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A retailer may add the amount of the tax to the sales price and the department shall prescribe tables providing the amount to be added to the sales price consistent with the total rate of the tax."

SECTION 3. Section 12-36-2110 of the 1976 Code, as last amended by Section 92, Part II, Act 497 of 1994, is further amended to read:

"Section 12-36-2110. (A) Notwithstanding the rates of tax imposed by this chapter, the maximum tax rate imposed by this chapter is three hundred dollars four percent on the first six thousand dollars and six percent on amounts in excess of six thousand dollars, but no more than seven hundred fifty dollars, for each sale or lease made or executed after June 30, 1984 1996, or lease executed after August 31, 1985, of each:

(1) aircraft, including unassembled aircraft which is to be assembled by the purchaser, but not items to be added to the unassembled aircraft;

(2) motor vehicle;

(3) motorcycle;

(4) boat;

(5) trailer or semitrailer, pulled by a truck tractor, as defined in Section 56-3-20, and horse trailers but not including house trailers or campers as defined in Section 56-3-710;

(6) recreational vehicle, including tent campers, travel trailer, park model, park trailer, motor home, and fifth wheel; or

(7) self-propelled light construction equipment with compatible attachments limited to a maximum of one hundred sixty net engine horsepower.

In the case of a lease, the total tax rate required by law applies on each payment until the total tax paid equals three hundred dollars the total tax due. Nothing in this section prohibits a taxpayer from paying the total tax due at the time of execution of the lease, or with any payment under the lease. To qualify for the tax limitation provided by this section, a lease must specifically state the term of, and remain in force for, a period in excess of ninety continuous days.

(B) For the sale of a manufactured home, as defined in Section 40-29-20, the tax is calculated as follows:

(1) subtract trade-in allowance from the sales price;

(2) multiply the result from (1) by sixty-five percent;

(3) if the result from (2) is no greater than six thousand dollars, multiply by five six percent for the amount of tax due;

However, a manufactured home is exempt from any tax that may be due above three hundred sixty dollars as a result of the calculation in item (4) if it meets these energy efficiency levels: storm or double pane glass windows, insulated or storm doors, a minimum thermal resistance rating of the insulation only of R-11 for walls, R-19 for floors, and R-30 for ceilings. However, variations in the energy efficiency levels for walls, floors, and ceilings are allowed and the exemption on tax due above three hundred sixty dollars applies if the total heat loss does not exceed that calculated using the levels of R-11 for walls, R-19 for floors, and R-30 for ceilings. The edition of the American Society of Heating, Refrigerating, and Air Conditioning Engineers Guide in effect at the time is the source for heat loss calculation. The dealer selling the manufactured home must maintain records, on forms provided by the State Energy Office, on each manufactured home sold which contains the above calculations and verifying whether or not the manufactured home met the energy efficiency levels provided for in this subsection. These records must be maintained for three years and must be made available for inspection upon request of the Department of Consumer Affairs or the State Energy Office.

(C) For the sale of each musical instrument, or each piece of office equipment, purchased by a religious organization's exempt under Internal Revenue Code Section 501(c)(3), the maximum tax imposed by this chapter is three hundred sixty dollars. The musical instrument or office equipment must be located on church property and used exclusively for the organizations exempt purpose. The religious organization must furnish to the seller an affidavit on forms prescribed by the commission. The affidavit must be retained by the seller.

(D) The maximum tax levied pursuant to this chapter on the sale or use of each item of machinery for research and development is three hundred sixty dollars. As used in this subsection, `machinery for research and development' means machinery used directly and exclusively in research and development in the experimental or laboratory sense for new products, new uses for existing products, or for improving existing products. To be eligible for the limitation imposed by this subsection, the machinery must be located in a separate facility devoted exclusively to research and development as defined in this subsection. The limitation does not extend to machinery used in connection with efficiency surveys, management studies, consumer surveys, economic surveys, advertising,

SECTION 4. Item (11) of Section 12-36-2120 of the 1976 Code is amended to read:

"(11) Reserved (a) toll charges for the transmission of voice or messages between telephone exchanges;

(b) charges for telegraph messages; and

(c) carrier access charges and customer access line charges established by the Federal Communications Commission or the South Carolina Public Service Commission;"

SECTION 5. A. The gross proceeds of sales of tangible personal property delivered after June 30, 1996 in this State, either under the terms of a construction contract executed before July 1, 1996, or a written bid submitted before July 1, 1996, culminating in a construction contract entered into before or after July 1, 1996, are exempt from the tax provided in Section 12-36-1110 of the 1976 Code if a verified copy of the contract is filed with the South Carolina Department of Revenue and Taxation before January 1, 1997.

B. Notwithstanding the date of general imposition of the tax imposed pursuant to Section 12-36-1110 of the 1976 Code, with respect to services that are regularly billed on a monthly basis, the tax is imposed beginning on the first day of the billing period beginning on or after July 1, 1996.

SECTION 6. A. Section 57-11-20(A) of the 1976 Code, as amended by Act 501 of 1992, is further amended to read:

"(A) All state revenues and state monies dedicated by statute to the operation of the department must be deposited into one fund to be known as the `state highway fund' and all federal revenues and federal monies must be deposited into the `federal aid highway fund'. These funds must be held and managed by the State Treasurer separate and distinct from the general fund, except as to monies utilized by the State Treasurer for the payment of principal or interest on state highway bonds as provided by law. Interest earned on the state highway fund must be credited to it. All interest revenues must be used for road and highway construction and maintenance and such revenues must not be used to pay administrative expenses."

B. Section 12-27-400(A) of the 1976 Code, as last amended by Section 17, Part II, Act 497 of 1994, is further amended by adding at the end:

C. Section 12-27-1270 of the 1976 Code, as last amended by Act 164 of 1993, is further amended by adding at the end:

"All interest earnings on the Economic Development Account must be credited to the State Highway Fund. All interest revenues must be used for road and highway construction and maintenance and such revenues must not be used to pay administrative expenses."

D. This section takes effect July 1, 1995.

SECTION 7. A. Section 12-21-2772 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2772. As used in this article:

(1) `Associated equipment' means a proprietary device, machine, or part used in the manufacture or maintenance of a video game machine including, but not limited to, integrated circuit chips, printed wired assembly, printed wired boards, printing mechanisms, video display monitors, and metering devices.

(2) `Commission Department' means the South Carolina Tax Commission Department of Revenue and Taxation.

(3) `Distributor' means any person who buys and sells or leases video machines or associated equipment in this State. A distributor may also own, operate, service, or repair video machines in this State.

(4) `Licensed establishment' means an establishment owned or managed by a person who is licensed pursuant to Article 19 of this chapter for the location of coin-operated nonpayout video machines with a free play feature. The location must contain at least one thousand two hundred and fifty square feet of floor area. If a building contains more than one location that offers video machines, then each location must have a separate outside entrance and contain a floor to ceiling interior wall that does not permit public access from one location to an adjacent location.

(5) `Machine' means an electronic video games machine that, upon insertion of cash, is available to play or simulate the play of games as authorized by the commission department utilizing a video display and microprocessors in which the player may receive free games or credits that can be redeemed for cash. Each station of multiplayer machines is a separate machine for purposes of this article.

(6) `Manufacturer' means any person that manufactures or assembles and programs machines or associated replacement equipment authorized for sale or use in this State.

(8) `Machine owner' means any person, other than a distributor, who owns and operates, or maintains, repairs, or services one or more machines in licensed establishments. For purposes of this article "owner/operator" is defined the same as "machine owner".

(9) `Contraband device/equipment' or `gray area machine' means any unlicensed machine not described in item (12) of this section.

(10) `Service entity' means any person other than a distributor or machine owner who repairs, services, inspects, or examines video machines.

(11) `Credit payback value' means the expected payback value of credit played.

(12) `Video lottery terminal' means a machine or device which simulated the play of a game of chance and which contains a programmable read-only memory (PROM) computer chip which controls game play, including randomness and percentage of payout, and which communicates all game activity including, but not limited to, cash in, games played, credits won, credits played, and credits paid out, to a separate computer device by means of serial data communications, and which may be remotely polled, activated, and deactivated by means of serial data communications.

(13) `Person' means any individual, trust, estate, partnership, limited liability company, receiver, association, company, corporation, or any other entity or group.

(14) `Operator' means any person who owns or manages a location for the operation of gaming machines.

(15) `Game' means any electronically simulated game of chance approved by the department that is displayed and played on a licensed video gaming machine."

B. Section 12-21-2774 of the 1976 Code, as added by Act 164 of 1993, is further amended to read:

"Section 12-21-2774. Each machine licensed under this chapter:

(1) may not have any means of manipulation that affect the random probabilities of winning a video game;

(2) shall have one or more mechanisms that accept only coins or cash in the form of bills. Credit card payments are not allowed. The mechanisms must be designed to prevent obtaining credits without paying by stringing, slamming, drilling, or other means;

(4) must be capable of being accessed on demand by telecommunication from a central computer for purposes of polling or reading device activities and for central computer remote shutdown of machine operations."

C. Section 12-21-2776 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2776. (A) All machines must be approved, registered, and licensed by the commission department under procedures and guidelines issued by the commission department.

(B) By July 1, 1996, all machines approved, registered, and licensed by the commission department must be equipped with a commission department supplied or approved metering device. Each machine owner, operator, or licensed establishment must establish and implement cash controls required by the commission department.

(C) By July 1, 1996, all video game machines must be of the video lottery terminal variety as defined in this article."

D. Section 12-21-2778 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2778. Each player station of a machine must be licensed pursuant to Article 19 of this chapter by the commission department before placement or operation on the premises of a licensed establishment. Each machine must have the license prominently displayed pursuant to Article 19 of this chapter."

E. Article 20, Chapter 21, Title 12 of the 1976 Code is amended by adding:

"Section 12-21-2779. (A) Each machine must have a credit payback value of at least seventy percent. The department shall establish the mechanism for ensuring that the machines comply with this section.

(B) Video games that are affected by player skill, such as video draw poker and blackjack, shall pay out a minimum of eighty-three percent and no more than ninety-six percent of the amount wagered. This standard is met when using a method of play that will provide the greatest return to the player over a period of continuous play.

(C) Manufacturers shall file a request and receive approval by the department prior to manufacturing machines for placement in the State

(1) the number of machines proposed for placement;

(2) market conditions;

(3) revenues in relation to net machine income for both the State and private sector operations."

F. Section 12-21-2780 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2780. A seal must be affixed to the commission department supplied or approved metering device which corresponds to the license as set forth in Section 12-21-2778."

G. Article 20, Chapter 21, Title 12 of the 1976 Code is amended by adding:

"Section 12-21-2781. A machine may not allow more than three dollars to be placed on a single game or award won games or credits in excess of the value of five hundred dollars. Violation of the provisions of this section are considered intent to interfere with the proper operation of a machine in accordance with Section 12-21-2794."

H. Section 12-21-2782 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2782. The commission department shall promulgate rules and regulations regarding the types of machines and equipment that must be licensed and the costs associated with inspection. Notwithstanding the provisions of Section 12-21-2774(1), any machine of a type licensed as of July 1, 1993 July 1, 1996, in this State and which satisfies the conditions of Section 12-21-2776(B) may continue to operate for five two years from July 1, 1993 that date. This section may not be construed as authorizing cash payouts for credits earned after the effective date of a referendum prohibiting such payouts."

I. Article 20, Chapter 21, Title 12 of the 1976 Code is amended by adding:

"Section 12-21-2783. There is a limit of five machines in a licensed establishment."

J. Article 20, Chapter 21, Title 12 of the 1976 Code is amended by adding:

"Section 12-21-2787. A person licensed as a machine manufacturer, distributor, operator, or licensed establishment may be required to submit to a background investigation. The department shall complete the investigation within one hundred twenty days of the date of application unless additional time is granted in writing. This includes each partner of

K. Section 12-21-2794 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2794. A person who, with intent to manipulate the outcome, payoff, or operation of a machine, manipulates the outcome, payoff, or operation of a machine or its associated monitoring system, or both by physical tampering or any other means is guilty of a felony and, upon conviction, must be imprisoned not less than one year nor more than five years or fined not more than one thousand dollars, or both."

L. Article 20, Chapter 21, Title 12 of the 1976 Code is amended by adding:

"Section 12-21-2795. (A) Beginning July 1, 1996, a tax equal to fifteen percent of the gross machine income is imposed and must be remitted to the department weekly on a schedule determined by the department. The revenue must be remitted by electronic transfer in a manner provided by the department. Revenues of this tax must be deposited to the credit of the Property Tax Relief Fund. All payments not remitted when due must be paid together with a penalty under the provisions of Section 12-54-40.

(B) A machine owner, operator, or licensed establishment who falsely reports or wilfully fails to report the amount due required by this section is guilty of a felony and, upon conviction, must be imprisoned not less than one year nor more than five years. In addition, the person must have his license revoked by the department and is not eligible for licensing for at least three years nor more than ten years, as the department determines."

M. Section 12-21-2796 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2796. A machine owner or distributor who wilfully places a machine on location or who wilfully causes a machine to be operated without the state supplied or approved metering device is guilty of a felony and, upon conviction, must be imprisoned for not less than one year nor more than ten years, without benefit of probation, parole, or

N. Article 20, Chapter 21, Title 12 of the 1976 Code is amended by adding:

"Section 12-21-2800. The department shall promulgate regulations pertaining to the machines and persons licensed by it. These regulations must include, but are not limited to, provisions:

(1) prohibiting the acceptance of checks or credit cards exclusively for playing the machines;

(2) prohibiting the extension of credit, advances, loans for playing the machines;

(3) assuring access is limited to persons twenty-one years of age or older;

(4) prohibiting the use of any type of advertisement to promote the play of the machines;

(5) specifying the mechanism for transmitting revenue, service, and access information as well as revenue amounts owed electronically;

(6) specifying the mechanism for verifying information transmitted to the department;

(7) establishing guidelines for licensing and review of licensing decisions, including background investigations and license revocation; and

(8) requiring other information considered necessary by the department to carry out the provisions of this article."

O. Article 20, Chapter 21, Title 12 of the 1976 Code is amended by adding:

"Section 12-21-2801. (A) In addition to all other licenses and fees, and beginning July 1, 1996, the following annual licenses are required for the fees stated by qualified persons who meet the definitions provided in Section 12-21-2772 and who otherwise comply with the provisions of this article:

(1) manufacturer five thousand dollars

(2) distributor three thousand dollars

(3) service entity two thousand dollars

(4) machine owner one thousand dollars

(5) licensed establishment one hundred dollars.

(B) A machine owner shall pay a machine owner fee for the privilege of owning and operating machines and is not required to pay more than one device owner fee.

(C) The machine owner fee is due and payable in addition to any licensed establishment fee resulting from the placement of machine at that establishment. If more than one machine is placed at a licensed

(D) No license may be issued under this section unless the applicant for a license or renewal presents to the department a signed statement from the department and from the Internal Revenue Service showing that the applicant does not owe the state or federal government any delinquent taxes, penalties, or interest.

(E) No distributor, service entity, machine owner, or licensed establishment may be issued a license under this section unless the distributor, service entity, machine owner, or licensed establishment has been a resident of this State for two years. The department shall require a statement of residency to be filed with the department as part of the application process on forms and in a manner prescribed by the department.

(F) Licenses issued under this section apply for the period July first through the successive June thirtieth."

P. Section 12-21-2804 of the 1976 Code, as added by Act 164 of 1993, is amended to read:

"Section 12-21-2804. (A) No person shall apply for, receive, maintain, or permit to be used, and the commission shall not allow to be maintained, permits or licenses for the operation of more than eight machines authorized under Section 12-21-2720(A)(3) at a single place or premises for the period beginning July 1, 1993, and ending July 1, 1994. After July 1, 1994, the commission may not issue nor authorize to be maintained any licenses or permits for more than five machines authorized under Section 12-21-2720(A)(3) at a single place or premises. Any licenses or permits issued for the operation of machines authorized under Section 12-21-2720(A)(3) during the period of July 1, 1993, and July 1, 1994, for a two-year period shall continue in effect after July 1, 1994, provided that during the period of July 1, 1994, and July 1, 1995, no person shall maintain at a single place or premises more than eight machines authorized under Section 12-21-2720(A)(3). No machine may be licensed or relicensed in any location where the primary and substantial portion of the establishment's gross proceeds is from machines licensed under Section 12-21-2720(A)(3). The commission shall revoke the licenses of machines located in an establishment which fails to meet the requirements of this section. No license may be issued for a machine in an establishment in which a license has been revoked for a period of six months from the date of the revocation. The term "gross proceeds" from the machines means the establishment's portion. Reserved

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