work and whose work is directly related to
management policies or general headquarters operations. An
administrative employee must customarily exercise discretion and
independent judgment.
(c) A professional employee is an employee whose primary
duty is work requiring knowledge of an advanced type in a field of
science or learning. This knowledge is characterized by a prolonged
course of specialized study. The work must be original and creative in
nature, and the work cannot be standardized over a specific period of
time. The work must require consistent exercise of discretion and the
employee must spend at least eighty percent of the time performing
headquarters related functions and services.
(6) `Research and development' means laboratory, scientific, or
experimental testing and development related to new products, new uses
for existing products, or improving existing products, but `research and
development' does not include efficiency surveys, management studies,
consumer surveys, economic surveys, advertising, promotion, or
research in connection with literary, historical, or similar projects.
(7) `Research and development facility' means the building or
buildings or portion of a building where research and development
functions and services are physically located.
(8) `Direct lease costs' are cash lease payments. The term does not
include any accrued, but unpaid, costs.
Section 12-8-2820. (A) A corporation may claim a credit for the
construction or improvement of an infrastructure project against taxes
due under Section 12-8-530 for:
(1) expenses paid or accrued by the taxpayer;
(2) contributions made to a governmental entity; or
(3) contributions made to a qualified private entity in the case of
water or sewer lines and their related facilities in areas served by a
private water and sewer company.
(B) (1) The credit is equal to fifty percent of the expenses or
contributions. The credit is limited to ten thousand dollars for each
infrastructure project.
(2) An unused credit may be carried forward three years.
(C) For purposes of this section:
(1) An infrastructure project includes water lines or sewer lines,
their related facilities, and roads that:
(a) do not exclusively benefit the taxpayer;
(b) are built to applicable standards; and
(c) are dedicated to public use or, in the case of water and
sewer lines and their related facilities in areas served by a private water
and sewer company, the water and sewer lines are deeded to a qualified
private entity.
(2) A qualified private entity is an entity holding the required
permits, certifications, and licenses from the South Carolina Department
of Health and Environmental Control, the South Carolina Public Service
Commission, and any other state agencies, departments, or commissions,
from which approvals must be obtained in order to operate as a utility
furnishing water supply services or sewage collection or treatment
services, or both, to the public.
(D) If an infrastructure project benefits more than the taxpayer, the
expenses of the taxpayer must be allocated to the various beneficiaries
and only those expenses not allocated to the taxpayer's benefit qualify
for the credit.
(E) The credit may be claimed before dedication or conveyance if
the taxpayer submits with its tax return a letter of intent signed by the
chief operating officer of the appropriate governmental entity or
qualified private entity stating that upon completion the governmental
entity or qualified private entity shall accept the infrastructure project for
the appropriate use.
(F) A qualifying private entity is not allowed the credit provided by
this section for expenses it incurs in building or improving facilities it
owns, manages, or operates.
(G) If a road qualifying for the credit is subsequently removed from
the state highway or public road system, the amount of the credit
allowed for the construction of the road must be added to any corporate
income tax due from the taxpayer in the first taxable year following the
removal of the road from public use. The department may implement
the provisions of this subsection by rules or regulation.
Section 12-8-2830. (A) Taxpayers who make qualified investments
in the Palmetto Seed Capital Corporation (corporation) or the Palmetto
Seed Capital Fund Limited Partnership (fund), as defined in Section
41-44-10, are allowed a credit against income or bank taxes imposed
under Title 12 or insurance premium taxes imposed under Chapter 7 of
Title 38.
(B) The amount of the credit for each taxable year is the lesser of:
(1) all qualified investments during the tax year multiplied by
thirty percent, plus any credit carryover; or
(2) fifty percent of all qualified investments during all tax years
multiplied by thirty percent.
(C) To receive the credit the taxpayer shall:
(1) claim the credit on the tax return in a manner prescribed by the
appropriate agency; and
(2) attach to the return a copy of the form, provided in subsection
(F) and issued by the corporation, indicating the taxpayer's qualified
investment.
(D) The use of the credit is limited to the taxpayer's tax liability for
the year after the application of all other credits. An unused credit may
be carried forward ten years from the date of the qualified investment.
(E) (1) If a qualified investment is redeemed by the fund or the
corporation within five years of the date it is purchased, the taxpayer
shall report the redemption to the appropriate agency. The credit allowed
for the current year by this section is disallowed and a credit previously
taken must be paid to the appropriate agency on the return filed for the
period in which the redemption occurred.
(2) Neither a distribution by the fund nor dividends or other
distributions by the corporation are considered to be redemption of the
qualified stock or the qualified interest of the taxpayer unless the amount
of qualified stock owned by the taxpayer or the qualified interest held by
the taxpayer after the distribution or dividend is less than the amount of
qualified stock or qualified interest held by the taxpayer immediately
before the distribution or dividend.
(F) The corporation shall complete forms prescribed by the
department which must show as to each qualified investment in the fund
the following:
(1) the name, address, and identification number of the taxpayer
who purchased a qualified investment; and
(2) the nature and amount paid for the qualified investment
purchased by the taxpayer.
These forms must be filed with the appropriate department on or
before the fifteenth day of the third month following the month in which
the qualified investment is purchased. Copies of these forms must be
mailed to the investor on or before the fifteenth day of the second month
following the month in which the qualified investment is purchased.
(G) The total amount of credits allowed for all taxpayers in all
taxable years may not exceed in the aggregate, five million dollars,
excluding any allowable tax credits of the Palmetto Seed Capital
Corporation. The credit must be allowed to taxpayers in the order of the
time of the purchase of the qualified investments.
(H) For purposes of this section:
(1) `The Fund' means the Palmetto Seed Capital Fund Limited
Partnership and is established and operated as described in Section
41-44-60.
(2) `The Corporation' means the Palmetto Seed Capital
Corporation which is the general partner of the fund.
(3) `Qualified investment' means qualified stock or qualified
interest purchased for cash. Qualified stock means authorized but
unissued shares of stock in the corporation. Qualified interest means a
general partnership interest in the fund for the corporation and a limited
partnership interest for all other persons.
(4) `Taxpayer' means an individual, corporation, partnership,
trust, or other entity having a state income, bank or insurance premium
tax liability who has made a qualified investment.
(5) `Appropriate agency' is the Department of Revenue and
Taxation for taxpayers subject to tax under Chapter 8 or Chapter 11 of
Title 12 and the Department of Insurance for corporations subject to the
premium tax under Chapter 7 of Title 38.
Section 12-8-2840. (A) (1) A taxpayer may claim a credit against
its state income tax, bank tax, or premium tax liability for fifty percent
of all qualified capital expenditures incurred in establishing a child care
program in South Carolina for its employees' children, if the program
and its operations meet the licensing, registration, and certification
standards prescribed by law. The maximum amount of credit allowed
by this subsection is one hundred thousand dollars.
(2) `Expenditures incurred in establishing a child care program'
include, but are not limited to, playground and classroom equipment,
kitchen appliances, cooking equipment, and real property and
improvements, including mortgage and lease payments.
(B) A taxpayer who qualifies under subsection (A) is also allowed
a credit against state income tax, bank tax, or premium tax liability in an
amount up to fifty percent of the expenses incurred by the taxpayer to
operate a child care program in this State for its employees. The credit
allowed by this subsection may not exceed three thousand dollars for
each participating employee a year.
(C) (1) A taxpayer may claim a credit for fifty percent of the
payments made directly to licensed or registered independent child care
facilities in the name of and for the benefit of an employee's children
who are kept at the facility during the employee's working hours if the
employee works or lives in this State. This credit may be claimed by a
taxpayer, regardless of whether the taxpayer qualifies under subsection
(A) or (B). The payment may not exceed the amount charged to other
children of like age and abilities of individuals not employed by the
taxpayer. In addition, a taxpayer is allowed to include in the amount of
the payment any administrative costs associated with payments to
licensed or registered independent child care facilities, not to exceed two
percent of the payments. The credit allowed by subsection (C)(1) may
not exceed three thousand dollars for each participating employee a year.
(2) Where an employee makes direct payments to licensed child
care facilities not operated by the employer, expenses incurred in
organizing and administering the direct payment program in the first
year are considered start-up expenses or expenditures for establishing a
child care program and qualify for the credit allowed by subsection (A).
(3) For purposes of the credits allowed by this subsection, the
taxpayer shall retain information concerning the child care facility's
federal identification number, license or registration number, payment
amount, and in whose name and for whose benefit the payments were
made.
(D) The credits established by this section taken in any one tax year
are limited to fifty percent of a taxpayer's state income tax, bank tax, or
premium tax liability for that year.
(E) An unused credit may be carried forward for the next ten taxable
years from the close of the tax year in which the expenditures are made.
Article 32
Estimated Tax Payments
Section 12-8-3210. (A) South Carolina estimated tax payments must
be made in a form prescribed by the department in accordance with
Internal Revenue Code Sections 6654 and 6655 except that:
(1) the small amount provisions in Internal Revenue Code
Sections 6654(e)(1) and 6655(f) are one hundred dollars rather than five
hundred dollars;
(2) income for the first installment for corporations is annualized
using the first two months of the taxable year;
(3) (a) The due dates of the installment payments for calendar
year taxpayers other than corporations are:
First quarter: April 15
Second quarter: June 15
Third quarter: September 15
Fourth quarter: January 15 of
the following taxable year.
(b) The due dates of the installment payments for calendar year
corporations are:
First quarter: March 15
Second quarter: June 15
Third quarter: September 15
Fourth quarter: December 15.
(c) In applying the estimated tax payment provisions to a
taxable year beginning on a date other than January 1, the month that
corresponds to the months specified above must be substituted.
(B) Payments required by this section are considered payments on
account of income taxes imposed by this chapter for the taxable year
designated.
(C) To the extent that estimated tax payments and withholdings are
in excess of the taxpayer's income tax liability as shown on the income
tax return, the taxpayer may claim a:
(1) refund;
(2) credit for estimated income tax for the succeeding taxable
year; or
(3) credit against the corporate license fee for the current taxable
year in the case of corporations.
Section 12-8-3220. In the case of sickness, absence, or other
disability or good cause, the department may in its discretion allow
further time for filing and paying estimated taxes.
Article 36
Tax Years, Accounting Methods, and
`S' Corporation Elections
Section 12-8-3610. (A) A taxpayer's taxable year under this chapter
must be the same as the taxpayer's taxable year for federal income tax
purposes.
(B) If a taxpayer's taxable year is changed for federal income tax
purposes, then the taxable year for South Carolina income tax purposes
is changed. The taxpayer shall provide the department with a copy of the
written permission received from the Internal Revenue Service.
(C) A change in the taxable year of an `S' Corporation is not
mandated for South Carolina income tax purposes under Internal
Revenue Code Section 1378 unless mandated for federal purposes.
(D) If a change in taxable year results in a taxable year of less than
twelve months, South Carolina income tax must be computed in the
manner provided in Internal Revenue Code Sections 443(b)
(Computation of Tax on Change of Annual Accounting Period) and
443(c) (Adjustment in Deduction for Personal Exemption).
Section 12-8-3620. (A) A taxpayer's method of accounting under
this chapter must be the same as for federal income tax purposes.
(B) If a taxpayer's method of accounting is changed for federal
income tax purposes:
(1) The method of accounting for South Carolina income tax
purposes is changed. The taxpayer shall provide the department with a
copy of the written permission received from the Internal Revenue
Service. When written permission is not required to change a method of
accounting, the taxpayer shall provide the department with a copy of the
election or statement provided to the Internal Revenue Service.
(2) Additional South Carolina income or deductions which result
from adjustments that are necessary because of a change in the method
of accounting are included in or deducted from income as provided in
the Internal Revenue Code.
Section 12-8-3630. (A) A taxpayer should provide the department
notice of its intent to be an `S' Corporation by filing with the department
a copy of the election filed with the Internal Revenue Service.
(B) (1) The approval or termination of an `S' election by the
Internal Revenue Service is approval or termination for South Carolina
income tax purposes as of the effective date of the federal election or
termination except as provided in Section 12-8-1000(F).
(2) No termination occurs under the Internal Revenue Code
Section 1362(d)(3) for South Carolina income tax purposes unless a
termination occurs for federal purposes.
Article 40
Tax Returns
Section 12-8-4010. Income tax returns must be filed by the
following:
(1) (a) an individual not listed in (c) whose federal filing status
is single, surviving spouse, or head of household who has gross income
for the taxable year of at least the federal exemption amount plus the
applicable basic standard deduction. If the individual is sixty-five or
older the standard deduction is increased as provided in Internal
Revenue Code Section 63(c)(3) and 63(f)(1)(A).
(b) an individual not listed in (c) who files a joint return and
whose combined gross income for the taxable year, is more than the sum
of twice the exemption amount plus the applicable basic standard
deduction if the individual and spouse had the same household at the
close of the taxable year. If the individual or spouse is sixty-five or
older the standard deduction is increased as provided in Internal
Revenue Code Section 63(c)(3) and 63(f)(1).
(c) an individual listed below whose gross income exceeds the
federal personal exemption amount:
(i) an individual making a return under Internal Revenue
Code Section 443(a)(1) for less than twelve months because of a change
in the individual's annual accounting period;
(ii) an individual described in Internal Revenue Code Section
63(c)(5) (Certain Dependents) who has unearned income in excess of the
amount provided in Internal Revenue Code Section 63(c)(5)(A), or who
has total gross income in excess of the standard deduction;
(iii) an individual for whom the standard deduction is zero.
(d) a nonresident individual with South Carolina gross income.
(e) for purposes of this subsection:
(i) `basic standard deduction' is as defined in Internal
Revenue Code Section 63(c);
(ii) `exemption amount' is as defined in Internal Revenue
Code Section 151(d). In the case of an individual described in Internal
Revenue Code Section 151(d)(2), the exemption amount is zero.
(2) a corporation subject to taxation under this chapter or subject
to the license fee requirements of Chapter 20 of Title 12.
(3) an `S' Corporation conducting business in South Carolina,
having South Carolina gross income, or subject to the license fee
requirements of Chapter 20 of Title 12, or having an interest in any
partnership conducting business in this State.
(4) a partnership conducting business in this State, having South
Carolina gross income or having an interest in any partnership
conducting business in this State.
(5) an estate with a nonresident beneficiary or with gross income
for the taxable year of six hundred dollars or more.
(6) a trust with a nonresident beneficiary, any taxable income, or
with gross income of six hundred dollars or more regardless of the
amount of taxable income.
(7) an estate of an individual under Chapters 7 or 11 of Title 11
of the United States Code relating to bankruptcy with gross income for
the taxable year of two thousand seven hundred dollars or more.
(8) Every exempt organization operating in this State described
in Internal Revenue Code Sections 501 through 528 (Exempt
Organizations) and 1381 (Cooperatives) with taxable income in South
Carolina under Internal Revenue Code Section 501(b) (Unrelated
Business Income), or Sections 1382 and 1383 (Taxable Income of
Cooperatives).
(9) a political organization within the meaning of Internal
Revenue Code Section 527(e)(1), and every fund treated under Internal
Revenue Code Section 527(g) as if it constituted a political organization,
which has political organization taxable income within the meaning of
Internal Revenue Code Section 527(c)(1) for the taxable year.
(10) a homeowners association within the meaning of Internal
Revenue Code Section 528(c)(1) which has homeowners association
taxable income within the meaning of Internal Revenue Code Section
528(d) for the taxable year.
(11) an entity other than those described in items (1) through (10)
having South Carolina taxable income during the taxable year.
Section 12-8-4020. An interstate motor carrier which within a taxable
year (1) owns or rents real or personal property in this State except
mobile property; or (2) travels more than twenty-five thousand mobile
property miles within this State; or (3) makes more than twelve pickups
or deliveries in this State shall file an income tax return and remit the
amount of tax due. The provisions of items (2) and (3) of this section
apply to the holder of the operating authority issued by the Interstate
Commerce Commission, not to the interstate motor carrier's agents.
Section 12-8-4030. The income tax return of a trade or business
carried on by an estate or trust must be made by the fiduciary and must
show the taxable income of the estate or trust and the distribution of
income to the beneficiaries. Under rules or regulations prescribed by the
department, one of two or more joint fiduciaries may file a single return.
Section 12-8-4040. Every trust institution maintaining a common
trust fund shall make a return under oath for each taxable year. The
return shall contain the items of gross income and the deductions
allowed by law, the names and addresses of the participants, and the
proportionate share of taxable income for each participant.
Section 12-8-4050. (A) An information return must be filed by all
individuals, corporations, and partnerships acting in any capacity who
make payments to another individual, corporation, or partnership in the
amount of:
(1) two hundred dollars or more of interest or dividends; or
(2) eight hundred dollars or more of rent, salaries, wages,
emoluments, or determinable gain, profit, or income.
(B) The return shall provide the recipient's name, address and the
amount of the payments.
(C) Providing the department with information required to be
provided to the Internal Revenue Service or participating in the
department agreement with the Internal Revenue Service to allow
combined federal and state reporting of information returns constitutes
compliance with this section.
(D) The provisions of this section do not apply to personal service
compensation paid to individuals on which withholding taxes are
required and reported as provided in Article 13 of Chapter 10.
Section 12-8-4060. Returns must be in a form prescribed by the
department. The department shall prepare blank forms for the returns to
be furnished upon request. Failure to receive or secure the form does not
relieve a taxpayer from the obligation to make a return.
Section 12-8-4070. (A) Returns of taxpayers, except as otherwise
provided, must be filed on or before the fifteenth day of the fourth
month following the taxable year.
(B) Returns of corporations must be filed on or before the fifteenth
day of the third month following the taxable year.
(C) Returns of organizations exempt under Internal Revenue Code
Section 501 reporting unrelated business income pursuant to Section
12-8-4010(8), must be filed on or before the fifteenth day of the fifth
month following the taxable year.
(D) Information returns provided in Section 12-8-4050 must be filed
on or before March fifteenth of each year.
Section 12-8-4080. (A) The department, for good cause, may allow
an extension of time for filing returns under Chapter 8 or the annual
report under Chapter 20 of Title 12. A taxpayer requesting an extension
of time for filing, on or before the date the return or annual report is due,
shall submit a tentative return and pay the full amount of the tax and
license fee due.
(B) When a taxpayer other than a corporation is not required to make
a payment of tax at the time of the extension, and the taxpayer has been
granted an extension of time to file a federal income tax return, the
taxpayer is not required to apply to the commission for an extension of
time to file the South Carolina return. The department shall accept a
copy, if applicable, of a properly filed federal extension attached to the
South Carolina return when filed.
Section 12-8-4085. When an income tax return is required under this
chapter, the taxpayer shall pay the tax due with the return to the
department at the time for filing the return determined without regard to
any extensions of time for the filing. Nothing in this section eliminates
the requirement for making estimated tax payments as provided in
Article 32 of this chapter.
Section 12-8-4090. (A) If the federal taxable income of a husband
and wife are determined on separate federal returns, their South Carolina
taxable income must be separately reported and taxed.
(B) If both a husband and wife are residents, and if their federal
taxable income is determined on a joint federal return, their South
Carolina taxable income must be reported and taxed on the basis of a
joint South Carolina income tax return.
(C) (1) If both husband and wife are nonresidents or if the husband
or wife is a resident and the other is a nonresident, and if their federal
taxable income is determined on a joint federal return, their South
Carolina taxable income must be reported and taxed on the basis of a
joint South Carolina income tax return except as provided in subitem
(2).
(2) If a nonresident taxpayer is a resident of a state which does
not allow a resident of South Carolina to file a joint return with a spouse,
the nonresident taxpayer shall file a separate South Carolina income tax
return from the spouse. The nonresident taxpayer shall calculate taxable
income on a federal return as a married person filing separately to
determine how the separate federal taxable income is calculated.
(D) If neither a husband nor wife files a federal return, their South
Carolina taxable income must be determined on a separate basis unless
both elect to have their South Carolina taxable income determined on a
joint basis by filing a joint South Carolina tax return.
Section 12-8-4100. If a custodial parent releases claim to the personal
exemption authorized in Internal Revenue Code Section 152, then the
noncustodial parent's South Carolina income tax return must include a
copy of the written declaration of the custodial spouse releasing the
exemption as provided in Internal Revenue Code Section 152(e)(2).
Section 12-8-4110. (A) Two or more corporations subject to tax
under Section 12-8-530, which are under substantially the same control
and have the same taxable year, may file a combined return.
Corporations are under substantially the same control if the ownership
of at least eighty percent of the total combined voting power of all
classes of stock of all corporations in the group are the same.
(B) For purposes of the combined return, South Carolina taxable
income or loss is computed separately for each corporation using each
corporation's apportionment percentage. Allocable income is allocated
separately for each corporation. The separately computed income is
combined and reported on a combined return for the controlled group.
(C) The tax of the controlled group before credits is computed by
applying the tax rate to the combined net income of the group. The tax
is reduced by credits that would be allowed for the corporation which
generates the credits based on the allocated tax liability before any
credits. The tax liability before credits is allocated to each corporation
based on the ratio of taxable income of that corporation to the total
taxable income of all corporations in the group which have positive
taxable income. Any limitation in the use of credits based on tax liability
is applied using the allocated tax liability.
(D) An election to file a combined return or separate returns must be
made on an original and timely filed return and the election may not be
changed after the return is filed.
Section 12-8-4120. (A) A partnership or `S' Corporation may file a
composite individual income tax return on behalf of the nonresident
partners or shareholders that are individuals, or trusts and estates in
which the income is taxed to the trust or estate, or the department may
require that a partnership or `S' Corporation file a composite individual
income tax return on behalf of the nonresident partners or shareholders
that are individuals, or trusts and estates in which the income is taxed to
the trust or estate, provided that a nonresident partner or `S' Corporation
shareholder having taxable income within the jurisdiction of this State
from sources other than the partnership or `S' Corporation may not file
as part of the composite return.
(B) A composite return is one which combines the separate South
Carolina tax liabilities of the nonresident partners or shareholders and
is signed by a general partner or an authorized officer of the `S'
Corporation.
(C) If there is not sufficient information to determine the separate
liability or the state of residence, then no deduction is allowed for
personal exemptions, individual itemized deductions, or standard
deductions.
(D) A composite return may be filed even if some of the nonresident
fiduciary and individual shareholders and partners eligible to participate
in filing a composite return choose not to participate.
(E) The department may establish procedures or promulgate rules
and regulations necessary to carry out the provisions of this section.
Section 12-8-4130. Returns filed by taxpayers under Section
12-8-4010 must be signed by the following:
(1) corporate returns by an authorized officer of the corporation.
(2) partnership returns by a general partner.
(3) trust and estate returns by the trustee, personal representative,
executor, or administrator, whichever is applicable.
(4) (a) except as provided in subsections (b) and (c), individual
returns must be signed by the individual;
(b) deceased individual returns for individuals who would
have been required to file a state tax return while living by the personal
representative, administrator, or executor of the decedent's estate and the
tax must be levied upon and collected from the estate.
(c) if an individual is unable to make a return or payment,
including an estimated tax payment, it must be made by an authorized
agent, a guardian, or other person charged with the conduct of the
business of the taxpayer.
Section 12-8-4140. A person who is an income tax preparer as
defined in Internal Revenue Code Section 7701(a)(36) and who
performs the same services with respect to South Carolina income tax
returns or claims for refund shall include with his signature on the South
Carolina return or claim for refund his taxpayer identification number as
prescribed by Internal Revenue Code Section 6109 and applicable
regulations.
Failure to comply with the provisions of this section results in a
penalty as provided in Section 12-54-47.
Section 12-8-4150. (A) Each taxpayer required to file a state
individual income tax return may contribute to the Nongame Wildlife
and Natural Areas Program Fund, the Children's Trust Fund of South
Carolina as created by Section 20-7-5010, or the Eldercare Trust Fund
of South Carolina as created by Section 43-21-160 by designating the
contribution on the return. The contribution may be made by reducing
the income tax refund or by remitting additional payment by the amount
designated.
(B) All South Carolina individual income tax return forms must
contain a designation for the above contributions. The instructions
accompanying the income tax form must contain a description of the
purposes for which the funds were established and the use of monies
from the income tax contribution.
(C) The department shall determine and report annually to the
appropriate agency administering the fund or in the case of the
Children's Trust Fund to the fund the total amount of contributions
designated to the above funds. The department shall transfer the
appropriate amount to each fund at the earliest possible time. The
incremental cost of administration of the contribution must be paid out
of the contributions before any funds are expended as provided in this
section.
(D) The Department of Natural Resources shall make a report to the
General Assembly as early in January of each year as may be
practicable, which must include the amount of revenue produced by the
contributions and a detailed accounting of expenditures from the
Nongame Wildlife and Natural Areas Fund.
Article 45
Miscellaneous Provisions
Section 12-8-4510. A certificate of compliance from the department
to the effect that a tax has been paid, that a return has been filed or that
information has been supplied as required by the provisions of this
chapter is prima facie evidence that the tax has been paid, that the return
has been filed, or that the information has been supplied.
Section 12-8-4520. (A) The department shall notify a domestic or
foreign corporation, as defined in Section 12-20-10(c) and (d), of its
failure to comply with the provisions of this chapter and Chapter 20 of
this title requiring the filing of returns. If the corporation fails to file the
required return within sixty days of the notice, the department may
provide the taxpayer's name to the Secretary of State. The department
may not make an estimated assessment or issue any warrant based on an
estimated assessment against a taxpayer prior to referring such taxpayer
to the Secretary of State for administrative dissolution or revocation.
(B) After referral from the department, the Secretary of State shall
administratively dissolve a domestic corporation or revoke a foreign
corporation's authority to transact business in this State.
Section 12-8-4530. Income taxes may be paid with an uncertified
check, but if a check is not paid by the bank on which it is drawn, the
taxpayer remains liable for the payment of the tax and for all legal
penalties as if the check had not been tendered.
Section 12-8-4540. The department may require a taxpayer to
provide copies of returns filed with the Internal Revenue Service and
verify the information contained on the returns.
Section 12-8-4550. (A) An income tax overpayment due to a person
who is deceased at the time of the refund is the sole and separate
property of the surviving spouse irrespective of the deceased's filing
status on the return.
(B) A refund by the State directly to the surviving spouse operates
as a complete acquittal and discharge of liability from any suit, claim, or
demand of any nature by any heir, distributee, creditor of the decedent,
or any other person.
Section 12-8-4560. (A) The department shall prepare a list for each
county that contains the name and last known address of each person in
each county whose income tax refund check has been returned for the
reason of unknown or insufficient address. Each county list must be sent
to the corresponding courthouse with a request that it be posted or
otherwise be made available for public inspection.
(B) A refund check may be voided if it remains unclaimed for at
least three months from the date of mailing the county list. A refund
check so voided must be reissued upon application by the taxpayer
before the expiration of the statute of limitation on claims for refunds.
(C) The action taken pursuant to the authority contained in this
section is not a violation of Section 12-54-240.
Section 12-8-4570. The department, with the approval of the State
Budget and Control Board, may expend from the revenue collected
under this chapter additional money necessary to insure the adequate
administration and enforcement of this chapter.
Section 12-8-4580. The failure to do an act required by or under the
provisions of this chapter is deemed an act committed in the county of
residence of the person failing to do the act.
Section 12-8-4590. A taxpayer may apply to the department for
revision of the tax assessed against him, at any time within one year
from the time of the filing of the return or from the date of the notice of
the assessment of any additional tax. The department shall grant a
hearing thereon, and if, upon such hearing, it shall determine that the tax
is excessive or incorrect, it shall resettle it accordingly. The department
shall notify the taxpayer of its determination and shall refund to the
taxpayer the amount, if any, paid in excess of the tax found by it to be
due."
SECTION 2. Title 12 of the 1976 Code is amended by adding:
"CHAPTER 10
Income Tax Withholding
Article 1
Definitions
Section 12-10-10. As used in this chapter unless otherwise required
by the context:
(1) `Person' includes an individual, trust, estate, partnership,
receiver, association, company, corporation, or any other entity
including the United States, a state, a political subdivision or agency of
the United States or any state, and a municipality located in this State.
(2) `Withholding agent' means a person required to withhold income
taxes under the provisions of this chapter.
(3) `Employee' includes a resident individual receiving wages, as
defined in Section 12-10-520(D), for services regardless of where the
services are rendered and nonresident individual receiving wages, as
defined in Section 12-10-520(D), for services rendered in this State.
(4) `Employer' means the person for whom an individual performs
or performed a service, of whatever nature, as the employee of the
person.
(5) `Nonresident' means an individual domiciled outside this State
and an entity whose principal place of business is outside of this State.
For corporations, principal place of business is defined in Section
12-8-30(9). This definition does not apply to Section 12-10-580.
(6) `Internal Revenue Code' means the Internal Revenue Code as
defined in Section 12-8-40(A).
(7) All definitions provided in Chapter 8 of this title are applicable
for purposes of this chapter unless otherwise provided or required by the
context.
Article 5
Withholding Required
Section 12-10-510. A person located, doing business, or having gross
income in this State and an employer having an employee earning
income within this State are subject to the withholding laws provided in
this chapter.
Section 12-10-520. (A) An employer paying wages at the rate of
eight hundred dollars or more a year to an employee shall withhold
income tax for that employee, except as provided in (C), using the tables
and rules promulgated by the department.
(B) In determining the amount to be withheld, the employer may
compute wages to the nearest dollar.
(C) The following wages are not subject to the withholding
requirements of this chapter:
(1) Wages of a resident employee receiving wages in another state
if:
(a) the wages are subject to the withholding laws of the state
in which they are earned; and
(b) the employer is withholding income taxes on behalf of the
other state.
(2) Wages of an employee obtaining a waiver of withholding
pursuant to Section 12-10-940.
(D) For purposes of this chapter `wages' is all remuneration for
services of any nature performed by an employee for an employer,
including the fair market value of all remuneration paid in a medium
other than cash, except the term does not include remuneration paid:
(1) for agricultural services performed by an employee on a farm
in connection with:
(a) cultivating the soil, or raising or harvesting any agricultural
or horticultural commodity, including the raising, shearing, feeding,
training, and management of livestock, bees, poultry, fur-bearing
animals and wildlife;
(b) the operation, management, conservation, improvement, or
maintenance of a farm and its tools and equipment; or
(c) salvaging timber or clearing land of brush and other debris
left by a hurricane if the major part of the service is performed on a
farm.
(2) for domestic services performed in a private residence;
(3) for personal services performed on occasional, sporadic, or
casual visits to this State by nonresident employees in connection with
their regular employment outside of this State; however, employees
performing construction, installation, engineering or similar services are
considered to have earned wages in this State if the situs of the job is in
this State;
(4) for services performed by a duly ordained, commissioned, or
licensed minister of a church in the exercise of the ministry or by
members of a religious order in the exercise of duties required by the
order;
(5) for services performed by an individual on a boat with a crew
of ten or fewer engaged in catching fish or other forms of aquatic animal
life under an arrangement with the boat owner or operator in which the
individual receives only a share of the boat's catch or a share of the
proceeds from the sale of the catch and for services involving a multiple
boat operation, with each boat's crew being ten or fewer, in which the
individual receives a share of all the boats' catch or a share of the
proceeds from the sale of all the boats' catch;
(6) for reimbursement of employee business expenses if, at the
time of the payment, it is reasonable to believe that the reimbursement
is excluded from South Carolina taxable income;
(7) for employee moving expenses if it is reasonable to believe
that the reimbursement is excluded from South Carolina taxable income;
(8) for group-term life insurance premium payments on the life of
an employee that is excluded from South Carolina taxable income;
(9) in the form of payments to or from employee benefit plans
which are excluded from South Carolina taxable income;
(10) for payments to a self-employed retirement fund (Keogh
Plans) or to an individual retirement account or program as permitted
under the Internal Revenue Code if, at the time of the payment, it is
reasonable to believe that the amounts are excludable or deductible from
South Carolina gross income;
(E) Withholding in addition to that required under this section is
permitted in cases in which the employer and the employee agree to the
additional withholding. This additional withholding is considered tax
required to be deducted and withheld under this chapter.
Section 12-10-530. (A) A person distributing prizes or winnings to
a resident or nonresident of five hundred dollars or more shall withhold
seven percent of each distribution made to an individual, partnership,
trust, or estate and five percent of each distribution made to a
corporation or other entity.
(B) When withholding on noncash prizes, the person distributing the
prize may either:
(1) accept cash from the prize recipient for the amount of the
withholding; or
(2) pay all taxes required to be withheld. If this subitem is used,
the withholding also becomes income for the prize recipient and the
amount to be withheld is calculated as follows:
(a) for individuals, partnerships, trusts, or estates, the fair
market value of the prize is divided by .93 and the quotient is multiplied
by .07;
(b) for corporations, the fair market value of the prize is
divided by .95 and the quotient is multiplied by .05.
(C) This section does not apply to payments of prizes or winnings
given to participants in spectator sporting events for which an admission
is charged.
Section 12-10-540. (A) A person making rent or royalty payments
to a nonresident of eight hundred dollars in any calendar year or more
annually for the use or privilege of using property in this State shall
withhold seven percent of each payment to a nonresident individual,
partnership, trust, or estate and five percent of each payment to a
nonresident corporation or any other nonresident entity.
(B) This section does not apply to payments made:
(1) to nonresident corporations that have a certificate of authority
from the South Carolina Secretary of State; or
(2) to a person for the rental of residential housing units,
including short-term rentals, when four or fewer units are owned by the
nonresident.
Section 12-10-550. (A) A person hiring or contracting with a
nonresident conducting a business or performing personal services of a
temporary nature within this State shall withhold two percent of each
payment in which the South Carolina portion of the contract exceeds or
could reasonably be expected to exceed ten thousand dollars.
(B) A foreign corporation which qualifies to do business in this State
is a nonresident of this State for purposes of this section.
(C) This section does not apply to:
(1) payments to nonresidents meeting the requirements of Section
12-10-560;
(2) a utility hiring or contracting with any nonresident utility or
to a South Carolina county for hiring or contracting with a person not in
its regular employ to perform services of a temporary nature relating to
damage caused by natural forces. For purposes of this subitem:
(a) `natural forces' means conflagration, flood, storm,
earthquake, hurricane, or other public disaster; and
(b) `utility' means any person, public utility, electric
cooperative, special purpose district, authority, or political subdivision
producing, storing, conveying, transmitting, or distributing
communication, electricity, gas, water, steam, or sewerage.
(3) a nonresident contractor performing work under a contract
with the Department of Transportation and any nonresident
subcontractor working for a contractor performing under such a contract.
(4) a motion picture company as defined in Section 12-36-2120
or entities performing personal services for motion picture companies
when the motion picture companies and the personal service companies
obtain a certificate of authority from the Secretary of State pursuant to
Title 33.
(D) The department may grant partial or total exemption from the
provisions of this subsection where:
(1) a portion of the contract is performed outside of this State;
(2) a portion of the contract consists of providing tangible
personal property or material;
(3) a portion of the contract is subcontracted to others;
(4) the taxpayer is not conducting business of a temporary nature
in this State as evidenced by substantial assets or a place of business
located in this State.
Section 12-10-560. (A) (1) Withholding required under Sections
12-10-540 and 12-10-550 may be waived by the department if the payee
guarantees compliance with the provisions of Chapter 8 of this Title and
the requirements of a withholding agent under this chapter by furnishing
the department with:
(a) a bond secured by an insurance company licensed by the
South Carolina Department of Insurance;
(b) a deposit of securities which have been approved by the
State Treasurer; or
(c) cash which does not bear interest.
(2) The amount of the bond or deposit must be at least as much
as the withholding otherwise required under Sections 12-10-540 and
12-10-550.
(B) (1) Nonresident taxpayers doing business or anticipating
business under two or more contracts during the calendar year may have
withholding waived on all contracts awarded in this State for the
calendar year providing the taxpayer:
(a) posts a single bond, security, or cash with the department
equal to at least two percent of all actual and anticipated contracts in this
State for the current year which may not be less than two percent of all
contracts within this State for the nonresident taxpayer for any previous
year; and
(b) has done business in this State for the two preceding years
in which it has posted proper and sufficient bonds, security, or cash for
the business and filed all required income and withholding returns for
those years.
Securities posted under this section must be held by the State
Treasurer.
(2) Taxpayers meeting the requirements of subsection (B)(1) shall
file an application for waiver of withholding for each contract awarded
in South Carolina during the year. When each contract is completed, the
taxpayer shall notify the department and identify:
(a) the contract name;
(b) date of award and completion;
(c) location;
(d) amount of the contract; and
(e) the parties to the contract.
(3) The department may revoke the taxpayer's right to file a single
bond if the taxpayer fails to comply with the requirements of this
subsection.
Section 12-10-570. (A) A trust or estate making a distribution of
South Carolina taxable income to a nonresident beneficiary shall
withhold seven percent of the beneficiary's distribution which is
attributable to South Carolina taxable income. The amounts withheld
must be remitted to the department at the time estimated tax payments
are due.
(B) This section does not apply to a trust that is exempt from
taxation under Internal Revenue Code Section 501.
Section 12-10-580. (A) A person who purchases real property and
associated tangible personal property from a nonresident seller shall
withhold:
(1) seven percent of the gain recognized on the sale by a
nonresident individual, partnership, trust, or estate and five percent for
a nonresident corporation or other nonresident entity if the seller
provides the buyer with an affidavit, described in subsection (E), stating
the amount of gain;
(2) seven percent of the amount realized on the sale for a
nonresident individual, partnership, trust, or estate and five percent by
a nonresident corporation or any other nonresident entity if the seller
does not provide the buyer with an affidavit described in subsection (E);
or
(3) the entire net proceeds payable to the nonresident seller, if the
amount required to be withheld in subitem (1) or (2) exceeds the net
proceeds payable to the seller.
(B) (1) For purposes of this section a sale is a transfer where gain
or loss is computed in accordance with Internal Revenue Code Section
1001 with modifications provided in Chapter 8 of this title for South
Carolina income tax purposes.
(2) A sale does not include tax exempt or tax deferred
transactions, other than installment sales. The sale of a principal
residence is considered a deferred transaction which is not subject to
withholding if the following conditions are met:
(a) the seller reinvests the proceeds into a new principal
residence pursuant to Internal Revenue Code Section 1034 or elects the
one time exclusion pursuant to Internal Revenue Code Section 121; and
(b) the buyer obtains an affidavit described in subsection (E)
which states that:
(i) the sale is not subject to tax because Internal Revenue
Code Section 1034 or 121 applies;
(ii) the seller acknowledges his obligation to file a South
Carolina income tax return for the year of the sale; and
(iii) the seller acknowledges his obligation to file an amended
South Carolina income tax return for the year of the sale if the seller
fails to comply with Internal Revenue Code Section 1034.
(3) The department may exempt certain other classes of
transactions from the provisions of this section when it determines that
the benefits to the State are insufficient to justify the burdens imposed
on the buyer and seller.
(C)(1) For purposes of this section, a nonresident is:
(a) an individual whose permanent home is outside of this
State on the date of the sale;
(b) a corporation incorporated outside of this State;
(c) a partnership whose principal place of business is located
outside of this State;
(d) a trust administered outside of this State; or
(e) an estate of a decedent whose permanent home was
outside of this State at the time of death.
(2) However, a nonresident seller is considered a resident for
purposes of this section if:
(a) (i) the seller is a corporation incorporated outside of this
State that has its principal place of business in this State and does no
business in its state of incorporation; or
(ii) the seller is a nonresident who:
(I) has filed at least one South Carolina income tax return
and is not delinquent with respect to filing South Carolina income tax
returns;
(II) has been in business in this State during the last two
taxable years, including the year of sale, and shall continue in
substantially the same business in the State after the sale; and
(III) has a certificate of authority to do business in this
State if the seller is a corporation or is registered to do business in this
State if the seller is a limited partnership.
(b) the seller provides the buyer an affidavit described in
subsection (E) certifying that the above requirements are met and that
the seller shall report the sale on a timely filed South Carolina income
tax return.
(D)(1) The buyer shall remit the amount withheld to the department
with the appropriate form on or before the fifteenth day of the month
following the month in which the sale takes place. However, the
department may extend the time for withholding and remitting payments
for seller financed sales.
(2) The buyer is liable for the collection and payment of an
amount due pursuant to this section. The lending institution, real estate
agent, and closing attorney are not liable for the collection of an amount
due from the buyer pursuant to this section.
(E) The buyer may rely on an affidavit provided by the seller if the
buyer does not know the affidavit is false and the seller, under penalties
of perjury, states the following:
(1) the seller's name, address, and social security or other federal
tax identification number;
(2) the date of the sale; and
(3) a description of the property.
(F) If a withholding payment:
(1) results in excess withholding based on the amount of gain
required to be recognized from the sale; or
(2) contains a computational error;
the seller may file an amended nonresident withholding statement with
the department and request a refund for any amount over withheld or pay
any amount due.
(H) The department shall prescribe rules and regulations necessary
to enforce and administer the provisions of this section.
Section 12-10-585. (A) Corporations having a valid `S' election for
South Carolina income tax purposes are required to withhold income
taxes at a rate of five percent on a nonresident shareholder's share of
South Carolina taxable income of the corporation, whether distributed
or undistributed, and pay the withheld amount to the department in the
manner prescribed by the department. For a taxable year beginning after
1991, the corporation shall make a return and pay over the withheld
funds on or before the fifteenth day of the third month following the
close of its tax year. Taxes withheld in the name of the nonresident
shareholder must be used as credit against taxes due at the time the
nonresident files income taxes for the taxable year.
(B) An `S' corporation required to withhold taxes on distributed or
undistributed income shall make a return with each payment of tax to the
department disclosing on the return the names, taxpayer identification
numbers, the total amount of South Carolina taxable income paid or
credited to each nonresident shareholder, the tax withheld for each
nonresident shareholder, and any other information the department
requires. The `S' corporation shall furnish to each nonresident
shareholder a written statement as required by Section 12-10-1340(A)
as proof of the amount of his share of distributed or undistributed
income and of the amount that has been withheld.
(C) Partnerships are required to withhold income taxes at a rate of
five percent on a nonresident partner's share of South Carolina taxable
income of the partnership, whether distributed or undistributed, and pay
the withheld amount to the department in the manner prescribed by the
department. For a taxable year beginning after 1991, the partnership
shall make a return and pay over the withheld funds on or before the
fifteenth day of the fourth month following the close of its tax year.
Taxes withheld in the name of the nonresident partner must be used as
credit against taxes due at the time the nonresident files income taxes for
the taxable year.
(D) A partnership required to withhold taxes on distributed or
undistributed income shall make a return with each payment of tax to the
department disclosing on the return the names, taxpayer identification
number, the total amount of South Carolina taxable income paid or
credited to each nonresident partner, the tax withheld for each
nonresident partner, and any other the department requires. The
partnership shall furnish to each nonresident shareholder a written
statement as required by Section 12-10-1340(A) as proof of the amount
of his share of distributed or undistributed income that has been
withheld.
(E) (1) For purposes of computing the penalty under Section
12-54-55, the amount withheld is deemed a payment of estimated tax,
and an equal part of the amount is deemed paid on each estimated tax
due date for the previous taxable year.
(2) If an `S' corporation or partnership is subject to withholding on
the sale of real property pursuant to Section 12-10-580, the `S'
corporation or partnership is exempt from withholding on income
attributable to the sale under this section.
(3) If a nonresident shareholder or partner files an affidavit with the
department in a form acceptable to the department by which he agrees
that he is subject to the personal jurisdiction of the department and
courts of this State for the purpose of determining and collecting any
South Carolina taxes, including estimated taxes, together with any
related interest and penalties, then the `S' corporation or partnership is
not required to withhold with regard to that shareholder or partner. The
department may revoke an exemption granted by this item at any time
it determines that the nonresident shareholder or partner is not abiding
by its terms.
(F) The department is authorized to require such returns and other
information as it considers appropriate to administer the provisions of
this section, and to issue rulings and promulgate regulations as necessary
or appropriate to implement this section.
Section 12-10-590. (A) A payee and payor may enter into an
agreement to withhold income tax from any type of payment not
otherwise provided in this chapter that is includable in South Carolina
gross income. The agreement is effective for a mutually agreed upon
period unless the payor or payee furnishes a signed written notice to the
other party terminating the agreement.
(B) A properly executed withholding exemption certificate furnished
by the payee to the payor constitutes a request for withholding. The
amount to be withheld must be determined in accordance with this
chapter and the tables and rules promulgated by the department with
respect to withholding.
Article 9
Procedure for Withholding on Wages
Section 12-10-910. (A) (1) Every employee shall furnish the
employer with a signed withholding exemption certificate on or before
the date employment begins indicating the number of withholding
exemptions which the employee claims. A properly completed federal
withholding exemption certificate is acceptable for South Carolina
purposes.
(2) The number of exemptions claimed for South Carolina may
not exceed the lesser of the number allowed under Internal Revenue
Code Section 3402 or the number actually claimed for federal income
tax withholding purposes. If an employee claims fewer exemptions for
South Carolina than for federal purposes, the employee shall furnish the
employer with a federal withholding exemption certificate which
indicates that it is for state purposes.
(B) A withholding exemption certificate is effective upon the first
payment of wages after the certificate is furnished to the employer and
continues in effect until a new certificate is furnished to the employer.
(C) If an employee fails to furnish an employer with an exemption
certificate as provided by this chapter, the number of withholding
exemptions claimed is zero.
Section 12-10-920. If a change occurs which decreases the number
of exemptions to which an employee is entitled, the employee shall
furnish the employer with a revised withholding exemption certificate
within thirty days from the date of change.
Section 12-10-930. An employer who believes an employee's
withholding exemption certificate is incorrect shall furnish a copy of the
certificate to the department within thirty days after it is received. If the
department determines the withholding exemption certificate is
incorrect, the employer and employee must be notified of the rate at
which income taxes must be withheld. The determination may be
appealed in writing by the employee within thirty days after the decision
is rendered.
Section 12-10-940. An employee may request waiver of the
withholding requirements in Section 12-10-520 if the employee files a
withholding exemption certificate annually on or before January 1 and
certifies that he:
(1) incurred no liability for income tax imposed under Chapter 8 of
Title 12 in the previous taxable year; and
(2) anticipates no income tax liability for the current year.
Section 12-10-950. (A) If wages are paid for a period which is not
a payroll period, the amount to be withheld is that amount applicable to
a miscellaneous payroll period containing the number of days, including
Sundays and holidays, equal to the number of days in the period for
which such wages are paid.
(B) If wages are paid by an employer without regard to a payroll
period or other period, the amount to be withheld is that amount
applicable to a miscellaneous payroll period containing the number of
days, including Sundays and holidays, which have elapsed since the date
of the last payment of such wages to the employee during the calendar
year, the date of commencement of employment of the employee or
January first, whichever is the later.
(C) To compute the withholding required in a miscellaneous payroll
period, the daily payroll withholding tables published by the department
must be used in the same manner as provided in Internal Revenue Code
Subsections 3402(c)(2) and (c)(3).
Section 12-10-960. The department may authorize employers to:
(1) estimate the wages that are paid to an employee in a quarter of
the calendar year;
(2) determine the amount to be withheld on each payment of wages
during the quarter as if the appropriate average of the estimated wages
is the actual wages paid; and
(3) withhold on a payment of the employee's wages during the
quarter the amount necessary to adjust the estimated amount withheld to
the actual amount required to be withheld during the quarter as if the
payroll period of the employee was quarterly.
Section 12-10-970. If payment of wages is made to an employee by
an employer
(1) with respect to a payroll period or other period, a part of which
is included in a payroll period or other period with respect to which
wages are also paid to the employee by the employer;
(2) without regard to a payroll period or other period but on or
before the expiration of a payroll period or other period with respect to
which wages are also paid to an employee by an employer;
(3) with respect to a period beginning in one and ending in another
calendar year; or
(4) through an agent, fiduciary, or other person who also has the
control, recent custody, disposal of or pays the wages payable by another
employer to the employee;
the manner of withholding and the amount to be deducted and withheld
under this article must be determined in accordance with rules or
regulations promulgated by the department under which the withholding
exemption allowed to the employee in a calendar year approximates the
withholding exemption allowable with respect to an annual payroll
period.
Section 12-10-980. The department shall make an agreement with the
Secretary of the Treasury of the United States with respect to
withholding of income tax as provided by this section, pursuant to 5
U.S.C. Section 5517 and executive orders issued pursuant to that
section.
Article 13
Depositing and Filing Returns in
Connection with Withholding
Section 12-10-1310. The provisions of this article do not apply to
withholding pursuant to Section 12-10-580 or 12-10-585.
Section 12-10-1320. (A) (1) Resident withholding agents who
deposit and pay withholding to the Internal Revenue Service under the
provisions of the Internal Revenue Code and applicable regulations shall
remit all South Carolina taxes withheld pursuant to this chapter on or
before the date their federal withholding taxes are due.
(2) If a resident withholding agent is required under the Internal
Revenue Code to deposit withheld funds at a financial institution, then
the withholding agent shall deposit the funds required to be withheld
under this chapter at a financial institution selected by the State
Treasurer.
(3) If a resident withholding agent is not required to deposit and
pay federal withholding to the Internal Revenue Service under the
provisions of the Internal Revenue Code and applicable regulations, the
resident withholding agent shall remit South Carolina withholding to the
department in accordance with subsection (B).
(B) A nonresident withholding agent and a resident withholding
agent described in (A)(3) may either remit South Carolina taxes withheld
pursuant to this chapter on or before the date their federal withholding
taxes are due or remit taxes withheld under this chapter as follows:
(1) on or before the fifteenth day of the month following the
month in which the aggregate amount withheld is five hundred dollars
or more; or
(2) on or before the last day of the month following the quarter in
which funds were withheld if the aggregate amount withheld in a
calendar quarter is less than five hundred dollars.
Section 12-10-1330. (A) A withholding agent shall file a quarterly
return in a form prescribed by the department indicating the total amount
withheld pursuant to this chapter during the calendar quarter. The return
must be filed even in quarters when no income tax has been withheld.
The return must be filed on or before dates required for filing federal
quarterly withholding returns specified in Internal Revenue Code
Section 6071 and Internal Revenue Code Regulation Section
31.6071(a)(1).
(B) (1) A withholding agent may discontinue filing quarterly
returns only after the withholding agent:
(a) notifies the department in writing that he is no longer
required to withhold; and
(b) has remitted all taxes withheld or required to be withheld
under the provisions of this chapter.
(2) A withholding agent who notifies the department that he is no
longer required to withhold under subsection (B)(1) may furnish the
department with the reconciliation statement required under Section
12-10-1350(A)(2) at the time notification is given.
Section 12-10-1340. (A) A person required to withhold income tax
under this chapter, or who would have been required to withhold a tax
under Section 12-10-520 if the taxpayer had claimed a single exemption,
shall furnish on or before January thirty-first of the following year a
properly completed federal wage and tax statement or federal 1099 to
the taxpayer with respect to the remuneration paid during the calendar
year, showing the following:
(1) the withholding agent's name, address, and South Carolina
withholding tax account number;
(2) the taxpayer's name, address, and social security or federal
employer identification number;
(3) the total amount of wages or payments; and
(4) the total amount withheld.
(B) The wage and tax statement or 1099 required to be furnished by
this section may be required to be furnished at other times, and contain
other information as prescribed by the department.
Section 12-10-1350. (A) On or before the last day of February
following the calendar year of the withholding, the following items must
be filed with the department:
(1) the original copy of the statement required by Section
12-10-1340;
(2) a recapitulation and reconciliation of taxes withheld and paid
in the form the department prescribes.
(B) A withholding agent may request in writing an extension of time
for filing the information required under this section for not to exceed
thirty days.
Article 17
Enforcement and Administrative Provisions
Section 12-10-1710. (A) A withholding agent who fails to
withhold or pay to the department an amount required by this chapter is
personally and individually liable for the amount of tax not withheld or
paid.
(B) If a withholding agent fails to remit an amount withheld from a
taxpayer under this chapter to the department, the taxpayer is allowed a
credit for the amount of income tax withheld from him but not remitted.
(C) The amount required to be withheld may not be collected from
a withholding agent who fails to withhold income tax as required under
the provisions of this chapter after the taxpayer whose wages or
payments should have been withheld upon pays the tax applicable to that
withholding. However, the payment by the taxpayer does not relieve the
withholding agent from liability for penalty and interest.
(D) For purposes of this section, the term `withholding agent'
includes an officer or employee of a corporation, or a member or
employee of a partnership, who as such officer, employee, or member is
under a duty to perform the act in respect of which the violation occurs.
Section 12-10-1720. (A) A refund or credit may be allowed for an
overpayment of tax withheld under this chapter to:
(1) the withholding agent to the extent that the withholding agent
did not withhold the overpayment amount from the taxpayer; or
(2) the taxpayer to the extent that the overpayment was withheld
from the taxpayer.
(B) A refund or credit may be granted to a withholding agent who
has withheld taxes in error if the withholding agent furnishes evidence
that the amount erroneously withheld has been refunded or
unconditionally credited to the taxpayer and the amount is refunded or
credited to the taxpayer before the issuance of the original wage and tax
statement for the calendar year.
(C) The withholding agent or taxpayer shall apply for a refund or
credit under this section within three years from the deemed date of the
overpayment. A refund or credit is not allowed for less than one dollar.
For purposes of this section, the deemed date of overpayment is the
original due date of the return in which the withholding is credited
against tax imposed by Chapter 8 of this title.
Section 12-10-1730. An amount withheld under this chapter must
be held in trust for the State and is a lien against all property, both real
and personal, tangible and intangible, of the withholding agent. The lien
becomes effective after it has been properly recorded in the county
where the withholding agent's business is located.
Section 12-10-1740. For purposes of Chapter 54, the quarterly
return required under Section 12-10-1330, the annual reconciliation
required under Section 12-10-1350, and the form required to be filed in
connection with withholding under Section 12-10-580 are considered
returns."
SECTION 3. Title 12 of the 1976 Code is amended by adding:
"CHAPTER 20
Corporation License Fees
Section 12-20-10. For the purposes of this chapter:
(1) `Department' means the South Carolina Department of Revenue
and Taxation.
(2) `Taxable year' means the calendar year or the fiscal year used in
computing taxable income under Chapter 8 of this title.
(3) `Domestic corporation' means a corporation incorporated under
the laws of this State.
(4) `Foreign corporation' means a corporation not incorporated
under the laws of this State.
Section 12-20-20. (A) Except for those corporations described in
Section 12-20-110, every domestic corporation, every foreign
corporation qualified to do business in this State, and any other
corporation required by Section 12-8-530 to file income tax returns shall
file an annual report with the department.
(B) Unless otherwise provided, corporations shall file an annual
report on or before the fifteenth day of the third month following the
close of the taxable year.
(C) The department, for good cause, may allow an extension of time
for filing an annual report. A request for an extension of time for filing
an annual report must be filed in accordance with Section 12-8-4080(A).
An extension of time for filing does not extend the time for paying the
license fee due.
Section 12-20-30. (A) The annual report must be in a form
prescribed by the department and Secretary of State and contain all
information that the department or the Secretary of State may require for
the administration of the provisions of this chapter and the provisions of
Title 33. The information in the annual report must be current as of the
date the annual report is executed on behalf of the corporation and
contain the following information:
(1) the name of the corporation and the state or country of
incorporation;
(2) the address of the registered office and the name of the
registered agent in this State;
(3) the address of the principal office;
(4) the names and business addresses of the directors and
principal officers;
(5) a brief description of the nature of the business;
(6) the total number of authorized shares of stock, itemized by
class and series, if any, within each class; and
(7) the total number of issued and outstanding shares of stock,
itemized by class and series, if any, within each class.
The information required by this subsection is open to unrestricted
public inspection. Any person may request a copy of the information
from either the Secretary of State or department.
(B) The Secretary of State or the department may by regulation
permit the public disclosure of other information that is required to be
filed as part of the corporation's annual report in addition to the
information required by subsection (A).
Section 12-20-40. (A) An initial annual report and the minimum
license fee required by Sections 12-20-50 and 12-20-100(C) must be
filed with the Secretary of State with the initial articles of incorporation
filed by a domestic corporation or an application for certificate of
authority filed by a foreign corporation. A check for the minimum
license fee must be made payable to the department. The initial annual
report and license fee payment must be submitted to the department by
the Secretary of State and contain the information required in Section
12-20-30(A).
(B) A corporation that does not file an application for certificate of
authority with the Secretary of State shall file the initial annual report
and pay the minimum license fee required by Sections 12-20-50 and
12-20-100 to the department on or before sixty days after initially doing
business, or using a portion of its capital in this State.
Section 12-20-50. (A) Except as provided in Section 12-20-100,
every corporation required to file an annual report shall pay an annual
license fee of fifteen dollars plus one dollar for each thousand dollars,
or fraction of a thousand dollars, of capital stock and paid-in or capital
surplus of the corporation as shown by the records of the corporation on
the first day of the taxable year in which the report is filed. In no case
may the license fee provided by this section be less than twenty-five
dollars. The license fee must be paid on or before the original due date
for filing the annual report.
The phrase `paid in or capital surplus' means the entire surplus of a
corporation other than earned surplus, including, but not limited to,
amounts charged against earned surplus and credited to other surplus
accounts, donated capital, amounts representing the increase in valuation
of assets made upon a revaluation of the company's assets, and amounts
credited to any surplus account other than earned surplus as a result of
a merger or acquisition regardless of whether the amount credited to the
surplus account was transferred from an earned surplus account.
For purpose of this section `earned surplus' means that portion of the
surplus of a corporation equal to the balance of its net profits, income,
gains, and losses from the date of incorporation or from the latest date
when a deficit was eliminated by application of its capital surplus, after
deducting subsequent distributions to shareholders and transfers to stated
capital and capital surplus to the extent that such distributions and
transfers are made out of earned surplus.
(B) (1) For purposes of this section capital stock and paid-in or
capital surplus is the amount reported on the taxpayer's applicable
financial statement.
(2) The term `applicable financial statement' means a statement
covering the taxable year which is:
(a) required to be filed with the Securities and Exchange
Commission;
(b) a certified audited balance sheet to be used for the purposes
of a statement or report:
(i) for credit purposes,
(ii) to shareholder's, or
(iii) for any other substantial nontax purpose;
(c) a balance sheet for a substantial nontax purpose required to
be provided to:
(i) the federal government or agency of the federal
government;
(ii) a state government or agency of a state government; or
(iii) a political subdivision of a state or any agency of the
political subdivision; or
(d) a balance sheet to be used for the purposes of a statement
or report:
(i) for credit purposes;
(ii) to shareholders; or
(iii) for any other purpose.
(3) If a taxpayer has a statement described in more than one part
of item (2), the applicable financial statement is the statement with the
lowest number and letter designation.
Section 12-20-60. When a corporation does business partly within
and partly without this State or uses its capital partly within and partly
without this State, the amount of the license fee provided for in Section
12-20-50 must be apportioned in accordance with the ratio prescribed
for income tax purposes in the taxable year preceding the year in which
the annual report is filed. The minimum license fee, however, may not
be apportioned.
Section 12-20-70. When a combined income tax return is filed the
license fee provided for by this chapter is measured by the total capital
and paid-in or capital surplus of each corporation considered separately
without offset for investment of one corporation in the capital or surplus
of another corporation in the group. The minimum license fee applies to
each corporation in the combined group.
Section 12-20-80. (A) If a corporation's taxable year is changed
and results in the filing of an income tax return for less than twelve
months, the license fee due with the short period return must be prorated
by dividing the annual license fee by twelve and multiplying the result
by the number of months in the short period. Each part of a month is
considered a full month for purposes of this section. This prorated fee
may not be less than the minimum license fee provided in Section
12-20-50(A).
(B) The proration provided in this section applies only to short
periods due to a change in accounting period and does not apply to short
periods due to initial or final returns.
Section 12-20-90. The amount of the license fee required by Section
12-20-50 for a bank holding company, insurance holding company
system, and savings and loan holding company must be measured by the
capital stock and paid-in surplus of the holding company exclusive of
the capital stock and paid-in surplus of a bank or savings and loan
association that is a subsidiary of the holding company. For the
purposes of this section, `bank,' `bank holding company,' and
`subsidiary' of a bank holding company have the same definitions as in
Section 34-24-20; `insurer', `insurance holding company system' and a
`subsidiary' of an insurance holding company system have the same
definitions as in Section 38-21-10; and savings and loan `association',
`savings and loan holding company', and a `subsidiary' of a savings and
loan company have the same definitions as in Section 34-28-300.
Section 12-20-100. (A) In the place of the license fee imposed by
Section 12-20-50, every railroad company, express company, street
railway company, navigation company, waterworks company, power
company, electric cooperative, light company, gas company, telegraph
company, telephone company, and private car line company shall file
an annual report with the department and pay a license fee as follows:
(1) one dollar for each thousand dollars, or fraction of a thousand
dollars, of fair market value of property owned and used within this
State in the conduct of business as determined by the department for
property tax purposes for the preceding taxable year; and
(2) (a) Three dollars for each thousand dollars, or fraction of a
thousand dollars, of gross receipts derived from services rendered from
regulated business within this State during the preceding taxable year,
except that with regard to electric cooperatives, only distribution electric
cooperatives are subject to the gross receipts portion of the license fee
under this subitem (2)(a).
(b) When a combined return is filed pursuant to Section
12-8-4110, the phrase `the gross receipts derived from services rendered
from regulated business' does not include gross receipts arising from
transactions between the separate members of the return group;
(B) A private car line company is a company which operates,
furnishes, or leases passenger cars, sleeping cars, dining cars, express
cars, refrigerator cars, oil or tank cars, horse or stock cars, or a car
designed for the carrying of a special commodity operated upon the
railroads in this State.
(C) The minimum license fee under this section is the same as
provided in Section 12-20-50(A). When a combined return is filed, the
minimum license fee applies to each corporation in the combined group.
Section 12-20-110. The provisions of this chapter do not apply to
any:
(1) nonprofit corporation organized under Article 1 of Chapter 31
or 33 of Title 33 exempt from income taxes pursuant to Section 501 of
the Internal Revenue Code of 1986;
(2) volunteer fire department and rescue squad;
(3) cooperative organized under Chapter 45 or 47 of Title 33;
(4) building and loan association or credit union doing a strictly
mutual business;
(5) insurance company or association including any fraternal,
beneficial, or mutual protection insurance company; or
(6) foreign corporation whose entire income is not included in gross
income for federal income tax purposes due to any treaty obligation of
the United States.
Section 12-20-130. The annual report required by this chapter must
be signed by a person duly authorized to make the report.
Section 12-20-140. The department shall prepare blank forms for the
initial annual report. For subsequent reports the department shall
combine the corporate income tax return and the annual report into one
form. Failure to receive or secure the form does not relieve a taxpayer
from the obligation of making the return or report at the time required.
Section 12-20-150. The department's receipt showing the payment of
the annual fees prescribed by this chapter constitutes a certificate of
compliance with the provisions of this chapter and licenses the
corporation for the taxable year of the corporation for which the annual
report is filed.
Section 12-20-160. The department shall prescribe rules and
regulations necessary to enforce and administer the provisions of this
chapter. These rules and regulations have the force of law.
Section 12-20-170. For purposes of this chapter and for purposes of
administrative and enforcement provisions of this title, the corporate
license fee is deemed to be a tax.
Section 12-20-180. All amounts collected by the department under
this chapter must be deposited to the credit of the State Treasurer."
SECTION 4. Chapter 54, Title 12 of the 1976 Code is amended by
adding:
"Section 12-54-15. Every tax imposed by this title and all
increases, interest, and penalties on the tax is from the time it is due and
payable, a personal debt from the person liable to pay it to the State.
Section 12-54-17. Action may be brought at any time by the
Attorney General, in the name of the State, to recover taxes, penalties,
and interest due under this title.
Section 12-54-42. (a) An employer who fails to comply with the
provisions of Section 12-10-1340, requiring the furnishing of a
withholding statement to employees is subject to a penalty of not less
than one hundred dollars nor more than one thousand dollars for each
violation.
(b) An employer who fails to comply with the provisions of
Section 12-10-540(A)(1), requiring the filing of withholding statements
with the department is subject to a penalty of not less than one hundred
dollars nor more than two thousand dollars for each violation.
(c) Failure to comply with Sections 12-10-1340 and
12-10-540(A)(1) with respect to each withholding statement required to
be provided to the department or each employee is considered a separate
violation.
Section 12-54-46. If an employee files a false or fradulent
exemption certificate with intent to evade any tax, the employee is liable
for a penalty of not less than fifty dollars for each fraudulent exemption
claimed, not to exceed a total of one thousand dollars. The penalty is
assessed and collected in the same manner as income tax penalties.
Section 12-54-47. The department may impose a penalty in an
amount not to exceed two hundred dollars for each failure to comply
with the provisions of Section 12-8-4140. The department may waive
the penalty if the tax preparer submits the required information.
Section 12-54-85. If the department discovers from the examination
of the return or otherwise that the income of the taxpayer or any portion
of the income has not been assessed, it may at any time within three
years after the time when the return was filed or due to be filed,
whichever is later, assess the income and notify the taxpayer of the
assessment and the taxpayer has thirty days to confer with the
department as to the proposed assessment. The limitation of three years
to the assessment of the tax or additional tax does not apply in the case
of fraud with intent to evade Chapter 8 of this title or authorized rules
and regulations promulgated under Chapter 8 of this title or in the case
of failure to make a return. After the expiration of thirty days from the
notification, the department shall assess the income of the taxpayer or
any portion of the income which it believes has not already been
assessed and notify the taxpayer so assessed of the amount of the tax and
interest and penalties, if any. These amounts are due and payable within
ten days from the date of the notice. The provisions of this chapter with
respect to revision and appeal apply to a tax so assessed.
Section 12-54-127. When title to property, both real and personal, is
transferred and the payment or collection of any tax is defeated because
of the transfer, then the transferor, the spouse of the transferor, a
fiduciary holding title to the property and a person for whose benefit the
property is held, the officers and stockholders of a corporation
transferring the property, and the transferee of the property, are
personally liable for tax in an amount equal to the interest in the property
transferred, and the liens provided by law for the tax attach to the
property as if no transfer was made. The above provisions do not apply
to a transfer to a bona fide purchaser or mortgagee for an adequate and
full consideration in money or moneys' worth. The provisions of this
section are in addition to and do not supersede any other provision of
law.
Section 12-54-135. (A) If a person after notice fails to withhold a
sum due by a taxpayer in accordance with the notice, or fails to remit the
sum in accordance with the provisions of Section 12-54-130, then the
person failing to withhold or remit is liable for the total of the notice in
the same manner and with similar effect as though the amount as shown
by the notice was due by the person as a direct obligation to the State.
Where a person fails to withhold or to remit after withholding in
accordance with the provisions of Section 12-54-130, the amount of the
notice is due and payable by the person in the same manner as now is
provided for the collection of similar taxes and by Section 12-54-130.
The department shall, upon failure of the person to pay the amount of
the notice which was not withheld in accordance with Section
12-54-130, issue its warrant for distraint to a duly authorized
representative of the department, who shall proceed to the collection of
the warrant.
(B) No person has a right of action against his employer in respect
of any moneys withheld and paid to the department or its duly
authorized representative in compliance or intended compliance with the
provisions of this section."
SECTION 5. (A) Title 12 of the 1976 Code is amended by adding:
"CHAPTER 56
Setoff Debt Collection Act"
(B) The following provisions of Article 3, Chapter 54, of Title 12 of
the 1976 Code are redesignated and included in Chapter 56, Title 12 of
the 1976 Code:
Section 12-54-410 is redesignated Section 12-56-10.
Section 12-54-420 is redesignated Section 12-56-20.
Section 12-54-430 is redesignated Section 12-56-30.
Section 12-54-440 is redesignated Section 12-56-40.
Section 12-54-450 is redesignated Section 12-56-50.
Section 12-54-460 is redesignated Section 12-56-60.
Section 12-54-470 is redesignated Section 12-56-70.
Section 12-54-480 is redesignated Section 12-56-80.
Section 12-54-490 is redesignated Section 12-56-90.
Section 12-54-495 is redesignated Section 12-56-100.
Section 12-54-500 is redesignated Section 12-56-110.
SECTION 6. (A) Title 12 of the 1976 Code is amended by adding:
"CHAPTER 58
South Carolina
Taxpayers' Bill of Rights"
(B) The following provisions of Article 5, Chapter 54 of Title 12 of
the 1976 Code are redesignated and included in Chapter 58, Title 12 of
the 1976 Code:
Section 12-54-710 is redesignated Section 12-58-10.
Section 12-54-720 is redesignated Section 12-58-20.
Section 12-54-730 is redesignated Section 12-58-30.
Section 12-54-740 is redesignated Section 12-58-40.
Section 12-54-750 is redesignated Section 12-58-50.
Section 12-54-760 is redesignated Section 12-58-60.
Section 12-54-770 is redesignated Section 12-58-70.
Section 12-54-780 is redesignated Section 12-58-80.
Section 12-54-790 is redesignated Section 12-58-90.
Section 12-54-800 is redesignated Section 12-58-100.
Section 12-54-810 is redesignated Section 12-58-110.
Section 12-54-820 is redesignated Section 12-58-120.
Section 12-54-830 is redesignated Section 12-58-130.
Section 12-54-840 is redesignated Section 12-58-140.
Section 12-54-850 is redesignated Section 12-58-150.
Section 12-54-860 is redesignated Section 12-58-160.
Section 12-54-870 is redesignated Section 12-58-170.
Section 12-54-880 is redesignated Section 12-58-180.
SECTION 7. Chapter 54, Title 12 of the 1976 Code is amended by
deleting the article titles and numbers of Articles 1, 3, and 5 into which
this chapter was formerly divided. Chapter 54 of Title 12, as amended
by this section, contains Sections 12-54-10 through 12-54-260 and is
entitled "Uniform Method of Collection and Enforcement of Taxes
Levied and Assessed by the South Carolina Department of Revenue and
Taxation.
SECTION 8. Chapter 1, Title 50 of the 1976 Code is amended by
adding:
"Section 50-1-280. (A) The State Treasurer shall credit the
total amount transferred by the South Carolina Department of Revenue
and Taxation pursuant to Section 12-8-4150 to the Nongame Wildlife
and Natural Areas Fund established in this section.
(B) There is established a special fund to be known as the `Nongame
Wildlife and Natural Areas Fund' consisting of all monies transferred to
it under this section, donations to the Nongame and Endangered Species
or Heritage Trust Programs of the department, and all interest earned in
the fund.
(C) All balances in the Nongame Wildlife and Natural Areas Fund
must be carried forward each year so that no part of the fund reverts to
the general fund of the State.
(D) The department may expend monies held in the Nongame
Wildlife and Natural Areas Fund in furtherance of its Nongame and
Endangered Species Programs, Heritage Trust Programs, and for related
educational projects and programs.
(E) Revenues produced pursuant to Section 12-8-4150 are
supplemental and are in no way intended to take the place of funding
that would otherwise be appropriated for these purposes."
SECTION 9. Section 11-35-5230(B) of the 1976 Code, as last
amended by Section 96 of Act 181 of 1993, is further amended to read:
"(B) (1) Firms with state contracts that
subcontract with minority firms shall be eligible for an income tax credit
equal to four percent of the payments to minority subcontractors for
work pursuant to a state contract. Such subcontractors must be certified
as to the criteria of a minority firm as defined in Section 11-35-5010 of
this code and any regulations which may be promulgated thereunder.
(2) The tax credit is limited to a maximum of twenty-five
thousand dollars annually. A firm shall be eligible to claim a tax credit
for a period of five years from the date the first income tax credit is
claimed.
(3) Any firm desiring to be certified as a minority firm shall make
application to the Small and Minority Business Assistance Office
(SMBAO) as defined by Section 11-35-5270, on such forms as may be
prescribed by that office.
(4) Firms claiming the income tax credit shall maintain evidence
of work performed for a state contract by minority subcontractors and
shall present such evidence on a form and in a manner prescribed by the
Department of Revenue and Taxation at the time of filing its state
income tax return and claim such credit at the time of filing. All records
shall be available for audit by the Department of Revenue and Taxation
in accordance with prevailing tax statutes.
Taxpayers with contracts with this State that subcontract with
minority firms are eligible for an income tax credit as provided in
Section 12-8-2750.
(C) A firm desiring to be certified as a minority firm shall apply to
the Small and Minority Business Assistance Office (SMBAO) as defined
by Section 11-35-5270, on the forms as may be prescribed by that
office."
SECTION 10. Section 12-4-330 of the 1976 Code, as added by Act
50 of 1991, is amended by adding:
"(E) The members of the commission director of
the Department of Revenue and Taxation and the officers
designated by the director may administer oaths to any person or
take acknowledgments of any person in respect of any return or report
required by this chapter title or the rules and regulations
of the commission department."
SECTION 11. Section 12-37-220B of the 1976 Code is amended by
adding an appropriately numbered item to read:
"(35) After the easement is granted, land subject to a perpetual
easement donated to this State under the South Carolina Scenic Rivers
Act of Chapter 29 of Title 49."
SECTION 12. Section 12-54-30 of the 1976 Code, as last amended
by Act 660 of 1988, is further amended to read:
"Section 12-54-30. If the commission
department discovers on examination of a return or otherwise
that the tax, penalty, or interest paid by any person is in excess of the
amount legally due, the commission department may
order a refund or give credit for the overpayment. Upon the allowance
of a credit or refund of any tax, penalty, or interest paid, interest is
allowed and paid on the amount of the credit or refund at the rate
provided for in Section 12-54-20 from the date the tax, penalty, or
interest was paid to the date the order for refund or credit was issued.
No interest may be paid on income tax refunds for income taxes
withheld or estimated tax payments during the first seventy-five
days following the due date for the filing of the income tax
return or the date the income tax return was filed, whichever
occurs later."
SECTION 13. Section 12-54-40(b)(7) of the 1976 Code, as added by
Act 109 of 1991, is amended to read:
"(7) A failure to deposit or pay taxes deducted and withheld
pursuant to Article 5 of Chapter 10 subjects the withholding
agent to a penalty of not less than ten dollars nor more than one
thousand dollars. The penalty imposed by this item applies to failure to
comply with the provisions of Section 12-54-250."
SECTION 14. Section 12-54-55 of the 1976 Code, as last amended
by Act 612 of 1990, is further amended to read:
"Section 12-54-55. In the case of any an
underpayment of declaration of estimated tax by an individual, estate,
trust, or corporate taxpayer, in lieu of all other penalties provided by
law, there must be added to the tax for the taxable year an amount of
interest as provided under Section 12-54-20 a penalty to be
determined as follows:
(1) In the case of an individual taxpayer, estate, or trust in
the same manner as prescribed by the provisions of Internal Revenue
Code Section 6654, and applicable regulations, except that under
Internal Revenue Code Section 6654(e)(1) one hundred dollars applies
rather than five hundred dollars. No interest or penalty is due under this
item for underpayments attributable to personal service income earned
in another state on which was withheld income tax due the other state.
(2) In the case of a corporate taxpayer, in the same manner as
prescribed by the provisions of Internal Revenue Code Section 6655,
and applicable regulations except that:
(a) the small amount provisions are one hundred dollars rather
than five hundred dollars;
(b) the first installment payment for corporations is due on March
15, or in the case of a taxable year beginning on any date other than
January 1, there is substituted the month which corresponds thereto; and
(c) for the annualized installment method, income for the first
installment is annualized using the first two months of the taxable
year."
SECTION 15. Section 12-54-120 of the 1976 Code, as last amended
by Act 168 of 1991, is further amended by adding at the end:
"If a warrant is returned not satisfied in full, the
commission department has the same remedies to
enforce the claim for taxes against the taxpayer as if the people of the
State had recovered judgment against the taxpayer for the amount of the
tax."
SECTION 16. Section 12-54-210 of the 1976 Code is amended to
read:
"Section 12-54-210. Any A taxpayer
person liable for any a tax administered by the
commission department or for the filing of a return required
by this title shall keep books, papers, memoranda, records, render
statements, make returns, and comply with regulations as the
commission department may prescribe
prescribes. Persons failing to comply with the provisions of
this section must be penalized in an amount to be assessed by the
commission department not to exceed five hundred
dollars for the period covered by the return in addition to other penalties
provided by law."
SECTION 17. Section 12-54-240(A) of the 1976 Code, as last
amended by Act 50 of 1991, is further amended to read:
"(A) Except in accordance with proper judicial order or as
otherwise provided by law it is unlawful for a person to divulge or make
known in any manner any particulars set forth or disclosed in any report
or return required under Chapters 7, 8, 10, 11, 13,
15, 16, 17, 20, 35, or 36 of this title.
Any A person violating the provisions of this section is
guilty of a misdemeanor and, upon conviction, must be punished by a
fine of not more than one thousand dollars or by imprisonment for not
more than one year, or both. If the offender is an officer or an employee
of the State he must be dismissed from office and is disqualified from
holding any public office in this State for a period of five years
thereafter. If the offender is an officer or employee of a company
retained by the State on an independent contract basis under subsection
(B)(3) of this section or Section 12-4-350, the contract is immediately
terminated and the company is not eligible to contract with the State for
this purpose for a period of five years thereafter."
SECTION 18. Subsections (F), (G), and (L) of Section 41-44-10 of
the 1976 Code, as added by Act 643 of 1988, are amended to read:
"(F) `State tax liability' means a taxpayer's total income
tax liability that is incurred under Title 12 or insurance premium tax
liability incurred ursuant to Chapter 7 of Title 38, or both, as computed
after the application of credits, except the credits provided by this
chapter. Reserved.
(G) `Taxpayer' means any individual, corporation, partnership,
trust, or other entity that has any state tax liability and has made a
qualified investment. Reserved.
(L) `Less Developed Area' has the same meaning as set forth in
Section 12-7-616(a) 12-8-2760."
SECTION 19. Section 41-44-20 of the 1976 Code, as added by Act
643 of 1988, is amended to read:
"Section 41-44-20. A taxpayer is entitled to a credit
determined in accordance with Section 41-44-30 which must be
applied against any state tax liability which may be imposed on the
taxpayer for qualified investments in the Palmetto Seed Capital
Corporation or the Palmetto Seed Capital Fund Limited Partnership as
determined under Section 12-8-2830."
SECTION 20. Section 41-44-70(B) of the 1976 Code, as added by
Act 643 of 1988, is amended to read:
"(B) To the extent that the Fund derives taxable income
from a South Carolina business which is either established and operated
in a Less Developed Area, invested in agriculture, aquaculture, or a
related business or invested in a business created by a socially or
economically disadvantaged individual as defined in 13 C.F.R. Sections
124.105(A) and 124.106 (1987), then each partner shall exclude
seventy-five percent of his proportionate share of this income from the
partner's determination of gross income. Partners of the Fund
are allowed an exclusion from gross income as provided in Section
12-8-920(8)."
SECTION 21. Except where inappropriate, and except for
Regulations 117-76, 117-77, 117-79, 117-91.2, 117-91.3, 117-91.5,
117-91.6, 117-91.8, 117-91.9, 117-91.11, and 117-95.1 of the South
Carolina Code of Regulations, regulations promulgated pursuant to
Chapters 7, 9, and 19, and Articles 3 and 5 of Chapter 54 of Title 12 of
the 1976 Code, are considered to be promulgated pursuant to Chapters
8, 10, 20, 56, and 58 of Title 12 of the 1976 Code as added by this act.
SECTION 22. Except where inappropriate, or as provided in Section
21 of this act, a reference in a law, regulation, or other document to
Chapters 7, 9, and 19 of Title 12 of the 1976 Code and Articles 3 and 5,
Chapter 54 of Title 12 of the 1976 Code, is considered a reference to the
appropriate provisions of Chapters 8, 10, 20, 56, and 58 of Title 12 of
the 1976 Code.
SECTION 23. The Code Commissioner shall:
(1) place all appropriate provisions of acts dealing with Chapters 7,
9, 19, and 54, Title 12 of the 1976 Code enacted in the 1993 session of
the General Assembly in the appropriate part of Chapters 8, 10, 20, 56
and 58, Title 12 of the 1976 Code as added by this act, and in so doing
he shall modify the language of code sections as necessary to implement
the intent of the General Assembly;
(2) eliminate or delete from the chapters added by this act any
provision of law the subject matter of which was repealed or eliminated
by the General Assembly in the 1994 session;
(3) amend provisions in the chapters added by this act corresponding
to amendments of the tax laws of this State enacted by the General
Assembly during the 1994 session in other acts;
(4) correct cross references as he considers necessary in affected
provisions of the 1976 Code;
(5) correct cross references and references to subdivisions in the
redesignations of Articles 3 and 5, Chapter 54 of Title 12 of the 1976
Code into Chapters 56 and 58, Title 12 of the 1976 Code.
SECTION 24. The repeal of a section of the 1976 Code by this act
does not prevent the assessment or collection of any tax, interest, or
penalties due before the effective date of this act.
SECTION 25. Chapters 7, 9, and 19 of Title 12 of the 1976 Code are
repealed with respect to taxable years beginning after 1994, withholding
required on taxes withheld for taxable years beginning after 1994, and
corporate annual reports and license fees required for taxable years
beginning after 1994. Sections 41-44-30, 41-44-40, 41-44-50, 41-44-90,
and 41-44-100, all of the 1976 Code, are repealed with respect to taxable
years beginning after 1994.
SECTION 26. Upon approval by the Governor, this act is effective
for taxable years beginning after 1994.
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