H 3299 Session 111 (1995-1996)
H 3299 General Bill, By D. Smith and Wilkes
A Bill to amend Section 12-7-1220, as amended, Code of Laws of South Carolina,
1976, relating to the State Targeted Jobs Tax Credit, so as to extend the
credit to a sole proprietor, partnership, limited liability company,
corporation of any classification, or association, allow the credit to be
claimed against the individual income tax liability of the sole proprietor,
partner, sub S corporation shareholder, and limited liability company owner
and provide for the manner of claiming the credit and to delete provisions
previously limiting the eligibility for the credit for shareholders of a sub S
corporation to such a corporation eligible to use the fee in lieu of tax.
01/18/95 House Introduced and read first time HJ-22
01/18/95 House Referred to Committee on Ways and Means HJ-22
A BILL
TO AMEND SECTION 12-7-1220, AS AMENDED, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE
STATE TARGETED JOBS TAX CREDIT, SO AS TO EXTEND
THE CREDIT TO A SOLE PROPRIETOR, PARTNERSHIP,
LIMITED LIABILITY COMPANY, CORPORATION OF ANY
CLASSIFICATION, OR ASSOCIATION, ALLOW THE CREDIT
TO BE CLAIMED AGAINST THE INDIVIDUAL INCOME TAX
LIABILITY OF THE SOLE PROPRIETOR, PARTNER, SUB S
CORPORATION SHAREHOLDER, AND LIMITED LIABILITY
COMPANY OWNER AND PROVIDE FOR THE MANNER OF
CLAIMING THE CREDIT AND TO DELETE PROVISIONS
PREVIOUSLY LIMITING THE ELIGIBILITY FOR THE
CREDIT FOR SHAREHOLDERS OF A SUB S CORPORATION
TO SUCH A CORPORATION ELIGIBLE TO USE THE FEE IN
LIEU OF TAX.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. A. Subsections (A) through (G) of Section
12-7-1220 of the 1976 Code, as last amended by Section 136A, Part
II, Act 497 of 1994, are further amended to read:
"(A) Annually by December thirty-first, using the most
current data available from the South Carolina Employment
Security Commission and the United States Department of
Commerce, the Department of Revenue and Taxation shall rank and
designate the state's counties as provided in this section. The
sixteen counties in this State having a combination of the highest
unemployment rate and lowest per capita income for the most
recent thirty-six month period with equal weight being given to
each category are designated less developed counties. The fifteen
counties in the State with a combination of the next highest
unemployment rate and next lowest per capita income for the most
recent thirty-six month period with equal weight being given to
each category are designated moderately developed counties. The
fifteen counties in the State with a combination of the lowest
unemployment rate and the highest per capita income for the most
recent thirty-six month period with equal weight being given to
each category are designated developed counties.
Corporations Taxpayers which create new full-time
jobs qualify for the appropriate tax credit as provided in subsections
(B), (C), and (D). The designation by the Department of Revenue
and Taxation is effective for corporate tax years which begin
after the date of designation. For corporations
taxpayers which plan a significant expansion in their labor
forces at a South Carolina location, the appropriate
commission agency shall prescribe certification
procedures to ensure that the corporations taxpayers
can claim credits in future years without regard to whether or not a
particular county is removed from the list of less developed or
moderately developed counties.
(B) Corporations Taxpayers operating
manufacturing, tourism, processing, warehousing, distribution,
research and development, and corporate office facilities in counties
designated by the commission department as less
developed are allowed a job tax credit for taxes imposed by Section
12-7-230 and for insurance premium taxes imposed pursuant to
Chapter 7, Title 38 equal to one thousand dollars annually for each
new full-time employee job for five years beginning with years two
through six after the creation of the job. The number of new
full-time jobs must be 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 corresponding period of the prior taxable year. Only those
corporations taxpayers that increase employment by
ten or more in a less developed county are eligible for the credit.
Credit is not allowed during the five years if the net employment
increase falls below ten. The appropriate commission
agency shall adjust the credit allowed each year for net new
employment fluctuations above the minimum level of ten.
(C) Corporations Taxpayers operating
manufacturing, tourism, processing, warehousing, distribution,
research and development, and corporate office facilities in counties
that have been designated by the commission
department as moderately developed are allowed a job tax
credit for taxes imposed by Section 12-7-230 and for insurance
premium taxes imposed pursuant to Chapter 7, Title 38 equal to six
hundred dollars annually for each new full-time employee job for
five years beginning with years two through six after the creation of
the job. The number of new full-time jobs must be determined by
comparing the monthly average number of full-time employees in
the applicable county subject to South Carolina income tax
withholding for the taxable year with the corresponding period of
the prior taxable year. Only those corporations
taxpayers that increase employment by eighteen or more in
a county that has been designated moderately developed are eligible
for the credit. The credit is not allowed during the five years if the
net employment increase falls below eighteen. The appropriate
commission agency shall adjust the credit allowed
each year for net new employment fluctuations above the minimum
level of eighteen.
(D) Corporations Taxpayers operating
manufacturing, tourism, processing, warehousing, distribution,
research and development, and corporate office facilities in counties
designated by the commission department as
developed are allowed a job tax credit for taxes imposed by Section
12-7-230 and for insurance premium taxes imposed pursuant to
Chapter 7, Title 38 equal to three hundred dollars annually for each
new full-time employee job for five years beginning with years two
through six after the creation of the job. The number of new
full-time jobs must be determined by comparing the monthly
average number of full-time employees in the applicable county
subject to South Carolina income tax withholding for the taxable
year with the corresponding period of the prior taxable year. Only
those corporations taxpayers that increase
employment by fifty or more in a county that has been designated
developed are eligible for the credit. The credit is not allowed
during the five years if the net employment increase falls below
fifty. The appropriate commission agency shall
adjust the credit allowed each year for net new employment
fluctuations above the minimum level of fifty.
(E) Tax credits for five years for the taxes imposed by Section
12-7-230 and for insurance premium taxes imposed pursuant to
Chapter 7, Title 38 must be awarded for additional new full-time
jobs created by corporations taxpayers qualified
under subsections (B), (C), (D), and (I). Additional new full-time
jobs must be determined by subtracting highest total employment of
the corporation taxpayer during years two through
six, or whatever portion of year two through six completed, from
the total increased employment. The appropriate
commission agency shall adjust the credit allowed
for employment fluctuations during the additional five years of
credit.
(F) The merger, consolidation, or reorganization of a
corporation taxpayer where tax attributes survive
does not create new eligibility in a succeeding corporation
taxpayer, but unused job tax credits may be transferred and
continued by the succeeding corporation taxpayer.
In addition, a corporation taxpayer may assign its
rights to its jobs tax credit to another corporation
taxpayer if it transfers all, or substantially all, of the assets
of the corporation taxpayer or all, or substantially
all, of the assets of a trade or business or operating division of a
corporation taxpayer related to the generation of the
jobs tax credits to that corporation taxpayer if the
required number of new jobs is maintained for that amount of
credit. No corporation taxpayer is allowed a jobs
tax credit if the net employment increase for that
corporation taxpayer falls below ten for a less
developed county, eighteen for a moderately developed county, or
fifty for a developed county. The Department of Revenue and
Taxation or Department of Insurance, as appropriate, shall
determine whether or not qualifying net increases or decreases have
occurred and may require reports, promulgate regulations, and hold
hearings needed for substantiation and qualification."
(G) A credit claimed under this section 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 corporation
taxpayer. However, the credit established by this section
taken in one tax year must be limited to an amount not greater than
fifty percent of the taxpayer's state corporate income tax or
premium tax liability which is attributable to income or premiums
derived from operations in the State for that year."
B. Section 12-7-1220(H)(3) of the 1976 Code, as added by Act
175 of 1989, is amended to read:
"(3) `Corporation Taxpayer' means a
sole proprietor, partnership, corporation of any classification,
limited liability company, or association taxable as a business
entity which is subject to South Carolina taxes as contained in
Section Sections 12-7-210 and 12-7-230 and
Chapter 7, Title 38."
C. Section 12-7-1220(J) of the 1976 Code, as added by Section
97A, Part II, Act 164 of 1993 is amended to read:
"(J) (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
12-7-210.
(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 12-7-210.
In addition to those credits allowed under subsections (B),
(C), and (D) of this section:
(1) A corporation, partnership, or limited liability company
that qualifies for a credit under this section as an S corporation,
partnership, or limited liability company, entitles each shareholder
of the S corporation, partner of the partnership, or member of the
limited liability company to a nonrefundable credit against taxes
imposed pursuant to Section 12-7-210.
(2) The amount of the credit allowed a shareholder,
partner, or owner of a limited liability company by this subsection
is equal to the shareholder's percentage of stock ownership,
partner's interest in the partnership, or member's interest in the
limited liability company for the taxable year multiplied by the
amount of the credit the taxpayer would have been entitled to if it
were taxed as a 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,
partnership, or limited liability company. 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
12-7-210."
SECTION 2. This act takes effect upon approval by the
Governor and applies with respect to taxable years beginning after
1994.
-----XX----- |