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(2) Notwithstanding anything in subsections (B), (O), (P), (Q), (S)(1), and (U), a single entity, or two or more entities which are members of a controlled group (the "original transferor"), may enter into any sale-leaseback arrangement (including, without limitation, an assignment, a sublease, or similar arrangement), or succession of such arrangements, with one or more financing entities, concerning all or part of a project, regardless of the identity of the income tax owner of the property which is subject to the fee payment under subsection (D)(2), provided that such sale-leaseback is executed prior to or contemporaneously with the time that fee payments under subsection (D)(2) begin with respect to property which is the subject of a sale-leaseback. Even though income tax basis is changed for income tax purposes, neither the original transfer to the financing entity nor the later transfer from the financing entity back to the original transferor or members of its controlled group, pursuant to terms in the sale-leaseback agreement, will affect the amount of the fee due. Nothing in this subsection (S)(2) shall prohibit a sale-leaseback where income tax ownership of the property which is subject to the fee payment under subsection (D)(2) is held only by the entities identified in subsection (S)(1).

(5) The manner in which an arrangement is reported under generally accepted accounting principles shall not adversely affect the authorization of such an arrangement under this section.

(T) No inducement agreement, millage rate agreement, or lease agreement, nor the rights of any entity pursuant to any such agreement,

(U) Notwithstanding any other provision of this section to the contrary, if at any time following the period provided in subsection (C)(2), the investment based on income tax basis without regard to depreciation falls below the eighty-five million dollar minimum investment to which the fee relates and is held by an entity or controlled group of entities, the fee provided in subsection (D)(2) is no longer available and the investor is required to make the payments which are due under Section 4-29-60 for the remainder of the lease period.

(1) Notwithstanding any other provision of this section, if an investor fails to make the minimum investment required under subsection (D)(2) within the time provided in subsection (C)(2), then if and to the extent allowed pursuant to an applicable agreement between the investor and the county, the investor is entitled to the benefits of Chapter 12 of this title. Otherwise, the fee provided in subsection (D)(2) is no longer available and the investor is required to make the payments which are due under Section 4-29-60 for the remainder of the lease period.

(2) Notwithstanding any other provision of this section, if at any time following the period provided in subsection (C)(2), the investment based income tax basis without regard to depreciation falls below the forty-five million dollar minimum investment to which the fee relates and is held by an entity or controlled group of entities, then if and to the extent allowed pursuant to any applicable agreement between the investor and the county, the investor is entitled to the benefits provided under Chapter 12 of this title. Otherwise, the fee provided in subsection (D)(2) is no longer available and the investor is required to make the payments which are due under Section 4-29-60 for the remainder of the lease period."

B.(1) Section 4-29-67(Z) of the 1976 Code, as added by Act 497 of 1994, is amended to read:

"(Z) Reserved. Notwithstanding any provision of Section 4-29-60 or this section:

(1) If at least two hundred new full-time jobs are created within the time period for qualifying expenditures set forth in subsection (I), the minimum level of investment required in order for property to qualify for the payment in lieu of taxes (fee) as provided in this section is sixty million dollars.

(5) For purposes of this subsection, the terms `full-time' and `new job' are defined as provided in Section 12-7-1220."

(2) This item is effective January 1, 1996.

C. The amendments to Section 4-29-67 of the 1976 Code contained in this section are effective for inducement resolutions, inducement agreements, millage rate agreements, and lease agreements with regard to projects for which lease agreements are entered into after December 31, 1995. However, the provisions affecting Section 4-29-67(B)(3), (B)(4)(b)(iii), (H), (K)(1)(c), (O), and (U) of the 1976 Code are effective for inducement resolutions, inducement agreements, millage rate agreements, and lease agreements with regard to projects for which lease agreements have been entered into on or before December 31, 1995, if the investor and the county agree to modify the agreement to allow these provisions to apply to their agreement. However, except as provided in Section 4-29-67(H) of the 1976 Code, no amendment to an inducement agreement or millage rate agreement may reduce the millage rate, discount rate, or assessment ratio under such agreements.

SECTION 8. A. Section 12-6-2320(B) of the 1976 Code, as last amended by Act 76 of 1995, is further amended to read:

"(B) (1) For the purposes of this chapter, the department may enter into an agreement with the taxpayer establishing the allocation and apportionment of the taxpayer's income for a period not to exceed five years, if the following conditions are met:

(1)(a) the taxpayer is planning a new facility in this State or an expansion of an existing facility;

(2)(b) the taxpayer asks the department to enter into a contract under this subsection reciting an allocation and apportionment method; and

(2) For the purposes of this subsection the word `taxpayer' includes any one or more of the members of a controlled group of corporations authorized to file a consolidated return under Section 12-6-5020."

B. This section is effective April 4, 1995.

SECTION 9. A. Section 12-6-3360 of the 1976 Code, as last amended by an act of 1996 bearing ratification number 234, is further amended to read:

"Section 12-6-3360. (A) Taxpayers that operate manufacturing, tourism, processing, warehousing, distribution, research and development, and corporate office, and qualifying service-related facilities are allowed an annual job tax credit as provided in this section. In addition, taxpayers that operate retail facilities and service related industries qualify for an annual jobs tax credit in counties designated as least developed. Credits under this section can may be claimed against income taxes imposed by Section 12-6-510 or Section 12-6-530, 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. In computing any tax payable by a taxpayer under Section 38-7-90, the credit allowable under this section must be treated as a premium tax paid under Section 38-7-20.

(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 twelve counties with a combination of the highest unemployment rate and lowest per capita income are designated less least developed counties.

(2) The fifteen twelve counties with a combination of the next highest unemployment rate and next lowest per capita income are designated moderately under developed counties.

(4) The eleven 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.

(5)(a) A county, any portion of which is located within twenty-five miles of the boundaries of an applicable military installation or applicable federal facility as defined in Section 12-6-3450(1), shall receive the benefits of the next increased credit designation for five years beginning with the year in which the military installation or federal facility became an applicable military installation or applicable federal facility as defined in Section 12-6-3450(1), with the additional requirement that the military installation must have reduced employment on the installation of at least three thousand employees.

(b) For a county in which is located an applicable military installation or applicable federal facility meeting the requirements for the increased credit provided in subitem (a) of this item, the credit allowed is two tiers higher than the credit for which the county would otherwise qualify for five years beginning with the year the installation or facility meets the requirements.

(c) Notwithstanding the designations in Section 12-6-3360, Laurens, Cherokee, and Union Counties shall qualify for the next increased credit designation.

(d) In a county where less than five percent of the work force is in manufacturing, the credit allowed is one tier higher than the credit for which the county would otherwise qualify.

(C) Subject to the conditions provided in subsection (N) of this section, 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 credit is only available to taxpayers that increase employment by ten or more full-time jobs, 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. The amount of the initial job credit and the minimum level of new jobs required is as follows:

(1) One Four thousand five hundred dollars for each new full-time job created in less least developed counties. The credit is only available to taxpayers 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.

(3) Three Two thousand five hundred dollars for each new full-time job created in moderately developed counties. The credit is only available to taxpayers 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.

(4) One thousand five hundred dollars for each new full-time job created in developed counties.

(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) Taxpayers 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 one thousand 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 operation in this State, a taxpayer 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

(H) A credit claimed under this section but not used in a taxable year may be carried forward for fifteen years from the taxable year in which the credit is earned by the taxpayer. Credits which are carried forward must be used in the order earned and before jobs credits claimed in the current year.

(I) The merger, consolidation, or reorganization of a taxpayer where tax attributes survive does not create new eligibility in a succeeding taxpayer, but unused job tax credits may be transferred and continued by the succeeding taxpayer subject to the limitations of Section 12-6-3320. In addition, a taxpayer may assign its rights to its jobs tax credit to another taxpayer if it transfers all, or substantially all, of the assets of the taxpayer or all, or substantially all, of the assets of a trade or business or operating division of a taxpayer related to the generation of the jobs tax credits to that taxpayer if the required number of new jobs is maintained for that amount of credit. No taxpayer is allowed a jobs tax credit if the net employment increase for that taxpayer falls below ten for a less developed county, eighteen for a moderately developed county, or fifty for a developed county. 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 needed for substantiation and qualification.

(J) For a taxpayer 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 taxpayer can claim credits in future years even if a particular county is removed from the list of less least developed, under developed, or moderately developed counties.

(K) (1) In addition to those credits allowed under subsection (C) of this section 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 12-6-510.

(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.

(L) Notwithstanding any other provision of this section, a county with a population under twenty thousand as determined by the 1990 most recent United States Census shall receive the next increased credit designation is considered a less developed county for purposes of the credit allowed by this section.

(M) As used in this section:

(1) `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 Sections 12-6-510 and 12-6-530 and Chapter 7 of Title 38.

(2) `Appropriate agency' means the Department of Revenue and Taxation for corporations subject to tax under Section 12-6-530 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 job requiring 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 for a week for a year in which the employee was hired initially for or transferred to the South Carolina facility. For the purposes of this section, two half-time jobs are considered one full-time job. A `half-time job' is a job requiring a minimum of twenty hours of an employee's time a week for the entire normal year of the company's

(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 on more than twelve days a year 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

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