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Indicates Matter Stricken
Indicates New Matter
AS PASSED BY THE SENATE
June 5, 2003
S. 274
S. Printed 6/5/03--H.
Read the first time March 20, 2003.
TO AMEND SECTION 12-37-220, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO EXEMPT A PRIVATE PASSENGER MOTOR VEHICLE LEASED TO A MEMBER OF THE ARMED FORCES OF THE UNITED STATES STATIONED IN THIS STATE WHOSE HOME OF RECORD IS IN ANOTHER STATE AND THE LEASED VEHICLE IS TO BE REGISTERED AND LICENSED IN THE STATE OF THE SERVICE MEMBER'S HOME OF RECORD AND TO EXEMPT ALL VEHICLES LEASED BY A PUBLIC BODY IF THE VEHICLE WOULD OTHERWISE BE EXEMPT IF OWNED BY THE PUBLIC BODY.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-37-220(B) of the 1976 Code is amended by adding two appropriately numbered items at the end to read:
"( ) a private passenger motor vehicle leased by a member of the armed forces of the United States stationed in this State when that service member's home of record is in another state and the leased vehicle is to be registered and licensed in the state of the service member's home of record.
( ) a private passenger motor vehicle leased to a governmental entity that would be exempt pursuant to subsection (A)(1) of this section if the governmental entity owned the vehicle."
SECTION 2. Notwithstanding any other provision of law, the amendment to Section 12-37-220(B)(11) of the 1976 Code, made pursuant to Section 7I, Act 334 of 2002, is effective for property tax years beginning after 2001.
SECTION 3. A. Chapter 2, Title 12 of the 1976 Code is amended by adding:
"Section 12-2-100. Unless otherwise provided by law, a tax credit administered by the department must be used in the year it is generated and must not be refunded."
B. Section 12-2-20 of the 1976 Code is amended to read:
"Section 12-2-20. As used in this title and in other titles which provide for taxes administered by the department and unless otherwise required by the context, the term 'person' includes an individual, a trust, estate, partnership, receiver, association, company, limited liability company, corporation, or any other entity or group."
C. Section 12-2-25(A) of the 1976 Code is amended to read:
"(A) As used in this title and in other titles which provide for taxes administered by the department and unless otherwise required by the context:
(1) 'partnership' includes a limited liability company taxed for South Carolina income tax purposes as a partnership;
(2) 'partner' includes a member of a limited liability company taxed for South Carolina income tax purposes as a partnership;
(3) 'corporation' includes a limited liability company or professional or other association taxed for South Carolina income tax purposes as a corporation; and
(4) 'shareholder' includes a member of a limited liability company taxed for South Carolina income tax purposes as a corporation."
D. Section 12-8-580(B)(2) and (3) of the 1976 Code, as last amended by Act 399 of 2000, are further amended to read:
"(2)(a) A sale does not include tax exempt or tax deferred transactions, other than installment sales.
(b) A sale does not include a transaction to the extent the gain on the sale of a principal residence is excluded in accordance with Internal Revenue Code Section 121. Any gain in excess of this permitted exclusion is subject to the provisions of this section.
(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. The department may revoke the exemption granted by this item if it determines that the nonresident is not cooperating with the department in the determination of the nonresident taxpayer's correct South Carolina tax liability. The revocation does not revive the duty of a person purchasing real property or associated tangible personal property from a nonresident seller to withhold until the person receives notice of the revocation."
E. 1. Section 12-6-40(A)(1) of the 1976 Code, as last amended by Act 220 of 2002, is further amended to read:
"(1) 'Internal Revenue Code' means the Internal Revenue Code of 1986, as amended through December 31, 2001 2002, and includes the effective date provisions contained in it."
2. Section 12-6-50(4) of the 1976 Code is amended to read:
"(4) Sections 78, 86, 87, 168(k), 196, and 280C;"
3. Section 12-6-540 of the 1976 Code is amended to read:
"Section 12-6-540. 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), 528(d) (taxable income of homeowners' associations), and 1382 and 1383 (taxation of cooperatives). with the The modifications provided in Article 9 of this chapter and subject to the allocation and apportionment as provisions provided in Article 17 of this chapter apply for the taxes imposed by this section."
F. Section 12-13-50 of the 1976 Code is amended to read:
"Section 12-13-50. The income tax provided in this chapter shall be in lieu of any and all other taxes on such associations, except use taxes, documentary stamp taxes deed recording fees, and taxes on real property. The real property of any such association shall be taxed in the place where it may be located, the same as the real property of individuals."
G. Section 12-13-70 of the 1976 Code is amended to read:
"Section 12-13-70. The income tax imposed by this chapter shall be is administered by the State South Carolina Department of Revenue. The department shall may make such rules and regulations not inconsistent with law as may be required for the proper administration and enforcement of this chapter, and such rules and the department's regulations have full force and effect of law."
H. Section 12-20-150 of the 1976 Code is amended to read:
"Section 12-20-150. The department shall prescribe rules and may promulgate regulations necessary to enforce and administer the provisions of this chapter. These rules and regulations have the force of law."
I. Section 12-28-940(C) of the 1976 Code is amended to read:
"(C) The department shall may promulgate regulations establishing the evidence a supplier shall provide to receive the credit."
J. Section 12-43-210(A) of the 1976 Code is amended to read:
"(A) All property must be assessed uniformly and equitably throughout the State. The South Carolina Department of Revenue shall may promulgate regulations to ensure equalization which must be adhered to by all assessing officials in the State."
K. Section 12-43-230(c) of the 1976 Code is amended to read:
"(c) The department shall may further provide by regulation for definitions not inconsistent with general law for real property and personal property in order that such property shall must be assessed uniformly throughout the State."
L. Section 12-54-110 of the 1976 Code is amended to read:
"Section 12-54-110. (A) When a person, who is required to make a return or obtain a license under the provisions of law administered by the department, (a) fails to do so at the time required, (b) delivers any return which, in the opinion of the department is erroneous, or (c) refuses to allow any regularly authorized agent of the department to examine his books and records, The department may summon:
(a)(1) the a person who,:
(a) is required to make a return or obtain a license pursuant to the provisions of law administered by the department and who fails to do so at the time required;
(b) delivers a return that the department considers erroneous; or
(c) refuses to allow an authorized agent of the department to examine his books and records;
(b)(2) any other another person having possession, care, or custody of books of account containing entries relating to the business of such person; or
(c)(3) any other another person it considers proper to.
(B) The summons may demand that the person appear before the department and produce the books at a time and place named in the summons and to give testimony and answer questions under oath respecting any item of income liable relating to a tax on the return thereof or other matter administered by the department.
(C) The summons must in all cases be served by an authorized agent of the department by delivering an attested copy to the person in hand or leaving the copy at the person's last or usual place of abode. When the summons requires the production of books and returns, it is sufficient if the books are described with reasonable certainty.
(D) Whenever If a person summoned under the provisions of pursuant to this section neglects or refuses to obey the summons, the department may apply to any a circuit judge for an attachment against him for contempt. Any judge may hear the application and, if satisfactory proof is made, shall issue an attachment directed to the sheriff of the county in which the person resides for the his arrest of the person. Upon When the person being is brought before him, the judge shall proceed to a hearing of the case. The judge and may make enforce obedience to the requirements of the summons by making an order consistent with existing laws for the punishment of contempt, to enforce obedience to the requirements of the summons."
M. 1. Section 12-6-3360(B) of the 1976 Code, as last amended by Act 332 of 2002, is further amended to read:
"(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 county designations are effective for taxable years that begin in the following calendar year. The counties are ranked using the last three completed calendar years of available per capita income data and the last thirty-six months or three years of available unemployment rate data that are available on November first, with equal weight given to unemployment rate and per capita income as follows:
(1)(a) The twelve counties with a combination of the highest unemployment rate and lowest per capita income are designated distressed counties. Notwithstanding any other provision of law, no more than twelve counties may be designated or classified as distressed and notwithstanding any other provision of this section, a county may be designated as distressed only by virtue of the criteria provided in this subitem.
(b) A category with the same criteria as provided in subitem (a) of this item is designated least developed county which consists of underdeveloped counties otherwise eligible for this category.
(2) The twelve counties with a combination of the next highest unemployment rate and next lowest per capita income are designated underdeveloped counties.
(3) The eleven counties with a combination of the next highest unemployment rate and the next lowest per capita income are designated moderately 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 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) In addition to the designation in subitem (a), a county in which an applicable military installation or applicable federal facility is located is allowed an additional increased credit designation 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.
(e) For a job created in a county that is not traversed by an interstate highway, the credit allowed is one tier higher than the credit for which jobs created in the county would otherwise qualify. This subitem does not apply to a job created in a county eligible for a higher tier pursuant to another provision of this item."
2. Section 12-6-3415 of the 1976 Code, as added by Act 283 of 2000, is amended to read:
"Section 12-6-3415. (A) A taxpayer that claims a federal income tax credit pursuant to Section 41 of the Internal Revenue Code for increasing research activities for the taxable year is allowed a credit against any tax due pursuant to Section 12-6-530 or Section 12-20-50 equal to five percent of the taxpayer's qualified expenditures for research and development research expenses made in South Carolina. For the purposes of this credit, qualified research and development expenditures have expenses has the same meaning as provided for in Section 41 of the Internal Revenue Code.
(B) The credit taken in any one taxable year pursuant to this section may not exceed fifty percent of the taxpayer's remaining tax liability after all other credits have been applied. Any unused credit may be carried over to the immediately succeeding taxable years, except that the credit carry-over may not be used for a taxable year that begins on or after ten years from the date of the qualified expenditure research expenses."
3. Section 12-6-3470(A) of the 1976 Code is amended to read:
"(A)(1) An employer who employs a person who received Family Independence payments within this State for three months immediately preceding the month the person becomes employed is eligible for an income tax credit of:
(1)(a) twenty percent of the wages paid to the employee for each full month of employment for the first twelve months of employment;
(2)(b) fifteen percent of the wages paid to the employee for each full month of employment during the second twelve months of employment;
(3)(c) ten percent of the wages paid to the employee for each full month during the third twelve months of employment.
(2) Except for employees employed in distressed counties the maximum aggregate credit that may be claimed in a tax year for a single employee under pursuant to this subsection and Section 12-6-3360 is five thousand five hundred dollars."
N. Section 12-6-3310 of the 1976 Code, as added by Act 76 of 1995, is amended to read:
"Section 12-6-3310. (A) All Credits allowed in this article are nonrefundable and useable may be used only in the year generated unless otherwise provided.
(B)(1) Unless specifically prohibited, an 'S' corporation, limited liability company taxed as a partnership, or partnership that qualifies for a credit pursuant to this article may pass through the credit earned to each shareholder of the 'S' corporation, member of the limited liability company, or partner of the partnership.
(2) A credit earned by an 'S' corporation owing corporate level income tax must first be used at the entity level. Only the remaining credit passes through to the shareholders of the 'S' corporation.
(3) The amount of the credit allowed a shareholder, partner, or member is equal to the percentage of the shareholder's 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 earned by the entity and available for pass through. Limitations upon reduction of income tax liability by use of a credit are computed based on the shareholder's, partner's, or member's tax liability. The credit is allowed against the type of tax or taxes specifically provided by the credit in this article."
O. 1. Section 12-6-3365(A), (B), and (C) of the 1976 Code, as added by Act 277 of 2000, is amended to read:
"(A) A taxpayer creating and maintaining at least one hundred full-time new jobs, as defined in Section 12-6-3360(M), at a facility of a type identified in Section 12-6-3360(M) is allowed may petition, utilizing the procedure in Section 12-6-2320(B), for a moratorium on state corporate income or insurance premium taxes imposed pursuant to Section 12-6-530 for the ten taxable years beginning the first full taxable year after the taxpayer qualifies and ending either ten years from that year or the year when the taxpayer's number of full-time new jobs falls below one hundred, whichever is earlier.
(B) To qualify for the moratorium pursuant to subsection (A), a taxpayer must shall create at least one hundred full-time new jobs at a facility in a county:
(1) with an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years twenty-four months, based on the most recent unemployment rates rate data on November first available, or that is one of the three lowest per capita income counties, based on the average of the three most recent completed calendar years of available average per capita income data that are available on November first; and
(2) in which at least ninety percent of the taxpayer's total investment in this State is located."
(C) The moratorium applies to that portion of the taxpayer's corporate income or premium tax that represents the ratio of the company's new investment in the qualifying county to its total investment in this State.
2. Section 12-6-3365 of the 1976 Code, as added by Act 277 of 2000, is amended by adding at the end:
"(G) The department shall designate the moratorium counties by December thirty-first each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for taxable years that begin in the following calendar year."
3. Section 12-10-35 of the 1976 Code, as last amended by Act 399 of 2000, is hereby repealed.
4. The repeal of Section 12-10-35 takes effect upon approval by the Governor and applies to tax years beginning after 2003; the repeal does not affect a moratorium in effect on that date.
P. Section 12-44-30(14) of the 1976 Code, as last amended by Act 280 of 2002, is further amended to read:
"(14) 'Minimum investment' means a project which results in a total investment by a sponsor of not less than five million dollars within the investment period. If a county has an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years, twenty-four months, based on data available on November first, the minimum investment is one million dollars. The department shall designate the reduced investment counties by December thirty-first each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose fee agreement is signed in the calendar year following the county designation. For all purposes of this chapter, the minimum investment may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup. If these amounts equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met."
Q. Section 4-12-30(B)(3) of the 1976 Code, as last amended by Act 280 of 2002, is further amended to read:
"(3) The minimum level of investment must be at least five million dollars and must be invested within the time period provided in subsection (C)(2). If a county has an average annual unemployment rate of at least twice the state average during each of the last two calendar years, twenty-four months, based on data available on November first, the minimum level of investment is one million dollars. The department shall designate the reduced investment counties by December thirty-first each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose fee agreement is signed in the calendar year following the county designation. Investments may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program, if the Department of Health and Environmental Control has issued a certificate of completion for the cleanup. If these amounts equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met."
R. Article 5, Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-535. For purposes of Internal Revenue Code Section 641(c), an electing small business trust is taxed at the highest rate provided in Section 12-6-510."
S. Section 12-6-5020 of the 1976 Code is amended to read:
"Section 12-6-5020. (A) A consolidated return may be filed for the following corporations:
(1) a parent and substantially controlled subsidiary or subsidiaries;
(2) two or more corporations under substantially the entire control of the same interest.
However, a corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code may not join in the filing of a consolidated income tax return under this section.
The terms 'substantially controlled' and 'substantially the entire control' mean the ownership of at least eighty percent of the total combined voting power of all classes of stock of all corporations that are a party to a consolidated return.
(B) All corporations included in a consolidated return must be subject to tax under Section 12-6-530.
(C) A corporation doing business entirely within this State may consolidate with a corporation doing a multistate business. Two or more corporations doing a multistate business may file a consolidated return.
(D) A consolidated return means a single return for two or more corporations in which income or loss is separately determined as follows:
(1) South Carolina taxable income or loss is computed separately for each corporation;
(2) allocable income is allocated separately for each corporation;
(3) apportionable income or loss is computed utilizing separate apportionment factors for each corporation;
(4) income or loss computed in accordance with items (1) through (3) of this subsection is combined and reported on a single return for the controlled group.
(E) All corporations included in a consolidated return or a combined return must use the same accounting year.
(F) If a corporation which files or is required to file a consolidated return is entitled to one or more income tax credits, including the carryover of unused credits from prior years, the income tax credits may be determined on a consolidated basis. Limitations on credits which refer to the income or the income tax liability of a corporation are deemed to refer to the income or income tax liability of the consolidated group, and credits shall reduce the consolidated group's tax liability regardless of whether or not the corporation entitled to the credit contributed to the tax liability or of the consolidated group.
(G) The election to file a consolidated return or separate returns must be made on an original and timely return and may not be changed after the return is filed.
(H) Once an election is made to file a consolidated return, this election must be adhered to until permission is granted by the department to file separate returns."
T. (Reserved)
U. Section 12-35-40 of the 1976 Code, as added by Act 334 of 2002, is amended to read:
"Section 12-35-40. For the purposes of reviewing or amending, or both, the agreement embodying the simplification requirements as contained in Section 12-35-70 of this chapter, this State shall enter into multistate discussions. For purposes of the discussions, this State must be represented by four delegates. The four delegates are the director of the department or the director's designee, the Chairman of the House Ways and Means Committee or the chairman's designee, the Chairman of the Senate Finance Committee or the chairman's designee, and one delegate appointed by the Governor from the business community. Any decision concerning the agreement must be made by a majority of this state's delegation present at the meeting. Members of the delegation shall receive the mileage, subsistence, and per diem, lodging, airfare, and other business expenses authorized by law for members of state boards, committees, and commissions and must be paid from sales and use tax collections."
V. (Reserved)
W. 1. Section 12-36-1310(C) of the 1976 Code is amended to read:
"(C) When a taxpayer is liable for the use tax imposed by this section on tangible personal property purchased in another state, upon which a sales or use tax was due and paid in the other state, the amount of the sales or use tax due and paid in the other state is allowed as a credit against the use tax due this State, upon proof of payment of that the sales or use tax was due and paid in the other state. The provisions of this section do not apply if the state in which the property was purchased does not allow substantially similar tax credits for tangible personal property purchased in this State. If the amount of the sales or use tax paid in the other state is less than the amount of use tax imposed by this article, the user shall pay the difference to the department."
2. This SUBSECTION takes effect upon approval by the Governor and applies to the purchase of subject tangible personal property made on or after that date.
X. Section 12-53-40 of the 1976 Code is amended to read:
"Section 12-53-40. Notwithstanding any other another provision of law, there shall be is added as costs to each warrant or tax execution collected, served, or recorded by a duly authorized representative of the department an amount equivalent to five percent of the total of the warrant or tax execution or the sum of three dollars, whichever is the greater and, in addition, a sum equal to the fee provided in Section 8-21-310(20) the sum of five dollars. Such These costs, together with the costs of storage, advertising, and sale, shall must be deducted from proceeds of sale before any other payment of prior liens or claims are paid. Fee charged by clerks of court for the recording and satisfaction of warrants for distraint or tax executions issued by the department shall must be paid by the State Treasurer on proper warrant from the department from funds appropriated by the General Assembly."
Y. Chapter 54, Title 12 of the 1976 Code is amended by adding:
"Section 12-54-124. In the case of the transfer of a majority of the assets of a business, other than cash, whether through sale, gift, devise, inheritance, liquidation, distribution, merger, consolidation, corporate reorganization, lease or otherwise, any tax generated by the business which was due on or before the date of any part of the transfer constitutes a lien against the assets in the hands of a purchaser, or any other transferee, until the taxes are paid. Whether a majority of the assets have been transferred is determined by the fair market value of the assets transferred, and not by the number of assets transferred. The department may not issues a license to continue the business to the transferee until all taxes due the State have been settled and paid, and may revoke a license issued to the business in violation of this section.
This section does not apply if the purchaser receives a certificate of compliance from the department stating that all tax returns have been filed and all taxes generated by the business have been paid. The certificate of compliance is valid if it is obtained no more than thirty days before the sale or transfer."
Z. Section 12-54-25(D) of the 1976 Code is amended to read:
"(D) Except as preempted or superseded by federal law or inter-governmental compact such as the International Fuel Tax Agreement, the rate of interest on underpayments and overpayments is established by the department in the same manner and at the same time as the underpayment rate provided in Internal Revenue Code Sections 6621(a)(2) and 6622."
AA. Section 12-54-240(B)(5) of the 1976 Code is amended to read:
"(5) inspection of returns by officials of other jurisdictions in accordance with Section 12-7-1690 12-54-220;"
BB. Section 12-54-240(B) of the 1976 Code, as last amended by Act 356 of 2002, is further amended by adding at the end:
"(24) disclosure of information pursuant to a subpoena issued by a federal grand jury or the State Grand Jury of South Carolina."
CC. Article 1, Chapter 60 of Title 12 of the 1976 Code is amended to read:
Section 12-60-10. This chapter may be cited as the South Carolina Revenue Procedures Act.
Section 12-60-20. It is the intent of the General Assembly to provide the people of this State with a straightforward procedure to determine any a dispute with the Department of Revenue. The South Carolina Revenue Procedures Act must be interpreted and construed in accordance with, and in furtherance of, that intent.
Section 12-60-30. As used in this chapter and in Chapter 54 of this title except when the context clearly indicates a different meaning:
(1) 'Administrative Law Judge Division' means the Administrative Law Judge Division created by Section 1-23-500. The Administrative Law Judge Division holds all of the contested case hearings except for DMV matters.
(2) 'Assessment' means the department's recording the liability of the taxpayer in the office of the department, subject to the restrictions in Section 12-60-440.
(3) 'Classification' means the various categories of property subject to property tax to which specific property tax assessment ratios apply.
(4) 'Contested case hearing' has the same meaning as it has in Section 1-23-310. It is a hearing conducted pursuant to Article 3, Chapter 23 of Title 1, the South Carolina Administrative Procedures Act, and includes the hearings conducted by:
(a) the Administrative Law Judge Division to review county boards of assessment appeals decisions, county auditor decisions, decisions on claims for refund made by a majority of county auditor, county treasurer, and county assessor, and department determinations other than DMV matters;
(b) The DMV hearing officers to review department determinations regarding DMV matters.
(5) 'County assessor'' or 'assessor' means any a county officer or official who issues an official property tax assessment for real property.
(6) 'County auditor' or 'auditor' means any a county officer or official who issues an official property tax assessment for personal property.
(7) 'County board of assessment appeals' or 'county board' means the board of assessment appeals which considers appeals pursuant to Section 12-43-300 of property tax assessments issued by the property tax assessor for the county and which also hears appeals of refund claims of property as determined by the majority of the county assessor, county auditor, and county treasurer.
(8) 'Deficiency' means the amount by which a tax exceeds the amount shown on any a return or report filed by a taxpayer, if any, plus the amounts previously assessed (or collected without assessment) as a deficiency.
(9) 'Department' means the South Carolina Department of Revenue.
(10) 'Department determination' means the final determination within the department from which an individual can request a contested case hearing before the Administrative Law Judge Division, or the DMV hearing officers.
(11) 'Department representative' means the person appointed by the department to prepare the department's determination and represent the department at the contested case hearing.
(12) 'Director' means the director of the department.
(13) 'DMV hearing officers' means Department of Public Safety hearing officers 'Division decision' means a decision by a division of the department that affects the rights or obligations of a person for which no specific appeals rights are provided by this act. Division decision includes the refusal to expunge or satisfy a lien.
(14) 'DMV matters' means matters related to driver licenses, motor vehicle registrations, and motor vehicle titles.
(15)(14) 'Exhaustion of the taxpayer's administrative remedy' means that the taxpayer has:
(a) exhausted his prehearing remedy; and
(b) had a hearing held pursuant to the Administrative Procedures Act with the Administrative Law Judge Division, or the DMV hearing officers, as appropriate.
(16)(15) 'Exhaustion of the taxpayer's prehearing remedy' means that the taxpayer:
(a) filed a written protest as required by this chapter;
(b) attended the conference with the county board of assessment appeals for the purposes of Subarticle 9, Article 9 of this chapter, or met with the auditor for purposes of Subarticle 13, Article 9 of this chapter; and
(c) provided the facts, the law, and any other authority supporting the taxpayer's position to:
(i) the county board of assessment appeals at its conference for appeals made pursuant to Subarticle 9, Article 9 of this chapter;
(ii) the auditor in the taxpayer's protest or claim for refund for appeals made pursuant to Subarticle 13, Article 9 of this chapter; or
(iii) the department representative in the protest for regulatory violation matters, and within thirty days after filing the protest for other matters, or such the later date agreed to by the department representative. For the purpose of this section, regulatory violation matters are violations of a statute or regulation which controls the conduct of alcoholic beverage licensees, bingo licensees, or coin-operated device licensees. It includes violations which may result in the suspension or revocation of a license, but it does not include taxes or interest on taxes or monetary penalties in Chapter 54 of this title.
(16) 'Internal Revenue Code' means the Internal Revenue Code as provided in Section 12-6-40(A).
(17) 'Mathematical or clerical error' means:
(a) an error in addition, subtraction, multiplication, or division shown on a return;
(b) an incorrect use of any a table provided by the department for use with any a return, if the incorrect use is apparent from the existence of other information on the return;
(c) an omission of information which is required to be supplied on the return to substantiate an entry on the return; or
(d) an entry of a deduction or credit item in an amount which exceeds the statutory limit that is either:
(i) a specified monetary amount; or
(ii) a percentage, ratio, or fraction, if the items entering into the application of that limit appear on the return.
(18) 'Property tax' means all ad valorem taxes on real and personal property.
(19) 'Property tax assessment' means any a valuation or determination of property value for annual property tax purposes arrived at by multiplying the fair market value or special use value of the property by the appropriate assessment ratio for the taxable property's classification.
(20) 'Property tax assessment ratio' means the percentages established for the property classification by Section 12-43-220.
(21) 'Property tax assessor' means the county assessor, the county auditor, the department, or any a government official who issues a property tax assessment.
(22) 'Property taxpayer' means a person who is liable for, or whose property or interest in property, is subject to, or liable for, any a property tax imposed by this title.
(23) 'Proposed assessment' means the first written notice sent or given to the taxpayer stating that a division within the department has concluded that a tax is due. The term proposed assessment does not include the auditor's work papers, draft audit reports, or any a document specifically stating that it is not a proposed assessment.
(24) 'Protest' means a written appeal of a proposed assessment or a division decision made in accordance with this chapter.
(25) 'Special use value' means property valued pursuant to Section 12-43-220(d).
(26) 'State tax' means all taxes, licenses, permits, fees, or other amounts, including interest and penalties, imposed by this title, or assessed or collected by the department, including property subject to collection pursuant to Chapter 18 of Title 27, except property taxes.
(27) 'Tax' or 'taxes' means all taxes, licenses, permits, fees, or other amounts, including interest, regulatory and other penalties, and civil fines, imposed by this title, or subject to assessment or collection by the department, including property subject to collection pursuant to Chapter 18 of Title 27.
(28) 'Tax notice' or 'tax bill' means the demand for payment of property taxes.
(29) 'Taxpayer' means a person who is liable for a tax or who is responsible for collecting and remitting a tax. 'Taxpayer' includes any a licensee, and any an applicant for a license, issued by or administered by the department.
Section 12-60-40. (A) A taxpayer may waive his rights under this chapter, providing the waiver is in writing and is signed by the taxpayer or his representative. The department may extend any time limitations provided by this title and for any other taxes. The department and a taxpayer may agree to extend any time limitations or waive, including any requirements provided in Article 5 or Article 9 of this chapter.
(B) Time limitations provided under pursuant to this chapter and Chapter 54 are suspended during a stay ordered by the Taxpayers' Rights Advocate.
Section 12-60-50. (A) For purposes of this title and for any other taxes, when the last day of any a specified time period is a Saturday, Sunday, or a legal holiday, the end of the period is extended to the next business day. For this purpose, a legal holiday is any day the department or the offices of the United States Postal Service are closed and for Subarticles 9 and 13 of Article 9 any day the county office is closed.
(B) Except where payment of taxes is required to be made in funds which are immediately available to the State by electronic funds transfer or otherwise, the provisions of Internal Revenue Code Section 7502 relating to timely mailing as timely filing and paying are applicable to returns, other documents, or payment of taxes imposed by this title, or subject to assessment and collection by the department.
Section 12-60-60. No An action of a court, or an administrative law judge, or a hearing officer can cannot stay or prevent the department or any an officer of the State charged with a duty in the collection of taxes, from acting to collect a tax, whether or not the tax is legally due.
Section 12-60-70. No A writ of mandamus may must not be granted or issued from a court, or an administrative law judge, or hearing officer directing or compelling the reception of any funds not authorized to be received by law.
Section 12-60-80. (A) Except as provided in subsection (B), there is no remedy other than those provided in this chapter in any case involving the illegal or wrongful collection of taxes, or attempt to collect taxes.
(B) Notwithstanding subsection (A), an action for a declaratory judgment where the sole issue is whether a statute is constitutional may be brought in circuit court. This exception does not include a claim that the statute is unconstitutional as applied to a person or a limited class or classes of persons.
(C) Notwithstanding subsections (A) and (B) ,a claim or action for the refund of taxes may not be brought as a class action in the Administrative Law Judge Division or any court of law in this State, and the department, political subdivisions or their instrumentalities may not be named or made a defendant in any other class action brought in this State.
Section 12-60-90. (A) For the purposes of this section, the administrative tax process includes all matters connected with presentation to any a state or local tax authority, or any of their officials or employees, relating to a client's rights, privileges, or liabilities under pursuant to laws, regulations, or rules administered by state or local tax authorities. These presentations include the preparation and filing of necessary documents, correspondence with, and communications to, state and local tax authorities, and the representation of a client at conferences and meetings, including conferences with the county boards of assessment appeals. It does not include contested case hearings held by the Administrative Law Judge Division, DMV hearing officers, or the courts.
(B) State and local government tax officials, and state and local government employees, may represent their offices, agencies, or both, during the administrative tax process.
(C) Taxpayers may be represented during the administrative tax process by:
(1) the same individuals who may represent them in administrative tax proceedings with the Internal Revenue Service pursuant to Section 10.3(a), (b), and (c), Section 10.7(a), (c)(1)(i) through (c)(1)(vi), and (c)(2)(viii), and Section 10.7(d) and (e) of United States Treasury Department Circular No. 230; and
(2) a real estate appraiser who is registered, licensed, or certified pursuant to Chapter 60 of Title 40 during the administrative tax process in a matter limited to questions concerning the valuation of real property.
(D) The department may suspend or disbar from practice in the administrative tax process, any person authorized by these rules to represent taxpayers, if the person is shown to be incompetent, disreputable, or fails or refuses to comply with the rules in subsection (E), or in any manner, with intent to defraud, wilfully and knowingly deceives, misleads, or threatens any claimant or prospective claimant, by word, circular, letter, or by advertisement. For the purposes of this section, incompetence and disreputable conduct is defined in Section 10.51 of United States Treasury Department Circular No. 230. The department may review a petition for reinstatement as provided in Section 10.81.
(E) Representatives of taxpayers must comply with the duties and restrictions contained in Sections 10.20 through 10.24 and 10.27 through 10.33 10.34 of United States Treasury Department Circular No. 230.
(F) For purposes of this section the terms in United States Treasury Department Circular No. 230 must be given the meanings necessary to effectuate this section. For example, unless a different meaning is required:
(1) references to United States Treasury Department Circular No. 230 mean the United States Treasury Department Circular No. 230 as revised through the date provided for in the definition of the Internal Revenue Code in Section 12-6-40(A).;
(2) references in United States Treasury Department Circular No. 230 to:
(a) the United States or federal are deemed to include references to this State, any of its political subdivisions, or any two or more of them;
(b) the Internal Revenue Service, the Department of Treasury, Examination Division, or District Director are deemed to include references to any state or local tax authority; and
(c) the Director of Practice is deemed to mean the director or his designee.
(3) references to tax return mean appropriate return, including property tax returns filed with the department;
(4) references to federal tax obligations mean all South Carolina taxes, including property taxes and property tax assessments, where administered by the department."
DD. Article 5, Chapter 60 of Title 12 is amended to read:
Section 12-60-410. The department shall assess all state taxes, including interest, additions to taxes, and penalties. An assessment is made by an employee of the department recording the liability of the taxpayer in the office of the department in accordance with rules or the procedures prescribed by of the department. Upon request of the taxpayer, the department shall furnish a copy of the assessment. The department may, at any time within the time period for assessment, make a supplemental assessment when it is determined that an assessment is imperfect or incomplete. Except in the case of fraud, an order abating a jeopardy assessment, or additional assessments resulting from adjustments made by the Internal Revenue Service, the department may not assess taxes imposed by the same article, or chapter if the chapter has no article, for any a tax period for which a final order has been issued by the Administrative Law Judge Division or a court determining the taxpayer's liability for that tax period.
Section 12-60-420. (A) If a division of the department makes a division decision or determines there is a deficiency in any a state tax, it may send by first class mail or deliver a the division decision or the proposed assessment to the taxpayer. The division decision or the proposed assessment must explain the basis for the division decision or the proposed assessment and state that an assessment will be made unless the taxpayer protests the division decision or the proposed assessment as provided in Section 12-60-450.
(B) The division decision or proposed assessment will become final and, if applicable, an assessment will be made for the amount of a proposed assessment. The department shall make available forms which taxpayers may use to protest the division decision or the proposed assessments. The division decision or the proposed assessment is effective if mailed to the taxpayer's last known address even if the taxpayer refuses or fails to take delivery, is deceased, or is under a legal disability, or, if a corporation, has terminated its existence. For a joint tax return or liability, one division decision or the proposed assessment may be mailed to both taxpayers unless the department has notice that the taxpayers have separate addresses in which event a duplicate original of the joint division decision or the proposed assessment must be sent to each taxpayer at his last known address.
Section 12-60-430. If a taxpayer fails or refuses to make any a report or to file a return required by the provisions of this title or required to be filed with the department, the department may make an estimate of the tax liability from the best information available, and issue a proposed assessment for the taxes, including any penalties and interest.
Section 12-60-440. (A) The department may not assess a deficiency until thirty ninety days after sending the proposed assessment as provided in Section 12-60-420, or, if the taxpayer files a timely written protest with the department, until the taxpayer's appeal is finally decided. For purposes of this section, the final decision of an appeal includes the decision of the Administrative Law Judge Division, DMV hearing officers, or court, if the matter was heard by the Administrative Law Judge Division or DMV hearing officers, or appealed to a court as provided in this article. This restriction on assessments does not apply to:
(1) mathematical or clerical errors;
(2) interest imposed by this title or subject to assessment or collection by the department;
(3) penalties for failure to file or failure to pay, or penalties that are determined as a percentage of interest;
(4) amounts reported on a return or other document, or paid as tax; or
(5) assessments as provided in Section 12-60-910.
(B) If a proposed assessment was not issued, the taxpayer may request an abatement of any an assessment due to a mathematical or clerical error, or for a penalty described in item (3), within thirty days of the date of the assessment. Upon receipt of the request for abatement the department shall abate the assessment. Any A further assessment of the tax with respect to which an abatement is made under this paragraph is subject to the proposed assessment procedures described in this chapter. No A levy or collection proceeding may not begin for a mathematical or clerical error during the thirty-day period during which a taxpayer may request an abatement.
Section 12-60-450. (A) A taxpayer can appeal a division decision or a proposed assessment by filing a written protest with the department within thirty ninety days of the date of the division decision or the proposed assessment. The department may extend the time for filing a protest at any time before the period has expired.
(B) The written protest must contain:
(1) the name, address, and telephone number of the taxpayer;
(2) the appropriate taxpayer identification number or numbers;
(3) if relevant, the tax period or date for which the tax was proposed;
(4) if relevant, the nature and kind of tax in dispute;
(5) a statement of facts supporting the taxpayer's position;
(6) a statement outlining the reasons for the appeal, including any law or other authority upon which the taxpayer relies; and
(7) any other relevant information the department may reasonably prescribe. The taxpayer does not need to provide legal or other authority, as provided in item (6), if the total amount of the proposed assessment is less than two thousand five hundred dollars, unless the taxpayer is a partnership, an 'S' corporation, an exempt organization, or an employee plan and the proposed tax is imposed by Chapter 7 6, 11, or 13 of this title.
(C) The filing of an appeal of the a proposed assessment as provided in subsection (A) extends the time for assessment as provided in Section 12-54-85(G).
(D)(1) After the protest is filed and the taxpayer has completed or refused any other internal administrative appeals procedures provided by the department, the taxpayer and department representative shall stipulate the facts and issues upon which they can agree, and may attempt to settle the case.
(2) If the taxpayer fails to respond or participate in the this process with the department representative, the department may view the appeal as abandoned and make a department determination using any information provided in accordance with Section 12-60-30(16)(15)(c)(iii).
(E)(1) The department will make a department determination using the information provided by the taxpayer in accordance with Section 12-60-30(16)(15)(c)(iii).
(2) A department determination adverse to the taxpayer must be in writing and must:
(a) be sent by first class mail or delivered to the taxpayer;
(b) explain the basis for the department's determination;
(c) inform the taxpayer of his right to request a contested case hearing; and
(d) if a proposed assessment was protested, explain that the taxes will be assessed in thirty days and payment demanded unless the taxpayer requests a contested case hearing.
(3) The department must issue the determination on a proposed assessment not later than nine months after the date the written protest or claim was filed with the department by the taxpayer. Upon failure of the department to timely issue the determination, the taxpayer may request a contested case hearing before the Administrative Law Judge Division for a determination of the tax controversy.
Section 12-60-460. Upon exhaustion of his prehearing remedy, a taxpayer may seek relief from the department's determination by requesting a contested case hearing before the Administrative Law Judge Division or the DMV hearing officers, as appropriate. This request must be made within thirty days after the date the department's determination was sent by first class mail or delivered to the taxpayer. Requests for a hearing before the Administrative Law Judge Division must be made in accordance with its rules. Requests for a hearing before the DMV hearing officers must be made to the department representative.
Section 12-60-470. (A) A taxpayer may seek a refund of any a state tax by filing a written claim for refund with the department. A claim for refund is timely filed if filed within the period specified in Section 12-54-85 even though the time for filing a protest under Section 12-60-450 has expired and no protest was filed.
(B) The refund claim must specify:
(1) the name, address, and telephone number of the taxpayer;
(2) the appropriate taxpayer identification number or numbers;
(3) the tax period or date for which the tax was paid;
(4) the nature and kind of tax paid;
(5) the amount which the taxpayer claims was erroneously paid;
(6) a statement of facts supporting the taxpayer's position;
(7) a statement outlining the reasons for the claim, including any law or other authority upon which the taxpayer relies; and
(8) any other relevant information that the department may reasonably require.
The department will make forms available which taxpayers may use to file a claim for refund.
(C) Only the taxpayer legally liable for the tax may file a claim for refund or receive a refund, except that after the application of Section 12-60-490 against the person claiming or receiving the refund:
(1) the assignment of a refund may be made, but only after the department has authorized the refund and issued an order for the refund to the State Treasurer's office; or
(2) a person who acts as a collector and remitter of state taxes may claim a credit or refund of the tax collected, but only if the person establishes that he has paid the tax in question to the State, and;
(a) repaid the tax to the person from whom he collected it; or
(b) obtained the written consent of the person from whom he collected the tax to the allowance of the credit or refund.;
(2) a purchaser who has paid sales tax to a retailer for a specific transaction may claim a refund if the retailer who paid the sales tax to the State has assigned, in writing, the right to a refund of that sales tax to the purchaser;
(3) except as allowed in items (1) and (2) above, the taxpayer legally liable for the tax may only assign a refund to another person after the taxpayer's claim is allowed, the amount of the refund is finally decided, and the department has approved the refund.
(D) The appropriate division of the department shall decide what refund is due, if any, and give the taxpayer written notice of its decision as soon as practicable after a claim has been filed.
(E) A taxpayer may appeal the division's decision by filing a written protest with the department following the procedures provided in Section 12-60-450. For purposes of complying with the provisions of Section 12-60-450, the written denial of any part of a claim for refund is the equivalent of a proposed assessment.
(F) Upon exhaustion of his prehearing remedy, a taxpayer may seek relief from the department's determination by requesting a contested case hearing before the Administrative Law Judge Division or the DMV hearing officers, as appropriate. This request must be made within thirty days after the date the department's determination was sent by first class mail or delivered to the taxpayer. Requests for a hearing before the Administrative Law Judge Division must be made in accordance with its rules. Requests for a hearing before the DMV hearing officers must be made to the department representative.
(G) Even if a taxpayer has not filed a claim for refund, if the department determines that money has been erroneously or illegally collected from a taxpayer or other person, the department, in its discretion, may, upon making a record in writing of its reasons, grant a refund to the taxpayer or other person.
(H) A claim for refund can be amended prior to before, but not after, the expiration of the time for filing the claim for refund under Section 12-54-85(F). The claim as amended must be treated as if it were first filed when the amendment was filed, and the procedures and time periods provided by this section must begin again.
(I) A taxpayer who requests a contested case hearing as provided in Section 12-60-460 is considered to have elected his remedy and is denied the benefits of this section.
Section 12-60-480. When a taxpayer prevails on the merits in a lawsuit seeking a refund or abatement of a license fee or any a tax based upon an allegation that the tax or fee has been imposed wrongfully as a matter of law, the department shall issue a refund to all similarly situated taxpayers who properly applied for a refund pursuant to the requirements of this chapter. A taxpayer is considered to have prevailed on the merits in a lawsuit only when a tax or license fee is refunded or abated as a result of a finding of law by a court of competent jurisdiction, and after the exhaustion of, or expiration of, the time for making all relevant appeals. A taxpayer must not be considered similarly situated if the taxpayer did not file a claim for refund within the period provided in Section 12-54-85.
Section 12-60-490. If a taxpayer is due a refund, the refund must be applied first against any an amount of that same tax that is assessed and is currently due from the taxpayer. The remaining refund, if any, must then be applied against any other state taxes that have been assessed against the taxpayer and that are currently due, or offset as provided in Article 3, Chapter 54 of this title. If any excess remains, the taxpayer must be refunded the amount plus interest as determined in Section 12-54-25, or, at the taxpayer's request, it may be credited to future tax liabilities.
Section 12-60-500. If it is determined that a refund is due of any a tax paid to, or collected by the State, the department shall issue its order to the State Treasurer to refund the taxes. Refunds must be paid in preference to other claims against the state treasury. If the State Treasurer does not have in his custody or possession enough funds to pay a refund of taxes, he shall request that the General Assembly appropriate the refund.
Section 12-60-510. (A) Before a taxpayer may seek a determination of a tax liability by an Administrative Law Judge or DMV hearing officer under Section 12-60-460 or 12-60-470 a contested case hearing before the Administrative Law Judge Division, he shall exhaust the prehearing remedy. If a taxpayer requests a contested case hearing before the Administrative Law Judge Division or DMV hearing officers without exhausting his prehearing remedy because he failed to file a protest, the Administrative Law Judge or DMV hearing officer shall dismiss the action without prejudice. If the taxpayer failed to provide the department with the facts, law, and other authority supporting his position, he shall provide the department with the facts, law, and other authority he failed to present to the department earlier. The administrative law judge or DMV hearing officer shall then remand the case to the department for reconsideration in light of the new facts or issues unless the department elects to forego the remand.
(B) Upon remand the department has thirty days, or a longer period ordered by the administrative law judge or DMV hearing officer, to consider the new facts and issues and amend its department determination. The department shall issue its amended department determination in the same manner as the original. The taxpayer has thirty days after the date the department's amended determination was sent by first class mail or delivered to the taxpayer to again request a contested case hearing. Requests for a hearing before the Administrative Law Judge Division must be made in accordance with its rules. Requests for a hearing before the DMV hearing officers must be made to the department representative. If the department fails to issue its amended department determination within thirty days of the date of the remand, or a longer period ordered by the administrative law judge or DMV hearing officer, the taxpayer can again request a contested case hearing. At the new hearing the facts, law, and other authority presented at the original hearing must be deemed to have been presented in a timely manner for purposes of exhausting the taxpayer's prehearing remedy. The statute of limitations remains suspended by Section 12-54-85(G) during this process.
Section 12-60-520. A taxpayer who requests a contested case hearing may elect to designate the action as a small claims case if no more than ten thousand dollars of taxes, including penalties, but not including interest, are in controversy at the time of filing the request for a contested case hearing. The designation must be made at the time the request for a contested case hearing is made and be included in the request. The decision of the administrative law judge or DMV hearing officer in an action designated as a small claims case is final and conclusive and may not be reviewed by any a court. A case decided under pursuant to this section may not be cited by either the department or any a taxpayer in any a future action and establishes no precedent except for the taxpayer involved and the tax period or periods in controversy. This section does not apply to actions that raise constitutional issues.
Section 12-60-910. (A) If the department finds that the assessment or the collection of a tax or a deficiency for any a tax period is jeopardized in whole or in part by delay, the department may terminate the taxpayer's current tax period and immediately assess the tax for the current period and prior periods not barred by the statute of limitations including all interest, penalties, and other amounts provided by law. Any An action by the department made under pursuant to this subsection is a 'jeopardy assessment'.
(B) If a jeopardy assessment is made under pursuant to subsection (A), notice of the jeopardy assessment must be provided to the taxpayer by any one of the following means:
(1) personal delivery of the assessment to the taxpayer;
(2) mailing a copy of the assessment to the last known address of the taxpayer by first class mail; or
(3) any other means reasonably designed to provide notice to the taxpayer.
(C) A jeopardy assessment is immediately due and payable, and proceedings for collection may begin as soon as the jeopardy assessment is made.
(D) A taxpayer may obtain a stay of the collection for all or part of the jeopardy assessment by:
(1) posting a bond with the department equal to the amount of the assessment that will be stayed, including interest to the date of payment; or
(2) providing security in any an amount the department considers necessary to secure all or part of the amount of the jeopardy assessment. The security required by the department cannot exceed twice the assessed amount for which the taxpayer seeks a stay.
(E) The department may stay collection at any time it finds that an assessment or the collection of a tax in whole or in part is no longer in jeopardy.
(F) The taxpayer may at any time waive any part or all of the stay of collection.
(G) Where collection of any part or all of the jeopardy assessment is stayed under this section, the period of limitation on any action to collect the assessment is tolled during the time of the stay.
(H) The bond or security must be reduced if:
(1) the taxpayer pays any part of the tax covered by the bond or security and the taxpayer requests the reduction. The reduction must be proportionate to the amount paid.;
(2) the department abates any a portion of the jeopardy assessment. The reduction in the bond or security must be proportionate to the amount abated.
Section 12-60-920. (A) Within five days after the day on which a jeopardy assessment is made, the department shall provide the taxpayer with a written statement of the information the department relied on in making the assessment.
(B) Within thirty days after the day on which the taxpayer is furnished the written statement described in subsection (A), or within thirty days after the last day of the period within which the statement is required to be furnished, the taxpayer may request a contested case hearing before the Administrative Law Judge Division by filing a request with the department. Requests for a hearing before the Administrative Law Judge Division must be made in accordance with its rules. The only issue for determination under this subsection is whether the jeopardy assessment is reasonable and appropriate.
(C) Within ten days after an action is commenced under subsection (B), the department a request for a contested case hearing is received by the department, it shall file its response with the Administrative Law Judge Division. Within twenty days after the department's response a request for a contested case hearing is received by the department, or as soon thereafter as practicable, an administrative law judge shall hold the contested case hearing and determine whether or not the making of the jeopardy assessment is reasonable under the circumstances, and whether the amount so assessed or demanded as a result of the action taken under Section 12-60-910 is appropriate under the circumstances. The running of the ten-day and twenty-day periods begins on the day on which service is made on the department.
(D) If the administrative law judge determines that the making of the jeopardy assessment is unreasonable or that the amount assessed or demanded is inappropriate, he may order the department to abate the assessment, to redetermine, in whole or in part, the amount assessed or demanded, or to take other action as the judge finds appropriate.
(E) The decision made by the administrative law judge under this section subsection (D) is final and conclusive and may not be reviewed by any a court.
(F)(1) In an action under subsection (B) involving the issue of whether the making of an assessment under Section 12-60-910 is reasonable under the circumstances, the burden of proof in respect to the issue is on the department.
(2) In an action under subsection (B) involving the issue of whether an amount assessed or demanded as a result of action taken under Section 12-60-910 is appropriate under the circumstances, the department shall provide a written statement containing any information on which its determination of the amount assessed was based, but the burden of proof in respect to the issue is on the taxpayer.
(1) In a contested case hearing pursuant to subsection (C), the department has the burden of proof showing the making of the jeopardy assessment was reasonable under the circumstances.
(2) In a contested case hearing pursuant to subsection (C), the taxpayer has the burden of proof of showing the tax assessed as a result of the action taken pursuant to Section 12-60-910 is not appropriate.
(G)(1) If the administrative law judge determines that the collection of the tax assessed is in jeopardy, the administrative law judge shall remand the case to the department to issue a department determination for the period or period in issue within the time period determined by the judge. This department determination is not limited by the administrative law judge's finding of the appropriate amount to collect as a jeopardy assessment. The taxpayer may appeal this department determination in accordance with Section 12-60-460. At the contested case hearing on this department determination, the parties can raise issues and arguments previously presented at the jeopardy hearing;
(2) if the administrative law judge determines that the collection of the tax assessed is not in jeopardy, the department may issue a department determination in accordance with Section 12-60-450(E).
Section 12-60-1310. (A) If a division of the department denies a person any a license that the department administers, or sends by first class mail or delivers a notice to the license holder that the division of the department shall suspend, cancel, or revoke a license administered by the department, then the person can appeal the division decision by filing a written protest with the department within thirty ninety days of the denial, or proposed suspension, cancellation, or revocation. The department may extend the time for filing a protest at any time before the period has expired.
(B) The written protest must contain:
(1) the name, address, and telephone number of the person;
(2) the appropriate taxpayer, driver, or vehicle identification number or numbers, if any;
(3) the kind of license in dispute;
(4) a statement of facts supporting the person's position;
(5) a statement outlining the reasons for the appeal, including any law or other authority upon which the person relies; and
(6) any other relevant information the department may reasonably prescribe.
(C) After the protest is filed and the person has completed or refused any other internal administrative appeals procedures provided by the department, the person and the department representative shall stipulate the facts and issues upon which they can agree, and may attempt to settle the case. If the person fails to respond or participate in the process with the department representative, the department may view the appeal as abandoned and make a department determination using any information provided in accordance with Section 12-60-30(16)(15)(c)(iii).
(D)(1) The department shall make a department determination using the information provided by the person in accordance with Section 12-60-30(16)(15)(c)(iii).
(2) A determination of the department adverse to the person must be in writing and must:
(a) be sent by first class mail or delivered to the person;
(b) explain the basis for the department's determination;
(c) inform the person of his right to request a contested case hearing; and
(d) explain that the license must not be issued, or the license must be suspended or revoked in thirty days unless the person requests a contested case hearing.
Section 12-60-1320. Upon exhaustion of his prehearing remedy, a person may seek relief from the department's determination by requesting a contested case hearing before the Administrative Law Judge Division or the DMV hearing officers, as appropriate. This request must be made within thirty days after the date the department's determination was sent by first class mail or delivered to the person. Requests for a hearing before the Administrative Law Judge Division must be made in accordance with its rules. Requests for a hearing before the DMV hearing officers must be made to the department representative.
Section 12-60-1330. Before a person may seek a determination by an administrative law judge or DMV hearing officer under Section 12-60-1320, he shall exhaust his prehearing remedy. If a person requests a contested case hearing before the Administrative Law Judge Division or DMV hearing officers without exhausting his prehearing remedy because he failed to file a protest, the administrative law judge or DMV hearing officer shall dismiss the action without prejudice. If the person failed to provide the department with the facts, law, and other authority supporting his position, he shall provide the department with the facts, law, and other authority he failed to present to the department earlier. The administrative law judge or DMV hearing officer shall then remand the case to the department for reconsideration in light of the new facts or issues unless the department elects to forego the remand. Upon remand the department has thirty days, or a longer period ordered by the administrative law judge or DMV hearing officer, to consider the new facts and issues and amend its department determination. The department shall issue its amended department determination in the same manner as the original. The person has thirty days after the date the department's amended determination was sent by first class mail or delivered to the person to again request a contested case hearing. Requests for a hearing before the Administrative Law Judge Division must be made in accordance with its rules. Requests for a hearing before the DMV hearing officers must be made to the department representative. If the department fails to issue its amended department determination within thirty days of the date of the remand, or a longer period ordered by the administrative law judge or DMV hearing officer, the person can again request a contested case hearing. At the new hearing the facts, law, and other authority presented at the original hearing must be deemed to have been presented in a timely manner for purposes of exhausting the person's prehearing remedy. The statute of limitations remains suspended by Section 12-54-85(G) during this process.
Section 12-60-1340. Anything else in this chapter notwithstanding, if the department determines that public health, safety, or welfare requires emergency action, it shall seek an emergency revocation order from the Administrative Law Judge Division, or the DMV hearing officers, as appropriate, pursuant to Section 1-23-370(c).
Section 12-60-1350. No provision Provisions in this chapter applies do not apply to, or has any have an effect on, any a license suspended or revoked (1) by the Department of Public Safety, (2) by judicial decision or order, (3)(2) where a statute requires the department or the Department of Public Safety to suspend or revoke a license, or (4)(3) by other operation of law."
EE. Section 12-60-2110 of the 1976 Code is amended to read:
"Section 12-60-2110. In the case of property tax assessments made by a division of the department, protests must be filed within thirty ninety days after the date of the property tax assessment notice. If the division does not send a taxpayer a property tax assessment notice, a protest must be filed within thirty ninety days after the tax notice is mailed to the taxpayer. If a division of the department denies a property tax exemption, a protest must be filed within thirty ninety days after the date the notice of denial is mailed to the taxpayer."
FF. Section 12-60-2510(A)(2) of the 1976 Code is amended to read:
"(2) The notice must be served upon the taxpayer personally or by mailing it to the taxpayer at his last known place of residence which may be determined from the most recent listing in the applicable telephone directory, the department's Department of Public Safety's motor vehicle registration list, county treasurer's records, or official notice from the property taxpayer. "
GG.1. Section 12-6-3535 of the 1976 Code, as added by Act 299 of 2002, is amended to read:
"Section 12-6-3535. (A) A taxpayer who is allowed a federal income tax credit under Section 47 of the Internal Revenue Code for making qualified rehabilitation expenditures for a certified historic structure located in this State is allowed to claim a credit against the tax imposed by this chapter. For the purposes of this section, 'taxpayer', 'qualified rehabilitation expenditures', and " certified historic structure" are defined as provided in the Internal Revenue Code Section 47 and the applicable treasury regulations. The amount of the credit is ten percent of the expenditures that qualify for the federal credit. To claim the credit allowed by this subsection, the taxpayer must attach to the return a copy of the section of the federal income tax return showing the credit claimed, along with any other information that the Department of Revenue determines is necessary for the calculation of the credit provided by this subsection.
(B) A taxpayer who is not eligible for a federal income tax credit under Section 47 of the Internal Revenue Code and who makes rehabilitation expenses for a certified historic residential structure located in this State is allowed to claim a credit against the tax imposed by this chapter. The amount of the credit is twenty-five percent of the rehabilitation expenses. To claim the credit allowed by this subsection, the taxpayer must attach to the return a copy of the certification obtained from the State Historic Preservation Officer verifying that the historic structure has been rehabilitated in accordance with this subsection, along with all information that the Department of Revenue determines is necessary for the calculation of the credit provided by this subsection.
For the purposes of this subsection subsections (B) through (F):
(1) 'Certified historic residential structure' means a structure or portion of a structure that is an owner-occupied personal residence if the residence is not actively used in a trade or business, held for the production of income, or held for sale or disposition in the ordinary course of the taxpayer's trade or business; and that is:
(a) listed individually in the National Register of Historic Places;
(b) considered by the State Historic Preservation Officer to contribute to the historic significance of a National Register Historic District;
(c) considered by the State Historic Preservation Officer to meet the criteria for individual listing in the National Register of Historic Places; or
(d) an outbuilding of an otherwise eligible property considered by the State Historic Preservation Officer to contribute to the historic significance of the property.
(2) 'Certified rehabilitation' means repairs or alterations consistent with the Secretary of the Interior's Standards for Rehabilitation and certified as such by the State Historic Preservation Officer before commencement of the work. The review by the State Historic Preservation Officer shall include all repairs, alterations, rehabilitation, and new construction on the certified historic residential structure and the property on which it is located. To qualify for the credit, the taxpayer shall receive documentation from the State Historic Preservation Officer verifying that the completed project was rehabilitated in accordance with the standards for rehabilitation. The rehabilitation expenses must, within a thirty-six-month period, exceed fifteen thousand dollars. A taxpayer shall not take more than one credit on the same certified historic residential structure within ten years.
(3) 'Rehabilitation expenses' means expenses incurred by the taxpayer in the certified rehabilitation of a certified historic residential structure, that are paid before the credit is claimed including preservation and rehabilitation work done to the exterior of a certified historic residential structure, repair and stabilization of historic structural systems, restoration of historic plaster, energy efficiency measures except insulation in frame walls, repairs or rehabilitation of heating, air-conditioning, or ventilating systems, repairs or rehabilitation of electrical or plumbing systems exclusive of new electrical appliances and electrical or plumbing fixtures, and architectural and engineering fees.
'Rehabilitation expenses' do not include the cost of acquiring or marketing the property, the cost of new construction beyond the volume of the existing building certified historic residential structure, the value of an owner's personal labor, or the cost of personal property.
(4) 'State Historic Preservation Officer' means the Director of the Department of Archives and History or the director's designee who administers the historic preservation programs within the State.
(5) 'Owner-occupied residence' means a building or portion of a building in which the taxpayer has an ownership interest, in whole or in part in fee, by life estate, or as the income beneficiary of a property trust, that is, after being placed in service, the residence of the taxpayer and is not:
(a) actively used in a trade or business;
(b) held for the production of income; or
(c) held for sales or disposition in the ordinary course of the taxpayer's trade or business.
(C)(1) The entire credit may not be taken for the taxable year in which the property is placed in service, but must be taken in equal installments over a five-year period beginning with the year in which the property is placed in service. For a certified rehabilitation of a certified historic residential structure "placed 'Placed in service"' is defined as the taxable year means the certified rehabilitation is completed and allows for the intended use. Any unused portion of any credit installment may be carried forward for the succeeding five years.
(2) For purposes of subsection (A), A an 'S' corporation, limited liability company, or partnership that qualifies for a credit under this section subsection may pass through the credit earned to each shareholder of the 'S' corporation, member of the limited liability company, or partner of the partnership. For purposes of this subsection, limited liability company means a limited liability company taxed as a partnership. The amount of the credit allowed a shareholder, member, or partner by this subsection is equal to the shareholder's percentage of stock ownership, member's interest in the limited liability company, or the partner's interest in the partnership for the taxable year multiplied by the amount of the credit earned by the entity. The credit earned pursuant to this section by a an 'S' corporation owing corporate level income tax must be used first at the entity level. Only the remaining credit passes through to each shareholder.
(D) Additional work done by the taxpayer while the credit is being claimed, for a period of up to five years, must be consistent with the Secretary of the Interior's Standards for Rehabilitation. During this period the State Historic Preservation Officer may review additional work to the certified historic structure or certified historic residential structure and has the right to inspect certified historic structures and certified historic residential structures. If additional work is not consistent with the Standards for Rehabilitation, the taxpayer and Department of Revenue must be notified in writing and any unused portion of the credit, including carry forward, is forfeited.
(E) The South Carolina Department of Archives and History shall develop an application and may promulgate regulations, including the establishment of fees, needed to administer the certification process. The Department of Revenue may promulgate regulations, including the establishment of fees, to administer the tax credit.
(F) A taxpayer may appeal a decision of the State Historic Preservation Officer to a committee of the State Review Board appointed by the chairperson."
2. This SUBSECTION takes effect upon approval by the Governor and is effective for taxable years beginning after 2002 for property placed in service after June 30, 2003, for costs paid in taxable years beginning after 2002.
HH. Article 13, Chapter 60 of Title 12 of the 1976 Code is amended to read:
Section 12-60-3310. A party permitted to request a contested case hearing with the Administrative Law Judge Division shall make his request and serve it on opposing parties in accordance with rules established by the Administrative Law Judge Division. A party requesting a contested case hearing before the DMV hearing officers, within the time set forth in this chapter, shall make the request in writing to the department representative.
Section 12-60-3320. In order to increase the efficiency and reduce the costs of contested cases, all parties to a contested case hearing, in good faith, shall do their best to stipulate the facts and issues upon which they can agree.
Section 12-60-3330. In view of the desirability of consistent property tax treatment throughout the State and of the department's oversight of county property tax matters, the Administrative Law Judge can request the participation of the department in any a case before it which arose from a property tax assessed by a county assessor or county auditor, and the department may intervene at the Administrative Law Judge level in any a case which arose from a property tax assessed by a county assessor or county auditor.
Section 12-60-3340. Contested case hearings must be without a jury and, except as otherwise provided by this chapter, must be held in accordance with Chapter 23 of Title 1. Contested case hearings held by and the rules of the Administrative Law Judge Division must be heard in accordance with its rules.
Section 12-60-3350. In any an action covered by this chapter, no costs or disbursements may be charged or allowed to either party, except for the service of process and the attendance of witnesses.
Section 12-60-3360. The DMV hearing officers shall make available to the public copies of decisions made by them in actions covered by this chapter edited to delete medical or other confidential information. The Administrative Law Judge Division shall make its decisions available to the public in accordance with Section 1-23-600.
Section 12-60-3370. Except as otherwise provided, a taxpayer shall pay, or post a bond for, all taxes, not including penalties or civil fines, determined to be due by the administrative law judge before appealing the decision to the circuit court. For property tax cases covered by Section 12-60-2140 or 12-60-2550, the taxpayer need pay only the amount assessed pursuant to the appropriate section.
Section 12-60-3380. Except as otherwise provided in this chapter, a party may appeal a decision of the Administrative Law Judge Division or the DMV hearing officers to the circuit court in Richland County except that a resident of this State may elect to bring the action in the circuit court for the county of his residence. Appeals Appeal of a decision of the Administrative Law Judge Division decisions must be made in accordance with Section 1-23-610(B). Appeals of DMV hearing officers must be made by filing a petition with the circuit court and serving the petition on the opposing parties not more than thirty days after the party received the decision and order of the judge or hearing officer.
Section 12-60-3390. If a taxpayer brings an action covered by this chapter in circuit court, other than an appeal of an Administrative Law Judge decision or DMV hearing officer decision, the circuit court shall dismiss the case without prejudice."
II. Section 30-2-30(1) of the 1976 Code, as added by Act 225 of 2002, is amended to read:
"(1) 'Personal information' means information that identifies or describes an individual including, but not limited to, an individual's photograph or digitized image, social security number, date of birth, driver's identification number, name, home address, home telephone number, medical or disability information, education level, financial status, bank account(s) number(s), account or identification number issued by and/or used, or both, by any federal or state governmental agency or private financial institution, employment history, height, weight, race, other physical details, signature, biometric identifiers, and any credit records or reports.
'Personal information' does not mean information about boating accidents, vehicular accidents, driving violations, boating violations, or driver status, or names and addresses from any registration documents filed with the Department of Revenue as a business address which also may be a personal address."
JJ. Notwithstanding any other provision of law, the amendment to Section 12-37-220(B)(11) of the 1976 Code, made pursuant to Section 7I, Act 334 of 2002, is effective for property tax years beginning after 2001.
KK. 1. Section 12-4-580 of the 1976 Code, as last amended by Act 363 of 2002, is further amended to read:
"Section 12-4-580. (A) The department and any other another governmental entity may contract to allow the department to collect any an outstanding liabilities liability owed the governmental entity. In administering the provisions of such those agreements, the department has all the rights and powers of collection allowed it under provided pursuant to this title for the collection of taxes and all such the rights and powers authorized the governmental entity to which the liability is owed.
(B) The department may charge and retain a reasonable fee for any a collection effort made on behalf of a governmental entity's entity behalf. The department may expend the funds resulting from any fees so charged and retained and may carry the funds forward from one fiscal year to the next. The amount of the fee must be negotiated between the governmental entity and the department. The debtor must be given full credit toward the satisfaction of the debt for the amount of the fee collected by the department pursuant to this section.
(C) Governmental entities that contract with the department pursuant to this section and those entities whose debts are submitted for collection through an association shall indemnify the department against any injuries, actions, liabilities, or proceedings arising from the department's collecting or attempting to collect collection or attempted collection by the department of the liability owed to the governmental entity.
(D) As used in this section:
(1) 'governmental entity' means the State and any a state agency, board, committee, department, department, or public institution of higher learning; all political subdivisions of the State; and all federal agencies, boards, and departments commissions; and a federal, state, county, or local governmental or quasi-governmental entity. 'Political subdivision' includes the Municipal Association of South Carolina and the South Carolina Association of Counties when these organizations submit claims on behalf of their members a county or local governmental or quasi-governmental entity.
(2) 'liabilities owed the governmental entity' means a debt which is certified by the governmental entity to be owed it for which all rights of administrative or judicial appeal have been exhausted or all time limits for these appeals have expired has the same meaning as a 'delinquent debt' as defined in Section 12-56-20(4).
(E) The governmental entity shall notify the debtor of its intention to submit the liability to the department for collection and of the debtor's right to protest not less than thirty days before the liability is submitted to the department for collection. The notice, hearing, appeals, and other provisions contained in Section 12-56-50 through 12-56-120 apply to this section with additional language in the notice letter as specified by the department."
2. Section 12-56-20 of the 1976 Code, as last amended by Act 334 of 2002, is further amended to read:
"Section 12-56-20. As used in this chapter:
(1) 'Claimant agency' means a state agency, board, committee, commission, public institution of higher learning, political subdivision, or any other governmental or quasi governmental quasi-governmental entity of any state or the United States. It includes the South Carolina Student Loan Corporation, housing authorities established pursuant to Articles 5, 7, and 9 of Chapter 3 of Title 31, and the Internal Revenue Service, and the United States Department of Education. It also includes a private institution of higher learning for the purpose of collecting debts related to default on authorized educational loans made pursuant to Chapter 111, 113, or 115 of Title 59. 'Political subdivision' includes the Municipal Association of South Carolina and the South Carolina Association of Counties when these organizations submit claims on behalf of their members, other political subdivisions, or other claimant agencies as defined in this item a county or local governmental or quasi-governmental entity. A political subdivision who submits a claim through an association is a claimant agency for the purpose of the notice and appeal provisions and other requirements of this chapter.
(2) 'Department' means the South Carolina Department of Revenue.
(3) 'Debtor' means a person having a delinquent debt or account with a claimant agency which has not been adjusted, satisfied, or set aside by court order, or discharged in bankruptcy.
(4) 'Delinquent debt' means any a sum due and owing any a claimant agency, including collection costs, court costs, fines, penalties, and interest which have accrued through contract, subrogation, tort, operation of law, or any other legal theory regardless of whether there is an outstanding judgment for that sum which is legally collectible and for which a collection effort has been or is being made. It does not include sums owed to county hospitals when the hospital and the debtor have entered into a written payment agreement and the debtor is current in meeting the obligations of the agreement. 'Delinquent debt' also includes any fine, penalty, cost, fee, assessment, surcharge, service charge, restitution, or other amount imposed by a court or as a direct consequence of a final court order which is received by or payable to the clerk of the appropriate court or treasurer of the entity where the court is located.
(5) 'Refund' means any individual or corporate South Carolina income tax refund payable. This term also includes any a refund belonging to a debtor resulting from the filing of a joint income tax return."
3. Section 12-56-60 of the 1976 Code is amended to read:
"Section 12-56-60. (A) A claimant agency seeking to attempt collection of a delinquent debt through setoff shall notify the department in writing and supply information the department determines necessary to identify the debtor whose refund is sought to be set off. A request for setoff may be made only after the claimant agency has notified the debtor of its intention to cause the debtor's refund to be set off not less than thirty days before the claimant agency's request to the department. The claimant agency promptly shall notify the debtor when the liability out of which the setoff arises is satisfied. The claimant agency promptly shall notify the department of a reduction in the delinquent debt. Notification to the department and the furnishing of identifying information must occur on or before a date specified by the department in the year preceding the calendar year during which the refund would be paid. Additionally, subject to the notification deadline specified above, the notification is effective only to initiate setoff for claims against refunds that would be made in the calendar year subsequent to the year in which notification is made to the department.
(B) Upon receiving the certification of the claimant agency of the amount of the delinquent debt, the department shall determine if the debtor is due a refund. If the debtor is due a refund of more than twenty-five dollars a tolerance amount as determined by the department, the department shall set off the delinquent debt against the amount of the refund in excess of twenty-five dollars and transfer the amount set off to the claimant agency. The department may retain an amount not to exceed twenty-five dollars of each refund set off to defray its administrative expenses, and that amount may be added to the debt. No apportionment Apportionment is not required in the cases case of a refunds refund resulting from filing a joint returns return. A person has no property right or property interest in a refund until all amounts due the State and claimant agencies are paid. The department shall consider any a delinquent debt and debtor list provided by a claimant agency as correct and the department is not liable for a wrongful or improper setoff."
4. Section 12-56-62 of the 1976 Code is amended to read:
"Section 12-56-62. The notice of intention to set off must be given by mailing the notice, with postage prepaid, addressed to the debtor at the address provided to the claimant agency when the debt was incurred or at the debtor's last known address. The giving of the notice by mail is complete upon the expiration of thirty days after deposit of the notice in the mail. A certification by the claimant agency that the notice has been sent as required by this section is presumptive proof that the requirements as to notice are met, even if the notice actually has not been received by the debtor. The notice must include a statement of appeal procedures available to the debtor, substantially as follows:
'According to our records, you owe the (claimant agency) a debt in the amount of (amount of the debt), plus interest, if applicable, for (type of debt). You are hereby notified of the (claimant agency's) intention to submit this debt to the South Carolina Department of Revenue to be set off against your individual income tax refund refunds until the debt is paid in full. Pursuant to the Setoff Debt Collection Act, this amount, plus all costs, will be deducted from your South Carolina individual income tax refund refunds unless you file a written protest within thirty days of the date of this notice. If you file a joint return with your spouse, this amount will be deducted from the total joint refund refunds without regard to which spouse incurred the debt or actually withheld the taxes. The protest must contain the following information:
(1) your name;
(2) your address;
(3) your social security number;
(4) the type of debt in dispute; and
(5) a detailed statement of all the reasons you disagree
with or dispute the debt.
The original written protest must be mailed to the (claimant agency) at the following address:
(address of the entity requesting the setoff)'."
5. Section 12-56-63 of the 1976 Code is amended to read:
"Section 12-56-63. (A) A debtor who protests the debt shall file a written protest with the claimant agency at the address provided in the claimant agency's notification of intention to set off. The protest must be filed within thirty days of the date of the notice of intention to set off and must contain the debtor's name, address, and social security tax identification number, identify the type of debt in dispute, and give a detailed statement of all the reasons which that support the protest. The requirements of this section are jurisdictional.
(B) To recover costs incurred by the Municipal Association of South Carolina and the South Carolina Association of Counties for submitting a debt pursuant to this chapter and Section 12-4-580 to the department for collection, the association may charge an administrative fee, not to exceed twenty-five dollars, that must be added to the debt. An association defined as a political subdivision in Section 12-56-20(1) may contract with another political subdivision for the processing of debts to be submitted to the department. These services may be funded through an administrative fee. The An association is exempt from the notice and appeal procedures of this chapter. The entity responsible for the notice and hearing requirements of this chapter is the political subdivision which that has submitted its claim through the association or governmental entity which has submitted it directly to the department is responsible for the notice and hearing requirements of this chapter."
6. Section 12-56-65 of the 1976 Code is amended to read:
"Section 12-56-65. (A) Before submitting a debt to the department, the claimant agency shall appoint a hearing officer to hear a protest of a debtor. This hearing officer is vested with the authority to decide a protest in favor of either the debtor or the claimant agency. The claimant agency shall certify to the department, on a form prescribed by the department, that a hearing officer has been appointed and shall inform the department of the name, address, and telephone number of the hearing officer. If this hearing officer is unable to serve at any time, the claimant agency shall appoint another hearing officer.
(B) Upon receipt of a notice of protest, the claimant agency shall notify the department that a protest has been received and shall hold an informal hearing at which the debtor may present evidence, documents, and testimony to dispute the debt. The claimant agency shall notify the debtor of the date, time, and location of the informal hearing. At the conclusion of the informal hearing, the hearing officer shall render his determination. Upon receipt of a sworn certification from the hearing officer that he held an informal hearing and ruled in favor of the claimant agency, the department may proceed to collect the delinquent debt with the setoff, regardless of a subsequent appeal by the debtor.
(C) A debtor may seek relief from the hearing officer's determination by requesting, within thirty days of the determination, a contested case hearing before the Administrative Law Judge Division. A request for a hearing before the Administrative Law Judge Division must be made in accordance with its rules.
(D) If a setoff is made portion of the delinquent debt is collected by the department and the determination of the hearing officer in favor of the claimant agency is later reversed or the debtor prevails in a claim for refund, the claimant agency shall refund the appropriate amount to the taxpayer, including the appropriate amount of the fee. If the claimant agency is found to be entitled to no part of the amount set off, it shall refund the entire amount plus the administrative fee retained by the department. That portion of the refund reflecting the administrative department's fee must be paid from claimant agency funds. If the claimant agency is found to be entitled to a portion of the an amount collected by set off, it is not required to refund the administrative setoff fee retained by the department.
(E) If a refund is retained in error, the claimant agency shall pay to the taxpayer interest calculated as provided in Section 12-54-20 from the date provided by law after which interest is paid on refunds until the appeal is final, except that interest does not accrue when the claimant agency is the Office of Child Support Services of the South Carolina Department of Social Services.
(F) If the claimant agency determines that money has been erroneously or illegally set off collected, the claimant agency, in its discretion, may issue a refund the amount of the setoff, even if the debtor does not file a protest or file a claim for refund.
(G) A setoff collection may not be contested more than one year after the date the setoff it was made. The date of the setoff collection must be conclusively determined by the department. This provision must be construed as a statute of repose and not as a statute of limitation.
(H) A debtor may make a claim for refund of an amount collected pursuant to this chapter within one year from the date the amount is collected, in the same manner as seeking relief from a hearing officer's determination pursuant to Section 12-56-65 or 12-56-67."
LL. (Reserved)
MM.Section 6-4-30 of the 1976 Code is repealed.
NN. The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision shall so expressly provide. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.
OO. Section 12-36-910(B)(3) of the 1976 Code, as last amended by Act 334 of 2002, is further amended to read:
"(3)(a) gross proceeds accruing or proceeding from the charges for the ways or means for the transmission of the voice or messages, including the charges for use of equipment furnished by the seller or supplier of the ways or means for the transmission of the voice or messages. Gross proceeds from the sale of prepaid wireless calling arrangements subject to tax at retail pursuant to item (5) of this subsection are not subject to tax pursuant to this item. Effective for bills rendered after August 1, 2002, charges for mobile telecommunications services subject to the tax under this item must be sourced in accordance with the Mobile Telecommunications Sourcing Act as provided in Title 4 of the United States Code. The term 'charges for mobile telecommunications services' is defined for purposes of this section the same as it is defined in the Mobile Telecommunications Sourcing Act. All other definitions and provisions of the Mobile Telecommunications Sourcing Act as provided in Title 4 of the United States Code are adopted;
(b)(i) for purposes of this item, a 'bundled transaction' means a transaction consisting of distinct and identifiable properties or services, which are sold for one nonitemized price but which are treated differently for tax purposes;
(ii) for bills rendered on or after January 1, 2004, that include telecommunications services in a bundled transaction, if the nonitemized price is attributable to properties or services that are taxable and nontaxable, the portion of the price attributable to any nontaxable property or service is subject to tax unless the provider can reasonably identify that portion from its books and records kept in the regular course of business for purposes other than sales taxes."
PP. Section 12-36-2120(28)(a) of the 1976 Code, as last amended by Act 399 of 2000, is further amended to read:
"(a) medicine and prosthetic devices sold by prescription, prescription medicines used to prevent respiratory syncytial virus, prescription medicines and therapeutic radiopharmaceuticals used in the treatment of cancer, lymphoma, leukemia, or related diseases, including prescription medicines used to relieve the effects of any such treatment, and free samples of prescription medicine distributed by its manufacturer and any use of these free samples;"
QQ. Section 12-20-105(B) and (C) of the 1976 Code is amended to read:
"(B)(1) In order To be considered an eligible project for purposes of this section, the project must qualify for income tax credits under Chapter 6 of Title 12, withholding tax credit under Chapter 10 of Title 12, income tax credits under Chapter 14 of Title 12, or fees in lieu of property taxes under either Chapter 12 of Title 4., Chapter 29 of Title 4, Chapter 37 of Title 12, or Chapter 44 of Title 12.
(2) If a project consists of an office, business, commercial, or industrial park which is owned or constructed by a county or political subdivision of this State, the project does not have to meet the qualifications of item (1) in order to be considered an eligible project.
(C) For the purpose of this section, 'infrastructure' means improvements for water, sewer, gas, steam, electric energy, and communication services made to a building or land which are considered necessary, suitable, or useful to an eligible project. These improvements include, but are not limited to:
(1) improvements to both public or private water and sewer systems;
(2) improvements to both public or private electric, natural gas, and telecommunications systems including, but not limited to, ones owned or leased by an electric cooperative, electric utility, or electric supplier, as defined in Chapter 27, Title 58;
(3) fixed transportation facilities including highway, road, rail, water, and air;
(4) for a qualifying project under subsection (B)(2), infrastructure improvements include industrial shell buildings and the purchase of land for an office, business, commercial, or industrial park which is owned or constructed by a county or political subdivision of this State."
RR. Section 12-10-95 of the 1976 Code, as added by Act 89 of 2001, is amended by adding an appropriately lettered subsection at the end to read:
"( ) Notwithstanding another provision of this section, the retraining credit allowed by this section is for:
(1) apprenticeship programs; and
(2) retraining for all relevant employees that enable a company to export or increase its ability to export its products, including training for logistics, regulatory, and administrative areas connected to its export process and other export process training that allows a qualified company to maintain or expand its business in this State."
SS.1. Notwithstanding the provisions of Section 12-43-217, a county that was scheduled to implement reassessment program values for property tax purposes in 2002 and, pursuant to the provisions of Section 12-37-217(B), postponed implementation until 2003 may postpone the implementation by ordinance for one additional property tax year. /
2. Section 12-43-335 of the 1976 Code is amended to read:
"Section 12-43-335. (A) For the purpose of assessing property of merchants and related businesses, as provided by Section 12-37-970, the department shall follow the classifications of the most recent Standard Industrial North American Classification System Manual, Bureau of the Budget, as follows:
(1) Division C Sector 23;
(2) Division E, Major Group 41, except number 414 Sector 48, except subsectors 48551 and 48541;
Major Group 42, except number 4213 Sector 484, except subsectors 48412 and 48423;
Major Group 44, except number 444 Sector 483, except subsector 483211;
Major Group 45, except number 451 Sector 481, except subsector 481112;
Major Group 47 Sector 56;
Major Group 48, except numbers 481, 482, 484 Sector 51, except subsectors 517, 5152, 51511, and 51512;
Major Group 49, except numbers 491, 493, 494, 4952; Sector 22, except subsectors 221 and 2212;
(3) Division F; Sector 42;
(4) Division G; Sectors 44 and 45;
(5) Division I, Major Groups 72, 73, 75, 76, 78, and 79; Sectors 71 and 81;
(6) Division K. Sector 453;
(B) For the purpose of assessing property of manufacturers as provided in Section 12-4-540(A), the department shall follow the classifications set out in Division B and Division D Sectors 21, 31 to 33 of the most recent Standard Industrial North American Industry Classification System Manual, Bureau of the Budget; however, establishments which publish newspapers, books, and periodicals which do not have facilities for printing or which do not actually print their publications are not classified as manufacturers, notwithstanding the provisions of Division D, Major Group 27 Sectors 31 to 33 , relating to printing, publishing, and allied industries.
(C) For the purpose of assessing property of railroads, private carlines, airlines, water, power, telephone, cable television, sewer and pipeline companies, as provided in Section 12-4-540(A), the department shall follow the Division E Sector 22 classification of the most recent Standard Industrial North American Industry Classification System Manual, Bureau of the Budget, as follows:
(1) Major Group 40; Sector 482;
(2) Major Group 41, except numbers 411, 412, 413, 415, and 417; Sector 485, except subsectors 4851, 48521, 48531, 48541, 4859, and 488490;
(3) Major Group 42, except numbers 4212, 4214, 4215, 422, and 423; Sector 424, except subsectors 48411, 48422, 492, 493, and 488490;
(4) Major Group 44, except numbers 441, 442, 443, 448, and 449; Sector 483, except subsectors 48311, 483113, 483211, and 483114;
(5) Major Group 45, except numbers 452 and 458; Sector 481, except subsectors 4812 and 48811;
(6) Major Group 46; Sector 486;
(7) Major Group 48, except numbers 483 and 489; Sector 57, except subsectors 51511 and 51512;
(8) Major Group 49, except numbers 492, 4953, 4959, 496, and 497. Sector 22, except subsectors 56292, 562211, 562212, 562213, 562219, 488119, 56291, 56171, 562998, 22133, and 22131."
TT. Section 58-9-2200(1), as added by Act 112 of 1999, is amended to read:
"(1) 'Telecommunications service' means the provision, transmission, conveyance, or routing for a consideration of voice, data, video, or any other information or signals of the purchaser's choosing to a point, or between or among points, specified by the purchaser, by or through any electronic, radio, or similar medium or method now in existence or hereafter devised. The term 'telecommunications service' includes, but is not limited to, local telephone services, toll telephone services, telegraph services, teletypewriter services, teleconferencing services, private line services, channel services, Internet protocol telephony, and mobile telecommunications services and to the extent not already provided herein, those services described in Standard Industrial Classification (SIC) 481 and North American Industry Classification System Manual (NAICS) 5133, 5171, 5172, 5173, 5174, and 5179, except satellite services exempted by law."
UU. Section 12-39-70 of the 1976 Code is amended to read:
"Section 12-39-70. For the purpose of appraising and assessing personal property of businesses and other entities under the jurisdiction of the county auditor, the county auditor shall follow the classification of the most recent Standard Industrial North American Industry Classification System Manual, Bureau of The Budget, as follows:
(1) Division A-Major Groups, 01, 02, 07, 08, 09 Sector 11, subsectors 111, 112, 113, 114, and 115, unless exempt;
(2) Division H-Major Groups, 60, 61, 62, 63, 64, 65, 66, 67 Sector 52, subsectors 522, 523, 524, and 525; Sector 53, subsectors 531 and 533; and Sector 55, subsector 551, unless exempt;
(3) Division 1-Major Group, 70, 80, 81, 82, 83, 84, 86, 87, 88, 89 Sector 51, subsector 512; Sector 54, subsector 541; Sector 61, subsector 611; Sector 62, subsectors 621, 622, 623, and 624; Sector 71, subsector 712; Sector 72, subsector 721; and Sector 81, subsectors 813 and 814, unless exempt."
VV. Section 12-6-3360(M)(13)(a) of the 1976 Code is amended to read:
"(a) an establishment engaged in an activity or activities listed under the Standard Industrial North American Industry Classification System Manual (SIC) Code 80 according to the Federal Office of Management and Budget Standard Industrial Classification Manual, 1987 edition (NAICS) Section 62, subsectors 621, 622, and 623; or"
WW. 1. Section 12-36-2120 of the 1976 Code, as last amended by Act 283 of 2000, is further amended by adding an appropriately numbered item to read:
"( ) seventy percent of the gross proceeds of the rental or lease of portable toilets."
2. Chapter 4 of Title 12 of the 1976 Code, as amended, is further amended by adding:
"Section 12-4-385. The department shall notify the appropriate licensing division of the Department of Labor, Licensing and Regulation when the department proposes a change in policy concerning a particular industry group. The department shall also notify any known industry groups."
3. Any sales tax paid as a result of an audit on a company leasing or renting portable toilets shall be refunded by the Department of Revenue upon application by the company requesting a refund. This provision applies for audits showing additional taxes due on and after June 25, 2001, up to the effective date of this SECTION.
4. This SUBSECTION takes effect the first day of the first month after signature of the Governor.
XX. 1. Article 37, Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-5085. (A) Each taxpayer required to file a state individual income tax return may contribute to the South Carolina Litter Control Enforcement Program (SCLCEP) 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. These contributions must be credited to a separate fund in the State Treasury styled the South Carolina Litter Control Enforcement Program Fund and used by the Governor's Task Force on Litter only for the SCLCEP program. Revenues in the fund carry forward into succeeding fiscal years and earnings of the fund must be credited to it.
(B) All South Carolina individual income tax return forms must contain a designation for the above contribution. The instructions accompanying the income tax form must contain a description of the purposes for which the SCLCEP Fund is established and the use of the monies from the contributions.
(C) The department shall determine and report annually to the fund the total amount of contributions designated. The department shall transfer the appropriate amount to the fund at the earliest possible time. The incremental cost of administration of the contribution must be paid out of the contributions before any fund revenues are expended as provided in this section.
(D) For purposes of this section, the South Carolina Department of Revenue is not subject to provisions of the South Carolina Solicitation of Charitable Funds Act as contained in Chapter 56, Title 33."
2. This SUBSECTION takes effect upon approval by the Governor and first applies for individual income tax returns filed for taxable year 2003.
YY.1. Chapter 12, Title 4 of the 1976 Code is amended to read:
Section 4-12-10. As used in this chapter:
(1) 'Department' means the South Carolina Department of Revenue.
(2) 'Project' means any land, and any buildings and other improvements on the land including, without limiting the generality of the foregoing, water, sewage treatment and disposal facilities, air pollution control facilities, and all other machinery, apparatus, equipment, office facilities, and furnishings which are considered necessary, suitable, or useful by a sponsor.
(3) 'Sponsor' means one or more entities which sign the fee inducement agreement with the county and also includes a sponsor affiliate unless the context clearly indicates otherwise.
(4) 'Sponsor affiliate' means an entity that joins with or is an affiliate of a sponsor and that participates in the investment in, or financing of, a project.
(5) 'Title to the property' as provided in Section 4-12-30 includes either record title or a leasehold or other interest including, without limitation, a sponsor or sponsor affiliate's interest in a nordic, synthetic, defeased tax benefit, or transfer lease 'Lease agreement' means an agreement between the county and the sponsor leasing the property at the project from the county to the sponsor.
Section 4-12-20. Every agreement between a county, municipality, school district, water and sewer authority, or other political subdivision and another party in the form of a lease must contain a provision requiring the other party to make payments to the county, municipality, school district, water and sewer authority, and other political subdivisions in which the project is located in lieu of taxes, in the amounts that would result from taxes levied on the project by a county, municipality, school district, water and sewer authority, and other political subdivisions, if the project were owned by the other party, but with appropriate reductions similar to the tax exemptions, if any, which would be afforded to the other party if it were owner of the project.
Section 4-12-30. (A) Notwithstanding the provisions of Section 4-12-20, in the case of an agreement in the form of one or more lease agreements for a project qualifying under subsection (B), the county and the a sponsor may enter into an inducement agreement which provides for a payment fee in lieu of taxes, as provided in this section, for certain property, title to which is held by the county, and leased to the sponsor. All references in this section to a lease agreement also are considered to refer to a lease purchase agreement.
(B) In order for property to qualify for the fee, as provided in subsection (D)(2):
(1) Title to the property must be held by the county. or in In the case of a project located in an industrial development park, as defined in Section 4-1-170, title may be held by more than one county, if each county is a member of the industrial development park. Any real property transferred to the county through a lease agreement must include a legal description and plat of the real property.
(2) The investment must be a project which is must be located in a single county or an industrial development park, as defined in Section 4-1-170. A project located on a contiguous tract of land in more than one county, but not in such an industrial development park, may qualify for the fee if:
(a) the counties agree on the terms of the fee and the distribution of the fee payment;
(b) the minimum millage rate is not lower than the millage rate applicable to the county in which the greatest amount of investment occurs provided for in the agreement; and
(c) all the counties are parties to all agreements establishing the terms of the fee.
(3) The minimum level of investment in the project must be at least five million dollars and must be invested within the time period provided in subsection (C)(2). If a county has an average annual unemployment rate of at least twice the state average during each of the last two calendar years the last twenty-four months based on data available on the most recent November first, the minimum level of investment is one million dollars. The department shall designate these reduced investment counties by December thirty-first of each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose inducement agreement is signed in the calendar year following the county designation. Investments may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property at a project pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program, if the Department of Health and Environmental Control has issued a certificate of completion for the cleanup. If these the amounts, under the Brownfields Voluntary Cleanup Program, equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met.
(4)(a) A sponsor and a sponsor affiliate may qualify for the fee if each sponsor and sponsor affiliate invests the minimum level of investment as specified in subsection (B)(3).
(b) If the project consists of a manufacturing, research and development, corporate office, or distribution facility, as those terms are defined in Section 12-6-3360(M), each sponsor or sponsor affiliate is not required to invest the minimum investment required by subsection (B)(3), if the total investment in the project exceeds ten million dollars. The county and the sponsors who are part of the inducement agreement may agree that any investments
(c) Investments by sponsor affiliates within the time periods provided in subsections (C)(1) and (C)(2) qualify for the payment fee whether or not the affiliate was part of the inducement agreement. To qualify for the fee, the other sponsor affiliates must be are approved specifically by the county and must agree to be bound by agreements with the county relating to the fee, except that the sponsor affiliates are not bound by agreements, or portions of agreements, to the extent the agreements do not affect the county. Except as otherwise provided in The inducement agreement or the lease agreement may provide for a process for approval of sponsor affiliates. subsection (B)(2), the
(d) The investments pursuant to this subsection (B)(4)(b) item must be within the same county or industrial park at the same project.
(b)(e) The department must be notified in writing of all sponsor affiliates which have investments subject to the fee before or within ninety days after the end of the calendar year during which the project or pertinent phase of the project was first placed in service. The department may extend this period upon written request. Failure to meet this notice requirement does not affect the fee adversely, but a penalty may be assessed by the department for late notification in the amount of ten thousand dollars a month or portion of a month, not to exceed fifty thousand dollars.
(c)(f)(i) If at any time a sponsor or sponsor affiliate no longer has the minimum level of investment as provided in subsection (B)(3), without regard to depreciation, that sponsor or sponsor affiliate no longer qualifies for the fee.
(ii) Except as provided in subsection (H)(3), if the sponsor qualifies for the fee under subsection (D)(4), the sponsor must maintain the applicable level of investment, without regard to the depreciation. If the sponsor fails to maintain the applicable investment it no longer qualifies for the fee.
(5)(a) Before undertaking a project, the county council or county councils shall find:
(i)(a) find that the project is anticipated to benefit the general public welfare of the locality by providing services, employment, recreation, or other public benefits not otherwise provided locally;
(ii)(b) find that the project gives rise to no pecuniary liability of the county or incorporated municipality or a charge against its general credit or taxing power; and
(iii) unless the terms of an agreement with respect to a project provide that the industry shall maintain the project and carry all proper insurance with respect thereto; the estimated cost of maintaining the project in good repair and keeping it properly insured must be included in the lease payment.
The determinations and findings of the county council or county councils required to be made above must be set forth in the proceedings under which the ordinance is enacted.
(b)(c) In addition to the findings required in subsection (B)(5)(a) above, the county council or county councils, with assistance and advice, from the department or the Board of Economic Advisors shall determine find that the purposes to be accomplished by the project are proper governmental and public purposes; and that the inducement of the location or expansion of the projects within the State is of paramount importance and
(d) find that the benefits of the project are greater than the cost costs.;
(e) seek the advice and assistance of the department or the Board of Economic Advisors of the Budget and Control Board in making the findings in items (a) through (d) above if necessary or helpful; and
(f) set forth in an ordinance its determination and findings.
(6) Every financing lease agreement with respect to a project shall must contain an a agreement provision obligating the industry sponsor to effect the completion of complete and maintain the project, and to carry all proper insurance with respect to the project. obligating the industry to pay an amount under the terms of a lease agreement, which must be sufficient to build up and maintain any reserve considered by the county council or county councils to be advisable in connection with the agreement.
(C)(1) From the end of the property tax year in which the sponsor and the county execute an inducement agreement, the sponsor has five years in which to enter into an initial lease agreement with the county.
(2) From the end of the property tax year in which the sponsor and the county execute the initial lease agreement, the sponsor has five years in which to complete its investment for purposes of qualifying for this section. If the sponsor does not anticipate completing the project within five years, the sponsor may apply to the county before the end of the five-year period for making the minimum investment for an extension of time to complete the project. If the county agrees to grant the extension, the county must do so in writing, and a copy must be delivered to the department within thirty days of the date the extension was granted. The extension may not exceed five years in which to complete the project. There is no extension allowed for the five-year period in which to meet the minimum level of investment. If the minimum level of investment is not met within five years, all property under the lease agreement or agreements, reverts retroactively to the payments required by Section 4-12-20. The difference between the fee actually paid by the sponsor and the payment which is due under Section 4-12-20 is subject to interest, as provided in Section 12-54-25(D). To the extent necessary to determine if a sponsor or sponsor affiliate has met its investment requirements, any statute of limitations that might apply pursuant to Section 12-54-85 is suspended for all sponsors and sponsor affiliates during the time period allowed to make the required investment and the department or county may seek collection of any amount that may be due pursuant to this subsection. Any property placed in service after the five-year period, or up to ten years ten-year period in the case of a project which has received an extension, is not part of the fee agreement under subsection (D)(2) and is subject to the payments required by Section 4-12-20 if the county has title to the property, or to ad valorem property taxes, as provided in Chapter 37 of Title 12 if the sponsor has title to the property. For purposes of those businesses sponsors qualifying under subsection (D)(4), the five-year period referred to in this subsection is eight years.
(3) For those sponsors that, after qualifying pursuant to (D)(4), have more than five hundred million dollars in capital invested in this State and employ more than one thousand people in this State, the five-year period referred to in this subsection is ten years, and the ten-year period for completing the project is fifteen years.
(4) The annual fee provided by subsection (D)(2) is available for no more than twenty years for an applicable piece of property. For projects which are completed and placed in service during more than one year, each year's investment may be subject to the fee in subsection (D)(2) for twenty years to a maximum total of twenty-seven thirty years for the fee for a single project which has been granted an extension. For those businesses sponsors qualifying under subsection (D)(4), the annual fee is available for no more than thirty years for an applicable piece of property and for those projects placed in service in more than one year the annual fee is available for a maximum of thirty-seven forty years, or for those sponsors qualifying pursuant to (C)(3), forty-five years.
(4)(5) Annually, during the time period allowed to meet the minimum investment level, the sponsor shall provide the total amount invested to the appropriate county official.
(D) The inducement agreement must provide for fee payments, to the extent applicable, as follows:
(1)(a) Any property, title to which is transferred to the county before being placed in service, is subject to an annual fee payment, as provided in Section 4-12-20.
(b) Any undeveloped land, title to which is transferred to the county, before being developed and placed in service, is subject to an annual fee payment as provided in Section 4-12-20. The time during which fee payments are made under Section 4-12-20 is not considered part of the maximum periods provided in subsections (C)(2) and through (C)(3)(4), and no a lease is not considered an 'initial lease agreement' for purposes of this section subsection until the first day of the calendar year for which a fee payment is due under subsection (D) item (2) in connection with the lease.
(2) After property qualifying under subsection (B) is placed in service, an annual fee payment determined in accordance with one of the following is due:
(a) an annual payment in an amount not less than the property taxes that would be due on the project if it were taxable, but using an assessment ratio of not less than six percent, or four percent of those projects qualifying pursuant to (D)(4) except as provided in item (4) of this subsection, and a fixed millage rate as provided in subsection (G), and a fair market value estimate determined by the department as follows:
(i) for real property, using the original income tax basis for South Carolina income tax purposes without regard to depreciation, but if real property is constructed for the fee or is purchased in an arm's length transaction, fair market value is deemed to equal the original income tax basis; otherwise, the department shall determine fair market value by appraisal property must be reported at its fair market value for ad valorem property tax purposes as determined by appraisal. The fair market value estimate established for the first year of the fee remains the fair market value of the real property for the life of the fee; and
(ii) for personal property, using the original tax basis for South Carolina income tax purposes less depreciation allowable for property tax purposes, except that the sponsor is not entitled to any extraordinary obsolescence.
(b) an annual payment as provided in subsection (D)(2)(a), except that every fifth year the applicable millage rate is allowed to increase or decrease in step with the average actual millage rate applicable in the district where the project is located based on the preceding five-year period.
(3) At the conclusion of the payments determined pursuant to items (1) and (2) of this subsection, an annual payment equal to the taxes is due on the project as if it were taxable. When the property is no longer subject to the fee under subsection (D)(2), the fee or property taxes must be assessed:
(a) with respect to real property, based on the fair market value as of the latest reassessment date for similar taxable property; and
(b) with respect to personal property, based on the then depreciated value applicable to such property under the fee, and thereafter continuing with the South Carolina property tax depreciation schedule.
(4)(a) The assessment ratio may not be lower than four percent:
(i) in the case of a business single sponsor which is investing at least two hundred million dollars, which, when added to the previous investments, results resulting in a total investment of at least four hundred million dollars when added to previous investments by a sponsor, and which is creating at least two hundred new full-time jobs at the site qualifying for the fee a project;
(ii) in the case of a business single sponsor which is investing at least four hundred million dollars and which is creating at least two hundred new full-time jobs at a site qualifying for the fee project;
(iii) in the case of investments totaling at least four hundred million dollars, in a county classified as either least developed or underdeveloped, by a limited liability company and/or one or more of the members or equity holders where a member or equity holder is creating, at a site qualifying for the fee, at least one hundred new full-time jobs with an average annual salary of at least forty thousand dollars within four years of the date of execution of the millage rate agreement; or
(iv)(iii) in the case of a single sponsor and a sponsor affiliate, who together are investing at least four six hundred million dollars in this State and creating at least two hundred new full-time jobs at the site qualifying for the fee and:; and
a. the investment by the sponsor affiliate is considered necessary and suitable for the operation of the sponsor facility;
b. the sponsor affiliate is located contiguous to the sponsor project;
c. one hundred percent of the output of the sponsor affiliate is provided to the sponsor for the project; and
d. the sponsor affiliate is not considered a supplier of manufactured parts or of any value added output of the sponsor.
(v)(iv) in the case of a business including a corporation, its subsidiaries, and its limited liability company members, that (A):
A. builds a project consisting of gas-fired combined-cycle power facility and invests at least four hundred million dollars and creates at least twenty-five full-time jobs as defined in Section 12-6-3360(M) at that facility project; and (B)
B. invests an additional five hundred million dollars in this State.
(b) The new full-time jobs requirement of this item does not apply in the case of a taxpayer sponsor which for more than the twenty-five years ending on the date of the agreement paid more than fifty percent of all property taxes actually collected in the county.
(c) In an instance in which the governing body of a county has by contractual agreement provided for a change in fee-in-lieu of taxes arrangements conditioned on a future legislative enactment, any new enactment shall not bind the original parties to the agreement unless the change is ratified by the governing body of the county.
(5) Notwithstanding the use of the term 'assessment ratio', a business sponsor qualifying under item (2) or (4) of this subsection for the fee may negotiate an inducement agreement with a county using differing assessment ratios for different assessment years or levels of investment covered by the inducement agreement. However, the lowest assessment ratio allowed is the lowest ratio for which the business sponsor may qualify under this section.
(E) Calculations pursuant to subsection (D)(2) must be made on the basis that the property, if taxable, is allowed all applicable property tax exemptions except the exemption allowed under Section 3(g) of Article X of the Constitution of this State and the exemption allowed pursuant to Section 12-37-220(B)(32) and (34).
(F) With regard to calculation of the fee provided in subsection (D)(2), the inducement agreement may provide for the disposal of property and the replacement of property subject to the fee as follows:
(1)(a) If a sponsor disposes of property subject to the fee, the fee must be reduced by the amount of the fee applicable to that property.
(b) Property is disposed of only when it is scrapped or sold in accordance with the lease agreement or it is removed from the project. If it is removed from the project it becomes subject to ad valorem property taxes to the extent the property remains in this State.
(c) If there is no provision in the agreement dealing with the disposal of property in accordance with this subsection, the fee remains fixed and no adjustment to the fee is allowed for disposed property.
(2) Any property which is placed in service as a replacement for property which is subject to the fee payment may become part of the fee payment, as provided in this item:
(a) Replacement property does not have to serve the same function as the property it is replacing. Replacement property is deemed to replace the oldest property subject to the fee, whether real or personal, which is disposed of in the same property tax year as the replacement property is placed in service. Replacement property qualifies for fee treatment provided in subsection (D)(2) only up to the original income tax basis of fee property it is replacing. More than one piece of replacement property can replace a single piece of fee property. To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the property which it is replacing, the excess amount is subject to payments, as provided in Section 4-12-20. Replacement property is entitled to the fee payment for the period of time remaining on the fee period for the property which it is replacing.
(b) The new replacement property which qualifies for the fee provided in subsection (D)(2) is recorded using its income tax basis and the fee is calculated using the millage rate and assessment ratio provided for the original fee property. The fee payment for replacement property must be based on subsection (D)(2)(a) or (D)(2)(b), if the sponsor originally used this method.
(c) In order to qualify as replacement property, title to the replacement property must be held by the county.
(d) If there is no provision in the inducement agreement dealing with replacement property, any property placed in service after the time period allowed for investments, as provided by subsection (C)(2), is subject to the payments required by Section 4-12-20 if the county has title to the property, or to ad valorem property taxes, as provided in Chapter 37 of Title 12, if the sponsor has title to the property.
(G)(1) The county and the sponsor may enter into an a millage rate agreement to establish the millage rate, a millage rate agreement, for purposes of calculating payments under subsection (D)(2)(a), and the first five years under subsection (D)(2)(b). This millage rate agreement may be executed at any time up to and including, but not later than, the date of the initial lease agreement. This millage rate agreement may be a separate agreement or may be made a part of either the inducement agreement or the initial lease agreement.
(2) The millage rate established pursuant to subsection (G)(1) must be no lower than a the cumulative property tax millage rate legally levied by or on behalf of all taxing entities within which the subject property project is to be located that is applicable during the period beginning on the thirtieth day of on either:
(a) June thirtieth of the year preceding the calendar year in which the millage rate agreement is executed and ending on the date or the initial lease agreement is executed if there is no millage rate agreement; or
(b) June thirtieth of the calendar year in which the millage rate agreement is executed. If a millage rate agreement is not executed on or before the date of the initial lease agreement, the millage rate the initial lease agreement is considered to be the cumulative property tax millage rate applicable on the thirtieth day of June preceding the calendar year in which the initial lease agreement is executed by the parties agreement for purposes of this item.
(3) For purposes of determining the cumulative property tax millage rate pursuant to subsection (G)(2), the millage rate assessed by a municipality may not be included in the computation if, pursuant to agreement on the part of the taxing entity at the time of execution of the millage rate agreement, the taxing entity de-annexes the subject property before execution of the initial lease.
(H)(1) Upon agreement of the parties, and except as provided in item (2) of this subsection, an inducement agreement, a millage rate agreement, or both, may be amended or terminated and replaced with regard to all matters including, but not limited to, the addition or removal of sponsors or sponsor affiliates.
(2) No amendment or replacement of an inducement agreement or millage rate agreement may be used to change lower the millage rate, assessment ratio, or length increase the term of the agreement under any such agreement. However, existing inducement agreements which have not yet been implemented by the execution and delivery of a millage rate agreement or a lease purchase agreement may be amended up to the date of execution and delivery of a millage rate agreement or a lease purchase agreement in the discretion of the governing body.
(3) An inducement agreement or a lease agreement may provide that a sponsor who has committed to an investment under subsection (D)(4) may continue to receive the benefits of this chapter even if the sponsor fails to make or maintain the required investment or fails to create the jobs required by (D)(4), if the sponsor meets the five million minimum investment. If the sponsor fails to make or maintain the required investment or create the required number of jobs, the inducement agreement or the lease agreement may not provide for an assessment ratio and an exemption period more favorable than those allowed for the minimum investment. To the extent that the sponsor obtained a four percent assessment ratio under subsection (D)(4), the sponsor must recalculate the fee using a six percent ratio or such other ratio as the inducement agreement or lease agreement may provide for all years in which the four percent assessment ratio was used and pay the county any difference. This difference is subject to interest as provided in Section 12-54-25.
(I) Investment expenditures incurred by any sponsor in connection with a project, or relevant phase of a project in connection with for a project completed and placed in service in more than one year, qualify as expenditures subject to the fee in subsection (D)(2), so long as those expenditures are incurred:
(1) after, or within sixty days before, the county takes action reflecting or identifying the project or proposed project or investment including, but not limited to, the adoption of an inducement or similar resolution by county council; and
(2) before the end of the applicable five-year, eight-year, ten-year, or seven-year fifteen-year period referenced in subsection (C)(2) and or (C)(3). An inducement agreement must be executed within two years after the date on which the county takes action reflecting or identifying the project or proposed project or investment including, but not limited to, the adoption of adopts an inducement or similar resolution identifying the project by county council; otherwise, only investment expenditures made or incurred by any sponsor after the date of the inducement agreement in connection with a project qualifies as expenditures subject to the fee in subsection (D)(2).
(J)(1) Property which has been previously subject to property taxes in South Carolina does not qualify for the fee except as provided in this subsection:
(a) land, excluding improvements on the land, on which a new project is to be located may qualify for the fee even if it has previously been subject to South Carolina property taxes;
(b) property which has been subject to South Carolina property taxes, but which has never been placed in service in South Carolina, may qualify for the fee.
(2) Repairs, alterations, or modifications to real or personal property which are not subject to a fee are not eligible for a fee, even if they are capitalized expenditures, except for modifications to existing real property improvements which constitute an expansion of the improvements.
(3) Project investment expenditures which are incurred within the applicable time period provided in subsection (I) by an entity whose investments are not being computed in the level of investment for purposes of subsection (B)(3) or (C) (D)(4) qualify as investment expenditures subject to the fee in subsection (D)(2) where if:
(a) the expenditures are part of the original cost of the property which is transferred, within the applicable time period provided in subsection (I), to one or more other entities which are sponsors or sponsor affiliates and whose investments are being computed in the level of investment for purposes of subsection (B) or (C); and
(b) the property would have qualified for the fee in subsection (D)(2) if it had been initially acquired by the transferee entity sponsor rather than the transferor entity.;
(4)(c) The the income tax basis of the property immediately before the transfer must equal the income tax basis of the property immediately after the transfer. However, to the extent income tax basis of the property immediately after the transfer unintentionally exceeds the income tax basis of the property immediately before the transfer, the excess shall be subject to payments under Section 4-12-20.; and
(5)(d) The the county shall agree agrees to any inclusion in the fee of the property described in subsection (J)(1)(3).
(K)(1) For a project not located in an industrial development park, as defined in Section 4-1-170, distribution of the fee-in-lieu of taxes on the project must be made in the same manner and proportion that the millage levied for school and other purposes would be distributed if the property were taxable, but without regard to an exemption otherwise available to the project pursuant to Section 12-37-220 for that year. For this purpose, the relative proportions must be calculated based on the following procedure: holding constant the millage rate set in subsection (G) and using all tax abatements automatically granted for taxable property, a full schedule of the property taxes that would otherwise have been distributed to each millage levying entity in the county must be prepared for the life of the agreement, up to twenty years maximum. The property taxes which would have been paid on the property if it were owned by the sponsor to each millage levying entity as a percentage of the total of such property taxes for all such entities determines each entity's relative shares of each year's fee payment for all subsequent years of the agreement.
(2) For a project located in an industrial development park, as defined in Section 4-1-170, distribution of the fee-in-lieu of taxes on the project must be made in the manner provided for by the agreement establishing the industrial development park.
(3) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes may use a portion of this revenue for the purposes outlined in Section 4-29-68 without the requirement of issuing special source revenue bonds or the requirements of Section 4-29-68(A)(4) by providing a credit against the fee due from a sponsor. A direct payment of cash may not be made to the sponsor.
(4) Misallocations of the distribution of the fee-in-lieu of taxes on the project pursuant to this chapter may be corrected by adjusting later distributions, but these adjustments must be made in the same fiscal year as the misallocations. To the extent distributions are made improperly in previous years, a claim for adjustment must be made within one year of the distribution.
(L) Projects on which a fee-in-lieu of taxes is paid pursuant to this section are considered taxable property at the level of the negotiated payments for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State and for purposes of computing the index of taxpaying ability pursuant to Section 59-20-20(3). However, for a project located in an industrial development park, as defined in Section 4-1-170, projects are considered taxable property in the manner provided in Section 4-1-170 for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State and for purposes of computing the index of taxpaying ability pursuant to Section 59-20-20(3). However, the computation of bonded indebtedness limitation is subject to the requirements of Section 4-29-68(E).
(M)(1) Any interest in an inducement agreement, millage rate agreement, lease agreement, and property to which the these agreement agreements relates relate may be transferred to any other another entity at any time. Notwithstanding any other provision of this chapter, any equity interest in any entity with an interest in any inducement agreement, millage rate agreement, or lease agreement may be transferred to any other entity or person at any time a sponsor may be transferred to another entity or person at any time. To the extent an agreement is transferred, the transferee assumes the current basis the sponsor has in real or personal property subject to the fee for purposes of calculating the fee.
(2) A sponsor or a county may enter into any lending, financing, security, lease, or similar arrangement, or succession of such arrangements, with any financing entity, concerning all or part of a project including, without limitation, any sale-leaseback arrangement, equipment lease, build-to-suit lease, synthetic lease, nordic lease, defeased tax benefit, or transfer lease, 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). 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, pursuant to terms in the sale-leaseback agreement, shall affect the amount of the fee due.
(3) All transfers undertaken with respect to other projects to effect a financing authorized under subsection (M) must meet the following requirements:
(a) The Department of Revenue department and the county must receive notification in writing within sixty days after the transfer of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement shall not adversely affect the fee, but a penalty may be assessed by the department for late notification for up to ten thousand dollars a year or portion of a year up to a maximum penalty of fifty thousand dollars.
(b) If the sponsor affiliate or other a financing entity is the income tax owner of property, either the financing entity is primarily liable for the fee as to that portion of the project to which the transfer relates with the original transferor sponsor remaining secondarily liable for the payment of the fee or the original transferor sponsor must agree to continue to be primarily liable for the payment of the fee as to that portion of the project to which the transfer relates.
(4) Before a A sponsor may transfer an inducement agreement, millage rate agreement, lease agreement, or the assets subject to the lease agreement, if it shall obtain obtains the prior approval, or subsequent ratification, of the county with whom it entered into the original inducement agreement, millage rate agreement, or lease agreement. However, no such approval is required in connection with transfers to sponsor affiliates or other financing-related transfers.
(N) Reserved. The minimum amount of investment provided in subsection (B)(3) of this section may not be reduced except by a special vote which, for purposes of this section, means an affirmative vote in each branch of the General Assembly by two-thirds of the members present and voting, but not less than three-fifths of the total membership in each branch.
(O) Notwithstanding any other provision of this section, if the investment based on income tax basis without regard to depreciation falls below the minimum level of investment provided in subsection (B)(3) at any time following the period provided in subsection (C)(2), the fee provided in subsection (D)(2) is no longer available and the investor must make the payments which are due pursuant to Section 4-12-20 for the remainder of the lease period.
(P) The minimum amount of investment provided in subsection (B)(3) of this section may not be reduced except by a special vote which, for purposes of this section, means an affirmative vote in each branch of the General Assembly by two-thirds of the members present and voting, but not less than three-fifths of the total membership in each branch.
(Q)(O)(1) The sponsor shall file the returns, contracts, and other information which may be required by the department.
(2) Fee payments and returns showing investments and calculating fee payments are due at the same time as property tax payments and property tax returns would be due if the property were owned by the party sponsor obligated to make the fee payments and file the returns.
(3) Failure to make a timely fee payment and file required returns shall result in penalties being assessed as if the payment or return were a property tax payment or return.
(4) The department may issue the rulings and promulgate regulations it determines necessary or appropriate to carry out the purpose of this section.
(5) The provisions of Chapters 4 and 54 of Title 12 applicable to property taxes shall apply to this section; and, for purposes of such application, the fee is considered a property tax. Sections 12-54-80 and 12-54-155 do not apply to this section.
(6) If the entity subject to the fee a sponsor fails to make the fee or lease payments as provided by the agreements between the entity sponsor and the county, upon ninety days' notice, the county may terminate the fee and lease agreement and sell the property to which the county has title free from any claim by the entity sponsor.
(7) Within thirty days of the date of execution of an inducement or lease agreement, a copy of the agreement must be filed with the Department of Revenue department and the county auditors and the county assessors for the county or counties in which the project is located. If the project is located in a an multicounty industrial development park, the agreements must be filed with the auditors and assessors for all counties participating in the multicounty industrial development park.
(8) The department, for good cause, may allow additional time for filing of returns required under this chapter. The request for an extension may be granted only if the request is filed with the department on or before the date the return is due. However, the extension must not exceed sixty days from the date the return is due. The department shall develop applicable forms and procedures for handling and processing extension requests. An extension may not be granted to a taxpayer sponsor who has been granted an extension for a previous period and has not fulfilled the requirements of the previous period.
(9) To the extent a form or a return is filed with the department, the sponsor must file a copy of the form or return with the county auditor, assessor, and the treasurer of the county or counties in which the project is located. To the extent requested, the county auditor of the county in which the project is physically located shall make these forms and returns available to any county auditor of a county participating in an industrial development park in which the project is located.
(R)(P) All references in this section to taxes must be considered to mean South Carolina taxes unless otherwise expressly stated.
Section 4-12-40. Projects with a lease agreement entered into before January 1, 1996, are required to use the provisions of Section 4-29-67. Projects with lease agreements entered into after December 31, 1995, are required to use the provisions contained in this chapter. However, those projects with lease agreements entered into after December 31, 1995, in which the total investment exceeds forty-five million dollars within the time provided in subsection (C)(2), may elect to use the provisions of Section 4-29-67 or 4-12-30, but not both.
The minimum investment levels or job creation levels, or both, required in order to qualify for a fee-in-lieu of property tax as provided in Section 4-29-67 and as reduced in Section 12-10-70(2) may be used for lease agreements executed before December 31, 1995, and for any project which has received any of the required readings before county council to enact the agreement before December 31, 1995. (Reserved)
Section 4-12-45. (A) All agreements entered into pursuant to this chapter must include as the first portion of the document a recapitulation of the remaining contents of the document which includes, but is not limited to, the following:
(1) the legal name of each party to the agreement;
(2) the county and street address of the project and property to be subject to the agreement;
(3) the minimum investment agreed upon;
(4) the length and term of the agreement;
(5) the assessment ratio applicable for each year of the agreement;
(6) the millage rate applicable for each year of the agreement;
(7) a schedule showing the amount of the fee and its calculation for each year of the agreement;
(8) a schedule showing the amount to be distributed annually to each of the affected taxing entities;
(9) a statement answering the following questions:
(a) Is the project to be located in a multi-county park formed pursuant to Chapter 29 of Title 4?;
(b) Is disposal of property subject to the fee allowed?;
(c) Will special source revenue bonds be issued or credits for infrastructure investment be allowed in connection with this project?;
(d) Will payment amounts be modified using a net present value calculation?; and
(e) Do replacement property provisions apply?
(10) any other feature or aspect of the agreement which may affect the calculation of items (7) and (8) of this subsection;
(11) a description of the effect upon the schedules required by items (7) and (8) of this subsection of any feature covered by items (9) and (10) not reflected in the schedules for items (7) and (8) of this subsection;
(12) which party or parties to the agreement are responsible for updating any information contained in the summary document.
(B) The auditor shall prepare a bill for each installment of the fee according to the schedule set forth in subsection (A)(7) or as modified pursuant to subsection (A)(10), (11), or (12) and that payment must be distributed to the affected taxing entities according to the schedule in subsection (A)(8) or as modified pursuant to subsection (A)(10), (11), or (12).
(C) The county and the sponsor and sponsor affiliates may agree to waive any or all of the items described in this section.
Section 4-12-50. If any provision of this chapter or its application to any circumstance is held by a court of competent jurisdiction to be invalid for any reason, this holding does not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to this end, the provisions of this chapter are severable."
2. The provisions of SUBSUBSECTION 1 are effective as of January 1, 2003; except that, the provisions may not impair applicable rights under agreements or other writings with respect to which the effective date would constitute an impairment of contractual rights under applicable law. Without limiting the generality of the preceding sentence, (i) for those projects which have been granted a two-year extension of time to complete the project and that two-year period has not expired, the sponsor may at any during the two-year extension request an additional three years to complete the project, and (ii) the county and the sponsor may agree to waive the provisions of Section 4-12-45 under any agreement whenever executed.
ZZ. 1. Section 4-29-67 of the 1976 Code, as last amended by Act 334 of 2002, is further amended to read:
"Section 4-29-67. (A)(1) As used in this section:
(a) 'Department' means the South Carolina Department of Revenue.
(b) 'Lease agreement' means an agreement between the county and a sponsor leasing the property at the project from the county to a sponsor.
(c) 'Project' means land, buildings and other improvements on the land including water, sewage treatment and disposal facilities, air pollution control facilities, and all other machinery apparatus, equipment, office facilities, and furnishings which are considered necessary, suitable, or useful by a sponsor.
(d) 'Sponsor' means one or more entities which sign the inducement agreement with the county and also includes a sponsor affiliate unless the context clearly indicates otherwise.
(e) 'Sponsor affiliate' means an entity that joins with, or is an affiliate of, a sponsor and that participates in the investment in, or financing of, a project.
(2) Notwithstanding the provisions of Section 4-29-60, and notwithstanding that the sponsor does not request the county to issue bonds to finance the property in the case of a financing agreement in the form of one or more lease agreements for a project qualifying pursuant to subsection (B), the county and the a investor sponsor may enter into an inducement agreement that provides for payment of a fee in lieu of taxes as provided in this section for certain property, title to which is held by the county and which is leased to a sponsor. A reference in this section to a lease agreement is considered a reference also to a lease purchase agreement.
(B) For property to qualify for the fee as provided in subsection (D)(2):
(1) Title to the property must be held by the county. or, in In the case of a project located in an industrial development park as defined in Section 4-1-170, title may be held by more than one county, provided if each county is a member of the industrial development park. Real property transferred to the county through a lease agreement must include a legal description and plat of the real property.
(2) The investment must be a project that is must be located in a single county or an industrial development park as defined in Section 4-1-170. A project located on a contiguous tract of land in more than one county, but not in an industrial development park, may qualify for the fee if:
(a) the counties agree on the terms of the fee and the distribution of the fee payment;
(b) the minimum millage rate is not lower than the millage rate applicable provided for in the agreement to the county in which the greatest amount of investment occurs; and
(c) all the counties must be are parties to all agreements establishing the terms of the fee.
(3) The minimum level of investment in the project must be at least forty-five million dollars and must be invested within the time period provided in subsection (C). If a county has an average annual unemployment rate of at least twice the state average during the last twenty-four months based on data available on the most recent November first, the minimum level of investment is one million dollars. The department shall designate these reduced investment counties by December thirty-first of each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose inducement agreement is signed in the calendar year following the county designation. Investments may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property at the project pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program, if the Department of Health and Environmental Control certifies completion of the cleanup. If the amounts under the Brownfields Voluntary Cleanup Program equal at least one million dollars, the investment threshold requirement of this section is met.
(4)(a) Investment may be made by a business or a combination of businesses, except that each business must invest at least five million dollars at the project. A sponsor and a sponsor affiliate may qualify for the fee if each sponsor and sponsor affiliate invests the minimum level of investment at the project. If the project consists of a manufacturing, research and development, corporate office, or distribution facility as those terms are defined in Section 12-6-3360(M), each sponsor or sponsor affiliate is not required to invest the minimum investment required by subsection (B)(3) if the total investment at the project exceeds forty-five million dollars.
(b)(i) The county and the investors and investor affiliates who are part of the inducement agreement may agree that investments Investments by other investor sponsor affiliates within the time periods provided in subsection (C)(1) and (2) qualify for the payment fee regardless of whether or not the investor sponsor affiliate was part of the inducement agreement., To qualify for the fee, so long as investor sponsor affiliates must be are approved specifically by the county and must agree to be bound by agreements with the county relating to the fee; except that investor sponsor affiliates need are not be bound by agreements, or portions of agreements, to the extent those agreements do not affect the county. Investor affiliates are not bound by agreements or portions of agreements which do affect the county, if the affected county consents not to bind them. Except as otherwise provided in subsection (B)(2), the The investments pursuant to this subsection (B)(4)(b) must be at the same project. The inducement agreement or the lease agreement may provide for a process for approval of sponsor affiliates:
(ii) The Department of Revenue department must be notified in writing of all investors and investor sponsor affiliates that have investments subject to the fee within thirty on or before ninety days after the execution of the lease agreement covering the investment by the investor or investor affiliate end of the calendar year during which the project or pertinent phase of the project is placed in service. The Department of Revenue department may extend the this thirty-day period upon written request. Failure to meet this notice requirement does not affect adversely the fee, but a penalty of up to ten thousand dollars a month or portion of a month with the total penalty not to exceed one hundred twenty thousand dollars may be assessed by the Department of Revenue department for late notification.
(iii)A. Except as provided in subsection (D)(4) If if, at any time, the investment at the project falls below forty-five million dollars, the investor and investor affiliate a sponsor no longer has the minimum level of investment as provided in subsection (B)(e), that sponsor no longer qualify qualifies for the fee.
B. Except as provided in subsection (Q), if a sponsor qualifies for the fee pursuant to subsection (D)(4), the sponsor must maintain the applicable level of investment, without regard to depreciation, and any applicable job requirements provided in (D)(4). If the sponsor fails to maintain the applicable investment or any job requirements provided in (D)(4), it no longer qualifies for the fee.
C. Except as provided in subsection (Q), if an inducement agreement or a lease agreement provides for an investment above the minimum investment provided in subsection (B)(3), and the sponsor fails to maintain the investment provided for in the agreement, the sponsor no longer qualifies for the fee.
(iv) If, at any time, a business no longer has a minimum investment of five million dollars at the project, without regard to depreciation, the investor or investor affiliate no longer qualifies for the fee.
(5) Investment for all purposes of this section may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program if the Department of Health and Environmental Control certifies completion of the cleanup. If these amounts equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met.
(C)(1) From the end of the property tax year in which the investor sponsor and the county execute an inducement agreement, the investor sponsor has seven five years in which to enter into an initial lease agreement with the county.
(2)(a) From the end of the property tax year in which the investor sponsor and the county execute the initial lease agreement, the investor sponsor has five years in which to complete its investment for purposes of qualifying for this section. If the investor sponsor does not anticipate completing the project within five years, the investor sponsor may apply to the county before the end of the five-year period for making the investment for an extension of time, up to five years, to complete the project. The If the county's county agreement agrees to grant the extension, it must be in writing, and a copy must be delivered to the Department of Revenue department within thirty days of the date the extension was granted. The extension may not exceed five years.
(b) An extension of the five-year period in which to meet the minimum level of investment is not allowed. If the minimum level of investment is not met within five years, all property covered by the lease agreement or agreements reverts retroactively to the payments required by Section 4-29-60. The difference between the fee actually paid by the investor sponsor and the payment due pursuant to Section 4-29-60 is subject to interest, as provided in Section 12-54-25. To the extent necessary to determine if a sponsor or sponsor affiliate has met its investment requirements, any statute of limitation that might apply pursuant to Section 12-54-85 is suspended for all sponsors and sponsor affiliates and the department or the county may seek to collect any amounts that may be due pursuant to this section.
(c) Unless property qualifies as replacement property pursuant to a contract provision enacted pursuant to subsection (F)(2), property placed in service after the five-year period, or up to the ten years ten-year period in the case of a project which has received an extension, is not part of the fee agreement pursuant to subsection (D)(2) and is subject to the payments required by Section 4-29-60 if the county has title to: (i) the property; or (ii) ad valorem property taxes, as provided in Chapter 37 of Title 12, if the investor sponsor has title to the property.
(d) For purposes of those businesses qualifying under Section 4-29-67 subsection (D)(4), the five-year period referred to in this subsection is eight years and the seven-year period is ten years. However, for For those businesses sponsors which, after qualifying under pursuant to Section 4-29-67 subsection (D)(4), have more than five hundred million dollars in capital invested in this State and employ more than one thousand people in this State, the five-year period referred to in this subsection is ten years, and the ten-year extended period referred to in the previous sentence is fifteen years.
(3) The annual fee provided by subsection (D)(2) is available for no more than twenty years for an applicable piece of property. For projects which are completed and placed in service during more than one year, each year's investment may be subject to the fee in subsection (D)(2) for twenty years to a maximum total of twenty- seven thirty years for the fee for a single project which has been granted an extension. For those businesses sponsors qualifying under subsection (D)(4), the annual fee is available for no more than thirty years for an applicable piece of property and for those projects placed in service in more than one year, the annual fee is available for a maximum of forty years or, for those businesses sponsors qualifying for the fifteen-year extended period pursuant to item (2)(d), forty-five years.
(4) During the time period allowed to meet the minimum investment level, the investor annually must inform the appropriate county official of the total amount invested.
(D) The inducement agreement must provide for fee payments, to the extent applicable, as follows:
(1)(a) If title of property is transferred to the county, the Any property is subject to an annual fee payment as provided in Section 4-29-60 before being placed in service.
(b) If title to undeveloped land is transferred to the county, the Any undeveloped land is subject to an annual fee payment as provided in Section 4-29-60 before being developed and placed in service. The time during which fee payments are made pursuant to Section 4-29-60 are is not considered part of the maximum periods provided in subsection (C)(2) and (3), and a lease is not an 'initial lease agreement' for purposes of this section unless and until the first day of the calendar year for which a fee payment is due pursuant to subsection (D)(2) in connection with the lease.
(2) After property qualifying pursuant to subsection (B) is placed in service, an annual fee payment, determined in accordance with one of the following, is due:
(a) an annual payment in an amount not less than the property taxes that would be due on the project if it were taxable, but using:
(i) an assessment ratio of at least six percent, except as provided in or four percent for those projects qualifying pursuant to subsection (D)(4);
(ii) a fixed millage rate as provided in subsection (G); and
(iii) a fair market value estimate determined by the South Carolina Department of Revenue department as follows.:
A. The estimate for real property, is using the original income tax basis for South Carolina income tax purposes without regard to depreciation. However, if If real property is constructed for the fee or is purchased in an arms-length transaction, fair market value equals using the original income tax basis, otherwise the property must be reported at its fair market value for ad valorem property tax purposes as determined Department of Revenue department shall determine fair market value by appraisal. The fair market value established for the first year of the fee remains the fair market value for the life of the fee; and
B. The estimate for personal property, is using the original income tax basis for South Carolina income tax purposes, less depreciation allowable for property tax purposes; except that the investor sponsor is not entitled to any extraordinary obsolescence;
(b) an annual payment based on an alternative arrangement yielding a net present value of the sum of the fees for the life of the agreement not less than the net present value of the fee schedule as calculated pursuant to subsection (D)(2)(a). Net present value calculations performed pursuant to this subsection must use a discount rate equivalent to the yield in effect for new or existing United States Treasury bonds of similar maturity as published during the month in which the inducement agreement is executed. If no yield is available for the month in which the inducement agreement is executed, the last published yield for the appropriate maturity must be used. If there are no bonds of appropriate maturity available, bonds of different maturities may be averaged to obtain the appropriate maturity; or
(c) an annual payment using a formula that results in a fee not less than the amount required pursuant to as provided in subsection (D)(2)(a), except that every fifth year the applicable millage rate may increase or decrease in step with the average actual millage rate applicable in the district where the project is located based on the preceding five-year period.
(3) At the conclusion of the payments determined pursuant to items (1) and (2) of this subsection the annual fee payment is equal to the taxes due on the project as if it were taxable. When the property is no longer subject to the fee pursuant to subsection (D)(2), the fee or property taxes must be assessed:
(a) with respect to real property, based on the fair market value as of the latest reassessment date for similar taxable property; and
(b) with respect to personal property, based on the then-depreciated value applicable to the property under the fee, and after that continuing with the South Carolina property tax depreciation schedule.
(4)(a) The assessment ratio must be at least four percent:
(i) in the case of a business single sponsor investing at least two hundred million dollars, resulting in a total investment of at least four hundred million dollars when added to previous investments by a sponsor, and which is creating at least two hundred new full-time jobs at the site qualifying for the fee project;
(ii) in the case of a business single sponsor investing at least four hundred million dollars and which is creating at least two hundred new full-time jobs at a site qualifying for the fee the project;
(iii) in the case of investments totaling at least four hundred million dollars in a county classified as either least developed or underdeveloped, by a limited liability company or one or more of its members or equity holders, or both of them, if the member or equity holder is creating at least one hundred new full-time jobs, at the site qualifying for the fee, with an annual average salary of at least forty thousand dollars within four years of the date of execution of a millage rate agreement;
(iv)(iii) in the case of a business single sponsor which is investing at least six hundred million dollars in this State; or
(v) in the case of investments totaling at least four hundred million dollars and creating at least two hundred new full-time jobs at the site qualifying for the fee and:
a. the investment by the investor affiliate is considered necessary and suitable for the operation of the sponsor facility;
b. the investor affiliate is located contiguous to the investor project;
c. one hundred percent of the output of the investor affiliate is provided to the investor for the project; and
d. the investor affiliate is not considered a supplier of manufactured parts or of any value added output of the investor.
(vi)(v) in the case of a business including a corporation, its subsidiaries, and its limited liability company members, that (A):
A. builds a project consisting of gas-fired combined-cycle power facility and invests at least four hundred million dollars and creates at least twenty-five full-time jobs as defined in Section 12-6-3360(M) at that facility; and (B)
B. invests an additional five hundred million dollars in this State.
(b) The new full-time jobs requirement of this item does not apply in the case of a business that paid more than fifty percent of all property taxes actually collected in the county for more than the twenty-five years ending on the date of the inducement agreement.
(c) In an instance in which the governing body of a county has provided, by contractual agreement, has provided for a change in fee-in-lieu of taxes arrangements conditioned on a future legislative enactment, a new enactment does not bind the original parties to the agreement unless the change is ratified by the governing body of the county.
(5) Notwithstanding the use of the term 'assessment ratio', an investor a sponsor qualifying for the fee pursuant to item (2) or (4) of this subsection may negotiate an inducement agreement with a county using differing assessment ratios for different assessment years or levels of investment covered by the inducement agreement. The lowest assessment ratio allowed is the lowest ratio for which the investor sponsor may qualify under this section.
(E) Calculations pursuant to subsection (D)(2) must be made on the basis that the property, if taxable, is allowed all applicable property tax exemptions except the exemption allowed pursuant to Section 3(g) of Article X of the Constitution of this State and the exemptions allowed pursuant to Section 12-37-220(B)(32) and (34).
(F) With regard to calculation of the fee provided in subsection (D)(2), the inducement agreement may provide for the disposal of property and the replacement of property subject to the fee as follows:
(1) If an investor a sponsor disposes of property subject to the fee, the fee must be reduced by the amount of the fee applicable to that property. Property is disposed of only when it is scrapped or sold or removed from the project. If it is removed from the project, it becomes subject to ad valorem property taxes to the extent it remains in the State in accordance with the lease agreement. If the investor sponsor used any method to compute the fee other than that provided in subsection (D)(2)(a), the fee on the property which was disposed of must be recomputed in accordance with subsection (D)(2)(a) and to the extent the amount that would have been paid pursuant to subsection (D)(2)(a) exceeds the fee actually paid by the investor sponsor, the investor sponsor must pay the difference with the next fee payment due after the property is disposed of. If the investor sponsor used the method provided in subsection (D)(2)(c), the millage rate provided in subsection (D)(2)(c) must be used to calculate the amount which would have been paid pursuant to subsection (D)(2)(a). If there is no provision in the agreement dealing with the disposal of property in accordance with this subsection, the fee remains fixed and no adjustment to the fee is allowed for disposed property.
(2) Property placed in service as a replacement for property that is subject to the fee payment may become part of the fee payment as provided in this item:
(a) Replacement property may have a function that differs from the property it is replacing. Replacement property is considered to replace the oldest real or personal property subject to the fee and disposed of in the same property tax year as the replacement property is placed in service. Replacement property qualifies for fee treatment provided in subsection (D)(2) only up to the original income tax basis of fee property it replaces. More than one piece of replacement property may replace a single piece of fee property. To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the property it replaces, the excess amount is subject to payments as provided in Section 4-29-60. Replacement property is entitled to the fee payment for the period of time remaining on the twenty-year fee period for the property it replaces.
(b) The new replacement property that qualifies for the fee provided in subsection (D)(2) is recorded using its income tax basis, and the fee is calculated using the millage rate and assessment ratio provided on the original fee property. The fee payment for replacement property must be based on subsection (D)(2)(a) or (c) if the investor originally used that method, without regard to present value.
(c) To qualify as replacement property, title to the replacement property must be held by the county.
(d) If there is no provision in the inducement agreement dealing with replacement property, any property placed in service after the time period allowed for investments as provided by subsection (C)(2), is subject to the payments required by Section 4-29-60 if the county has title to: (i) the property; or (ii) ad valorem property taxes, as provided in Chapter 37 of Title 12, if the investor sponsor has title to the property.
(G)(1) The county and the investor sponsor may enter into an a millage rate agreement to establish the millage rate for purposes of calculating payments pursuant to subsection (D)(2)(a) and the first five years pursuant to subsection (D)(2)(c). This millage rate agreement may be executed at any time up to and including, but not later than, the date of the initial lease agreement. This millage rate agreement may be a separate agreement or may be made a part of either the inducement agreement or the initial lease agreement.
(2) The millage rate established pursuant to item (1) of this subsection must be no lower than a the cumulative property tax millage rate legally levied by or on behalf of all taxing entities within which the subject property project is to be located that is applicable during the period beginning on the thirtieth day of June preceding the calendar year on either:
(a) in June thirtieth of the year preceding the year in which the millage rate agreement is executed and ending on the date or the initial lease agreement is executed if no millage rate agreement is executed.; or
(b) June thirtieth of the year in which the millage rate agreement is executed if a millage rate agreement is not executed on or the before the date of the initial lease agreement, is deemed to be the millage rate is the cumulative property tax millage rate applicable on the thirtieth day of June preceding the calendar year in which the initial lease agreement is executed agreement for purposes of this item.
(H)(1) Upon agreement of the county, investors, and investor affiliates parties, and except as provided in subsection (H)(2), an inducement agreement, a millage rate agreement, or both, may be amended or terminated and replaced with regard to all matters including, but not limited to, the addition or removal of investors sponsors or investor sponsor affiliates.
(2) An amendment or a replacement of an inducement agreement or millage rate agreement may not be used to change lower the millage rate, discount rate, assessment ratio, or duration increase the term of the agreement; except that an existing inducement agreement that has not been implemented by the execution and delivery of a millage rate agreement or a lease purchase agreement may be amended up to the date of execution and delivery of a millage rate agreement or a lease purchase agreement in the discretion of the governing body.
(I) Investment expenditures incurred by an investor a sponsor in connection with a the project, or relevant phase of a project, for those a projects project completed and placed in service in more than one year, qualify as expenditures subject to the fee in subsection (D)(2), so long as these expenditures are incurred:
(1) any time after, or within sixty days before, the county takes action reflecting or identifying the project or proposed project or investment including, but not limited to, the adoption of an inducement or similar resolution by county council; and
(2) before the end of the applicable time five-year, eight-year, ten-year, or fifteen-year period for investments referenced in subsection (C)(2) and or (3). An inducement agreement must be executed within two years after the date on which the county adopts an inducement resolution takes action reflecting or identifying the project or proposed project or investment including, but not limited to, the adoption of an inducement or similar resolution by county council; otherwise, only investment expenditures made or incurred by an investor a sponsor after the date of the inducement agreement in connection with a project qualify as expenditures subject to the fee in subsection (D)(2).
(J)(1) Subject to subsection (K), project investment expenditures incurred within the applicable time period provided in subsection (I) by an investor entity whose investments are not computed at the level of investment for purposes of subsection (B) or (C) qualify as investment expenditures subject to the fee in subsection (D)(2) if the:
(a) expenditures are part of the original cost of property that is transferred, within the applicable time period provided in subsection (I) to one or more other investors or investor affiliates whose investments are being computed at the level of investment for purposes of subsection (B) or (C); and
(b) property would have qualified for the fee in subsection (D)(2) if it had been initially acquired by the transferee entity sponsor instead of the transferor entity.;
(2)(c) The the income tax basis of the property immediately before the transfer must equal the income tax basis of the property immediately after the transfer; except that, to the extent income tax basis of the property immediately after the transfer unintentionally exceeds the income tax basis of the property immediately before the transfer, the excess is subject to payments pursuant to Section 4-29-60.;
(3)(d) The the county must agree agrees to an inclusion in the fee of the property described in subsection (J)(1).
(K)(1) Property previously subject to property taxes in South Carolina does not qualify for the fee except as provided in this subsection:
(a) land, excluding improvements on it, on which a new project is located may qualify for the fee even if it has previously been subject to South Carolina property taxes;
(b) property that has been subject previously to South Carolina property taxes, but has never been placed in service in South Carolina, may qualify for the fee; and
(c) property placed in service in South Carolina and subject to South Carolina property taxes that is purchased in a transaction other than between any of the entities specified in Section 267(b) of the Internal Revenue Code, as defined pursuant to Chapter 6 of Title 12 as of the time of the transfer, may qualify for the fee if the investor sponsor invests at least an additional forty-five million dollars in the project.
(2) Repairs, alterations, or modifications to real or personal property which are not subject to a fee are not eligible for a fee, even if they are capitalized expenditures, except for modifications to existing real property improvements constituting an expansion of the improvements.
(L)(1) For a project not located in an industrial development park as defined in Section 4-1-170, distribution of the fee in lieu of taxes on the project must be made in the same manner and proportion that the millage levied for school and other purposes would be distributed if the property were taxable but without regard to exemptions otherwise available to a project pursuant to Section 12-37-220 for that year. For this purpose, the relative proportions must be calculated based on the following procedure: holding constant the millage rate set in subsection (G) and using all tax abatements automatically granted for taxable property, a full schedule of the property taxes that would otherwise have been distributed to each millage-levying entity in the county must be prepared for the life of the agreement, for the maximum time period allowed pursuant to (C)(3). The property taxes that would have been paid on the property if it were owned by the investor to each millage-levying entity as a percentage of the total of the property taxes for all the entities determines each entity's relative shares of each year's fee payment for all subsequent years of the agreement.
(2) For a project located in an industrial development park as defined in Section 4-1-170, distribution of the fee in lieu of taxes on the project must be made in the manner provided for by the agreement establishing the industrial development park.
(3) A county or municipality or special purpose district that receives and retains revenues from a payment in lieu of taxes may use a portion of this revenue for the purposes outlined in Section 4-29-68 without the requirement of issuing special source revenue bonds or the requirements of Section 4-29-68(A)(4) by providing a credit against the fee due from the sponsor. A direct payment of cash may not be made to a sponsor pursuant to these provisions.
(4) Misallocations of the distribution of the fee-in-lieu of taxes on the project pursuant to this chapter may be corrected by adjusting later distributions, but these adjustments must be made in the same fiscal year as the misallocations. To the extent distributions are made improperly in prior years, a claim for adjustment must be made within one year of the distribution.
(M) As a directly foreseeable result of negotiating the fee, gross revenue of a school district in which a project is located in any year a fee negotiated pursuant to this section is paid may not be less than gross revenues of the district in the year before the first year for which a fee in lieu of taxes is paid. In negotiating the fee, the parties shall assume that the formulas for the distribution of state aid at the time of the execution of the inducement agreement must remain unchanged for the duration of the lease agreement.
(N) Projects on which a fee in lieu of taxes is paid pursuant to this section are considered taxable property at the level of the negotiated payments for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State, and for purposes of computing the index of taxpaying ability pursuant to Section 59-20-20(3). However, for a project located in an industrial development park as defined in Section 4-1-170, projects are considered taxable property in the manner provided in Section 4-1-170 for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State, and for purposes of computing the index of taxpaying ability pursuant to Section 59-20-20(3). Provided, however, that the computation of bonded indebtedness limitation is subject to the requirements of Section 4-29-68(E).
(O)(1) An interest in an inducement agreement, millage rate agreement, and lease agreement, and property to which the these agreement agreements relates relate, may be transferred to another entity at any time. Notwithstanding another provision of this chapter, an equity interest in an a investor sponsor or investor sponsor affiliate with an interest in any inducement agreement, millage rate agreement, or lease agreement may be transferred to another entity or person at any time. To the extent an agreement is transferred, the transferee assumes the current basis the sponsor has in the property subject to the fee for purposes of calculating the fee.
(2) An A investor sponsor or investor affiliate county may enter into a lending, financing, security, lease, or similar arrangement, or succession of such arrangements, with a financing entity, concerning all or part of a project and may enter into a sale-leaseback arrangement including, without limitation, a sale-leaseback arrangement, equipment lease build-to-suit-lease, synthetic lease, Nordic lease, defeased tax benefit, transfer lease, 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 pursuant to subsection (D)(2). 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 investor or investor affiliate sponsor pursuant to terms in the sale-leaseback agreement, affects the amount of the fee due.
(3) A transfer undertaken with respect to the other project projects to effect a financing authorized by subsection (O) must meet the following requirements:
(a) The Department of Revenue department and the county must shall receive written notification, within sixty days after the transfer, of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement does not affect adversely the fee, but a penalty up to ten thousand dollars a year or portion of a year up to a maximum penalty of one hundred twenty fifty thousand dollars may be assessed by the department for late notification.
(b) If the financing entity is the income tax owner of property, either:(i) the financing entity is primarily liable for the fee as to that portion of the project to which the transfer relates with the original transferor sponsor remaining secondarily liable for the payment of the fee; or (ii) the original transferor sponsor must agree agrees to continue to be primarily liable for the payment of the fee as to that portion of the project to which the transfer relates.
(4) Before an investor A sponsor may transfer an inducement agreement, millage rate agreement, lease agreement, or the assets subject to the lease agreement, if it must obtain obtains the prior approval, or subsequent ratification, of the county with which it entered into the original agreement. That approval is not required in connection with transfers to investor sponsor affiliates or other financing-related transfers.
(P) An inducement agreement, a millage rate agreement, or a lease agreement, or the rights of an a investor sponsor or investor sponsor affiliate pursuant to that agreement including, without limitation, the availability of the subsection (D)(2) fee, may not be affected adversely if the bonds issued pursuant to that agreement are purchased by one or more of the entities that are or become investor or investor sponsor or sponsor affiliates.
(Q) Except as provided in subsection (B)(4)(a), If an investor if a sponsor fails to make the minimum investment required by subsection (D)(2) or an investment under subsection (D)(4) if applicable, within the time provided in subsection (C)(2), then the investor sponsor is entitled to the benefits of Chapter 12 of this title if and to the extent allowed pursuant to an applicable agreement between the investor sponsor and the county, and if the requirements of subsection (B)(4)(a) are satisfied. Otherwise, the fee provided in subsection (D)(2) or (D)(4) is no longer available and the investor sponsor must make the payments due pursuant to Section 4-29-60 for the remainder of the lease period.
(R) The minimum amount of the initial investment provided in subsection (B)(3) of this section may not be reduced except by a special vote which, for purposes of this section, means an affirmative vote in each branch of the General Assembly by two-thirds of the members present and voting, but not less than three-fifths of the total membership in each branch.
(S)(1) The investor sponsor shall file the returns, contracts, and other information that may be required by the Department of Revenue department.
(2) Fee payments, and returns showing investments and calculating fee payments, are due at the same time as property tax payments and property tax returns would be due if the property were owned by the investor or investor affiliate sponsor obligated to make the fee payments and file such returns.
(3) Failure to make a timely fee payment and file required returns results in penalties being assessed as if the payment or return were a property tax payment or return.
(4) The Department of Revenue department may issue rulings and promulgate regulations necessary or appropriate to carry out the purpose of this section.
(5) The provisions of Chapters 4 and 54 of Title 12, applicable to property taxes, apply to this section, and, for purposes of that application, the fee is considered a property tax. Sections 12-54-20, 12-54-80, and 12-54-155 do not apply to this section.
(6) Within thirty days of the date of execution of an inducement or lease agreement, a copy of the agreement must be filed with the Department of Revenue department and the county auditor and the county assessor for every county in which the project is located. If the project is located in a multicounty an industrial development park, the agreements must be filed with the auditors and assessors for all counties participating in the multicounty industrial development park.
(7) The department, for good cause, may allow additional time for filing of returns required under this section. The request for an extension may be granted only if the request is filed with the department on or before the date the return is due. However, the extension must not exceed sixty days from the date the return is due. The department shall develop applicable forms and procedures for handling and processing extension requests. An extension may not be granted to a taxpayer sponsor who has been granted an extension for a previous period and has not fulfilled the requirements of the previous period.
(8) To the extent a form or return is filed with the department, the sponsor must file a copy of the form or return with the county auditor, assessor, and treasurer of the county or counties in which the project is physically located. To the extent requested, the county auditor of the county in which the project is physically located shall make these forms and returns available to any county auditor of a county participating in an industrial development park in which the project is located.
(T) Except as otherwise expressly provided in subsection (C)(2), a loss of fee benefits pursuant to this section is prospective only from the date of noncompliance and, subject to subsection (Q), only with respect to that portion of the project to which the noncompliance relates; except that the loss of fee benefits may not result in the recovery from the investor and investor affiliate sponsor of fee payments for more than:
(1) three years from the date a return concerning the fee is filed for the time period during which the noncompliance occurs. A showing of bad faith noncompliance increases the three-year period to a ten-year period; or
(2) ten years if a return is not filed for the time period during which the noncompliance occurs.
(U) Section 4-29-65 does not apply to this section. All references in this section to taxes mean South Carolina taxes unless otherwise expressly stated.
(V)(1) Notwithstanding another provision of this section, in the case of a project consisting of a qualified recycling facility the annual fee is available for no more than thirty years, and for those projects constructed or placed in service during a period of more than one year, the annual fee is available for a maximum of thirty-seven forty years.
(2) Notwithstanding another provision of this section, for a qualified recycling facility, the assessment ratio must be at least three percent.
(3) Any machinery and equipment foundations, port facilities, or railroad track systems used, or to be used, for a qualified recycling facility is considered tangible personal property.
(4) Notwithstanding subsections (F) and (I) of this section, the total costs of all investments made for a qualified recycling facility are eligible for fee payments as provided in this section.
(5) For purposes of fees that may be due on undeveloped property for which title has been transferred to the county by or for the owner or operator of a qualified recycling facility, the assessment ratio is three percent.
(6) Notwithstanding subsection (D)(2)(b) of this section, in the case of a qualified recycling facility, net present value calculations performed pursuant to that subsection must use a discount rate equivalent to the yield in effect for new or existing United States Treasury bonds of similar maturity as published on any day selected by the investor sponsor during the year in which assets are placed into service or in which the inducement agreement is executed.
(7) As used in this subsection, 'qualified recycling facility' and 'investment' have the meaning provided in Section 12-7-1275(A).
(W)(1) All agreements entered into pursuant to this section must include as the first portion of the document a recapitulation of the remaining contents of the document which includes, but is not limited to, the following:
(a) the legal name of each party to the agreement;
(b) the county and street address of the project and property to be subject to the agreement;
(c) the minimum investment agreed upon;
(d) the length and term of the agreement;
(e) the assessment ratio applicable for each year of the agreement;
(f) the millage rate applicable for each year of the agreement;
(g) a schedule showing the amount of the fee and its calculation for each year of the agreement;
(h) a schedule showing the amount to be distributed annually to each of the affected taxing entities;
(i) a statement answering the following questions:
(i) Is the project to be located in a multi-county park formed pursuant to Chapter 29 of Title 4?;
(ii) Is disposal of property subject to the fee allowed?;
(iii) Will special source revenue bonds be issued or credits for infrastructure investment be allowed in connection with this project?;
(iv) Will payment amounts be modified using a net present value calculation?; and
(v) Do replacement property provisions apply?
(j) any other feature or aspect of the agreement which may affect the calculation of subitems (g) and (h) of this item;
(k) a description of the effect upon the schedules required by subitems (g) and (h) of this item of any feature covered by subitems (i) and (j) not reflected in the schedules for subitems (g) and (h);
(l) which party or parties to the agreement are responsible for updating any information contained in the summary document.
(2) The auditor shall prepare a bill for each installment of the fee according to the schedule set forth in subitem (1)(g) or as modified pursuant to subitem (1)(j), (k), or (l) and that payment must be distributed to the affected taxing entities according to the schedule in subitem (1)(g) or as modified pursuant to subitem (1)(j), (k), or (l).
(3) The county and the sponsor and sponsor affiliates may agree to waive any or all of the items described in this subsection."
2. Section 4-29-10(9), (10), and (11) of the 1976 Code, as added by Act 89 of 2001 are further amended to read:
"(9) 'Investor' means one or more entities that sign the inducement agreement with the county and also includes an investor affiliate unless the context clearly indicates otherwise.
(10) 'Investor affiliate' means an entity that joins with, or is an affiliate of, an investor and that participates in the investment in, or financing of, a project.
(11) 'Business' means a single entity or two or more entities if they meet the qualifications of Section 4-12-30."
3. The provisions of SUBSUBSECTION 2 above are effective as of January 1, 2003; except that these provisions may not impair applicable rights under agreements or other writing with respect to which such effective dates would constitute an impairment of contractual rights under applicable law. Without limiting the generality of the preceding sentence, (i) for those projects which have been granted a two-year extension of time to complete the project and that two-year period has not expired, the sponsor may at any time during the two-year extension request an additional three years to complete the project, and (ii) the county and the sponsor may agree to waive the provisions of subsection (W) under any agreement whenever executed.
AAA. 1. Chapter 44, Title 12 of the 1976 Code is amended to read:
Section 12-44-10. This act may be cited as the 'Fee in Lieu of Tax Simplification Act of 1997'.
Section 12-44-20. The General Assembly finds that:
(1) With the state's economy being centrally connected, as the wealth-generating capacity of South Carolina's businesses has increased, the state's per capita income also has increased.
(2) Since South Carolina's property tax rates as applied to manufacturing and certain commercial properties are disproportionately higher than those applied to other property in South Carolina, this disparity and the resulting property tax burdens historically have impeded new and expanded business in South Carolina.
(3) Previous General Assemblies have enacted legislation which reduces this disparity and the resulting property tax burden through a complex fee in lieu of tax arrangement that requires a company to transfer title to its property to the county and then lease the property back by paying rent and fees instead of property taxes on the property. The arrangement often includes the issuance of industrial revenue bonds by the county.
(4) The transfer of title and issuance of bonds are expensive, complex, time-consuming, and difficult undertakings for the county, public, and companies to understand and implement. The current rules also make financings more difficult and more expensive. All of these factors act to discourage new investments in South Carolina.
(5) The 'Fee in Lieu of Tax Simplification Act' simplifies the method for obtaining the fee in lieu of tax benefits while maintaining the essential county council approval process.
(6) The 'Fee in Lieu of Tax Simplification Act' makes the fee in lieu of tax incentive more attractive by eliminating the requirement for the issuance of industrial revenue bonds or the transfer of title of property to a county. This simplification facilitates the benefit for the county and the company making the investments.
Section 12-44-30. As used in this chapter:
(1) 'Alternative payment method' means fee payments as provided in Section 12-44-50(A)(3).
(2) 'Commencement date' means the last day of the property tax year during which economic development property is placed in service, except that this date must not be later than the last day of the property tax year which is three years from the year in which the county and the sponsor enter into a fee agreement.
(3) Reserved.
(4)(3) 'County' means the county or counties in which the project is proposed to be located. A project may be located in more than one county, subject to the provisions of Section 12-44-40(G).
(5)(4) 'County council' means the governing body of the county in which the economic development property is located, except as specifically provided by Section 12-44-40(G).
(6)(5) 'Department' means the South Carolina Department of Revenue.
(7)(6) 'Economic development property' means each item of real and tangible personal property comprising a project which satisfies the provisions of Section 12-44-40(C) and other requirements of this chapter and becomes is subject to a fee agreement. That property, other than replacement property qualifying under Section 12-44-60, must be placed in service by the end of the investment period.
(8)(7) 'Enhanced investment' means a project which results in a total investment by a sponsor of:
(a) by a single sponsor of at least two hundred million dollars, which resulting in a total investment of at least four hundred million dollars when added to the previous investments, results in a total investment of at least four hundred million dollars, and which is creating at least two hundred new full-time jobs at the project;
(b) by a single sponsor investing at least four hundred million dollars of property qualifying for the fee and which is creating at least two hundred new full-time jobs at the project. The new full-time jobs requirement of this item does not apply to a taxpayer which paid more than fifty percent of all property taxes actually collected in the county for more than the twenty-five years ending on the date of the agreement;
(c) by a single sponsor investing at least six hundred million dollars in this State; at least four hundred million dollars in a county classified as either least developed or underdeveloped, by a limited liability company and/or one or more of the members or equity holders where a member or equity holder is creating, at a site qualifying for the fee, at least one hundred new full-time jobs with an average annual salary of at least forty thousand dollars within four years of the date of execution of the fee agreement.
(d) at least four hundred million dollars in the building of a project consisting of gas-fired combined-cycle power facility and by a sponsor which creates at least twenty-five full-time jobs as defined in Section 12-6-3360(M) at that facility project and invests an additional five hundred million dollars in this State. The investment must be made by a sponsor which consists of a corporation, its subsidiaries, and its limited liability companies. The new full-time jobs requirement of this subsection does not apply to a taxpayer which paid more than fifty percent of all property taxes actually collected in the county for more than twenty-five years ending on the date of the fee agreement.
(9)(8) 'Exemption period' means the period beginning on the later of the commencement date or the last day of the property tax year in which the fee agreement is entered into the first day of the property tax year after the property tax year in which an applicable piece of economic development property is placed in service and ending on the termination date. For projects which are completed and placed in service during more than one year, the exemption period applies to each year's investment made by a sponsor during the investment period.
(9) 'Fee' means the amount paid in lieu of ad valorem property tax as provided in the fee agreement.
(10) 'Fee agreement' means an agreement between the sponsor and the county obligating the sponsor to pay fees instead of property taxes during the exemption period for each item of economic development property as more particularly described in Section 12-44-40.
(11) 'Inducement resolution' means a resolution of the county setting forth the commitment of the county to enter into a fee agreement.
(12) 'Infrastructure improvement credit' means a credit against the fee as provided by Section 12-44-70.
(13) 'Investment period' means the period beginning sixty days before the county takes action or identifies the project under Section 12-44-40(C) with the first day that economic development property is purchased or acquired and ending five years after the commencement date; except that for a project with an enhanced investment as described above, the period ends eight years after the commencement date. The minimum investment must be completed within five years of the commencement date. For an enhanced investment, the enhanced investment applicable minimum investment and job requirements under Section 12-44-30(7) must be completed within eight years of the commencement date. For those sponsors that, after qualifying for the enhanced investment, have more than five hundred million dollars in capital invested in this State and employ more than one thousand people in this State, the investment period ends ten years after the commencement date. If the sponsor does not anticipate completing the project within this period, the sponsor may apply to the county before the end of the investment period for an extension of time to complete the project. If the county agrees to an extension, it must do so in writing and furnish a copy of the extension to the Department of Revenue department within thirty days of the date the extension was granted. The extension may not exceed five years in which to complete the project. An extension is not allowed for the time period in which the sponsor must meet the minimum investment requirement.
(14) 'Minimum investment' means a project which that results in a total investment by a sponsor of not less than five million dollars within the investment period. If a county has an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years the last twenty-four month period based on data available on the most recent November first, the minimum investment is one million dollars. The department shall designate these reduced investment counties by December thirty-first of each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The designations are effective for a sponsor whose fee agreement is signed in the calendar year following the county designation. For all purposes of this chapter, the minimum investment may include amounts expended by a sponsor or sponsor affiliate as a nonresponsible party in a voluntary cleanup contract on the property pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program if the Department of Health and Environmental Control certifies completion of the cleanup. If these the amounts under the Brownfield's Voluntary Cleanup Program equal at least one million dollars, the investment threshold requirement of this chapter is deemed to have been met.
(15) 'Multicounty Industrial development park' means an industrial or business park developed by two or more counties as defined in Section 4-1-170.
(16) 'Project' means land, and buildings, and other improvements on the land, including water, sewage treatment and disposal facilities, air pollution control facilities, and all other machinery, apparatus, equipment, office facilities, and furnishings which are considered necessary, suitable, or useful by a sponsor.
(17) 'Replacement property' means property placed under the fee agreement to replace economic development property previously subject to the fee agreement, as provided in Section 12-44-60.
(18) 'Sponsor' means one or more entities which sign the fee agreement with the county and makes the minimum investment, subject to the provisions of Section 12-44-40, each of which makes the minimum investment as provided in Section 12-44-30(13) and also includes a sponsor affiliate unless the context clearly indicates otherwise. If a project consists of a manufacturing, research and development, corporate office, or distribution facility, as those terms are defined in Section 12-6-3360(M), each sponsor or sponsor affiliate is not required to invest the minimum investment if the total investment at the project exceeds ten million dollars.
(19) 'Sponsor affiliate' means an entity that joins with or is an affiliate, as defined in Section 12-44-130, of a sponsor and that participates in the investment in, or financing of, a project.
(20) 'Termination date' means the date which is the last day of a property tax year which is the nineteenth year following the first property tax year in which an applicable piece of economic development property is placed in service. With respect to a fee agreement involving an enhanced investment, the termination date is the last day of a property tax year which is the twenty-ninth year following the first property tax year in which an applicable piece of economic development property is placed in service. If the fee agreement is terminated in accordance with Section 12-44-140, the termination date is the date the agreement is terminated.
Section 12-44-40. (A) To obtain the benefits provided by this chapter, the sponsor and the county must enter into a fee agreement requiring the payment of the fee described in Section 12-44-50. The county may not enter into a fee agreement unless the county council must adopts adopt an ordinance approving the fee agreement with the sponsor.
(B) If the county and the sponsor enter into a fee agreement, all economic development property is exempt from all ad valorem property taxation imposed by Chapter 37 of Title 12 for the entire exemption period. Upon termination of the exemption period, the property is subject to property taxation in the manner provided by law, unless the property is otherwise exempt.
(C) Subject to the provisions of subsection (D) and the provisions of Section 12-44-110, real or tangible personal property of a sponsor or sponsor affiliate which has been acquired for which expenditures have been incurred by the sponsor or sponsor affiliate and which are used in connection with a project or a portion of it a project, qualifies as economic development property, if the expenditures are incurred or the property is acquired after, or within sixty days before, the county takes action reflecting or identifying the project or proposed project including, but not limited to, the adoption of an inducement or similar resolution by county council and before the end of the investment period.
(D) A county has two years from the date it takes action reflecting or identifying the project, or proposed project, to adopt an inducement resolution if the inducement resolution was not the original county action reflecting or identifying the project or proposed project. Otherwise, expenditures incurred before adoption of the inducement resolution do not qualify as economic development property.
(E) If a fee agreement is not executed within five years after the inducement resolution is adopted by the county council, the real property or tangible personal property of a sponsor and sponsor affiliate for which expenditures have been incurred by the sponsor and sponsor affiliate with respect to the project do not qualify as economic development property.
(F) To be eligible to enter into a fee agreement, the sponsor shall commit to a project which meets the minimum investment level and, with respect to applicable enhanced investments, the total applicable investment and the minimum job creation levels required for an enhanced investment.
(G) The project which is the subject of the fee agreement must be located in a single county or in a multicounty an industrial development park. A project located or on contiguous tracts of land in more than one county but not in an industrial development park, may qualify for the fee if:
(1) the counties agree on the terms of the fee and the distribution of the fee payment;
(2) When a tract crosses a county boundary, all counties in which the tract is located must be parties to the fee agreement, which must provide the manner in which the fee payments must be distributed among the counties and the fee agreement must set a minimum millage rate is provided for in the agreement not lower than the millage rate applicable to the site in the county in which the greatest amount of investment occurs.; and
(3) all counties are parties to all agreements establishing the terms of the fee.
(H)(1) Before undertaking a project The county council shall evaluate projects for classification as economic development property, based on criteria that include, but are not limited to:
(1) the purposes to be accomplished by the project are proper governmental and public purposes;
(2) the anticipated dollar amount and nature of the investment to be made; and
(3) the anticipated costs and benefits to the county.
(I) Before entering into a fee agreement, the county council shall find that:
(1)(a) the project is anticipated to benefit the general public welfare of the locality by providing services, employment, recreation, or other public benefits not otherwise adequately provided locally;
(2)(b) the project gives rise to no pecuniary liability of the county or incorporated municipality or to no a charge against its general credit or taxing power; and
(3)(c) the purposes to be accomplished by the project are proper governmental and public purposes; and (4) the benefits of the project to the public are greater than the costs to the public.
(J)(2) In making the findings of subsections (H) and (I) this subsection, the county council may seek the advice and assistance of the department or the Board of Economic Advisors. The determination and findings must be set forth in an ordinance.
(K)(I) If the governing body of a county council has by contractual agreement provided for a change in fee in lieu of taxes arrangements conditioned on a future legislative enactment, a new enactment does not bind the original parties to the agreement unless the change is ratified by the governing body of the county council.
(L)(J)(1) Upon agreement of the parties, and except as provided in item (2), a fee agreement may be amended or terminated and replaced with regard to all matters, including the addition or removal of sponsors or sponsor affiliates.
(2) An amendment or replacement of a fee agreement may not be used to change lower the millage rate, discount rate, assessment ratio, or length increase the term of the agreement.
Section 12-44-50. (A) A fee agreement must contain the requirement that a fee in lieu of property tax be paid as follows:
(1) During the exemption period, the sponsor shall pay, or be responsible for payment, to the county the annual fee payment in connection with the economic development property which has been placed in service, in an amount not less than the property taxes that would be due on the economic development property if it were taxable but using:
(a) an assessment ratio of not less than six percent, or four percent for those projects qualifying under the if the project involves an enhanced investment, definition an assessment ratio of not less than four percent;
(b) a millage rate as established that is, either:
(i) by the county, which must be a cumulative property tax millage rate legally levied by or on behalf of all millage levying entities within which the project is to be located, that is applicable during the period beginning on the thirtieth day of June preceding the calendar year in which the fee agreement is executed and ending on the date the initial lease agreement is executed fixed for the life of the fee; or
(ii) as provided under subsubitem (i), except that every fifth year the millage rate is allowed to increase or decrease every fifth year in step with the average cumulative actual millage rate applicable to the project based upon the preceding five-year period; and
(c) a fair market value for the economic development property.:
(i) If if real property is constructed for the fee or is purchased in an arm's length transaction, The the fair market value of real property is determined by using the original income tax basis for South Carolina income tax purposes without regard to depreciation, otherwise the property must be reported at its fair market value for ad valorem property taxes as determined by appraisal. The fair market value estimate established for the first year of the fee remains the fair market value of the real property for the life of the fee; but if real property is constructed for the fee or is purchased in an arm's length transaction, fair market value equals the original income tax basis. Otherwise, the department shall determine fair market value by appraisal.
(ii) Fair fair market value for personal property is determined by using the original tax basis for South Carolina income tax purposes less depreciation allowable for property tax purposes, except that the investor sponsor is not entitled to extraordinary obsolescence. and
(d) to establish the millage rate for purposes of subsection (A)(1)(b)(i) or the first five years millage under (A)(1)(b)(ii), the millage rate must be no lower than the cumulative property tax millage rate levied by, or on behalf of, all taxing entities within which the project is located on either:
(i) June thirtieth of the year preceding the calendar year in which the fee agreement is executed; or
(ii) the millage rate in effect on June thirtieth of the calendar year in which the fee agreement is executed.
(2) The fee calculation must be made so that the property, if taxable, is allowed all applicable property tax exemptions except the exemption allowed under Section 3(g) of Article X of the Constitution of this State and the exemption allowed pursuant to Section 12-37-220(B)(32) and (34).
(3) If the project subject to the fee agreement involves an investment of at least forty-five million dollars or more, or any higher minimum established by the county, the county and the sponsor may agree to pay the fees established in subsection (A)(1) based on an alternative payment method yielding a net present value of the fee schedule as calculated in subsection (A)(1) provided the sponsor agrees to a millage rate as established in subsection (A)(1)(b)(i). Net present value calculations must use a discount rate equivalent to the yield in effect for new or existing United States Treasury bonds of similar maturity as published during the month in which the fee agreement is executed. If no yield is available for the month in which the fee agreement is executed, the last published yield for the appropriate maturity available must be used. If there are no bonds of appropriate maturity available, bonds of different maturities may be averaged to obtain the appropriate maturity.
(B)(1) If a sponsor or sponsor affiliate disposes of an item of economic development property, the fee must be reduced by the amount of the fee applicable to that item of economic development property. Economic development property is disposed of only when it is scrapped or sold or it is removed from the project. If it is removed from the project, it is subject to ad valorem property taxes to the extent the property remains in the State. Transactions with respect to items of property described in Section 12-44-120 are not a disposition of property under this subsection.
(2) If the sponsor used an alternative payment method as provided in subsection (A)(3), the fee applicable to the item of property which was disposed of must be recomputed in accordance with subsection (A)(1) and, to the extent that the amount which would have been paid with respect to this item under subsection (A)(1) exceeds the fee actually paid by the sponsor, the sponsor shall pay the difference with the next annual fee payment due after the item of property is disposed of. This amount is subject to interest as provided in Section 12-54-25.
Section 12-44-55. (A) All agreements entered into pursuant to this chapter must include as the first portion of the document a recapitulation of the remaining contents of the document which includes, but is not limited to, the following:
(1) the legal name of each party to the agreement;
(2) the county and street address of the project and property to be subject to the agreement;
(3) the minimum investment agreed upon;
(4) the length and term of the agreement;
(5) the assessment ratio applicable for each year of the agreement;
(6) the millage rate applicable for each year of the agreement;
(7) a schedule showing the amount of the fee and its calculation for each year of the agreement;
(8) a schedule showing the amount to be distributed annually to each of the affected taxing entities;
(9) a statement answering the following questions:
(a) Is the project to be located in a multi-county park formed pursuant to Chapter 29 of Title 4?;
(b) Is disposal of property subject to the fee allowed?;
(c) Will special source revenue bonds be issued or credits for infrastructure investment be allowed in connection with this project?;
(d) Will payment amounts be modified using a net present value calculation?; and
(e) Do replacement property provisions apply?
(10) any other feature or aspect of the agreement which may affect the calculation of items (7) and (8) of this subsection;
(11) a description of the effect upon the schedules required by items (7) and (8) of this subsection of any feature covered by items (9) and (10) not reflected in the schedules for items (7) and (8) of this subsection;
(12) which party or parties to the agreement are responsible for updating any information contained in the summary document.
(B) The auditor shall prepare a bill for each installment of the fee according to the schedule set forth in subsection (A)(7) or as modified pursuant to subsection (A)(10), (11), or (12) and that payment must be distributed to the affected taxing entities according to the schedule in subsection (A)(8) or as modified pursuant to subsection (A)(10), (11), or (12). The county and the sponsor and sponsor affiliates may agree to waive any or all of the items described in this subsection.
Section 12-44-60. (A) The fee agreement may provide that property which is placed in service as a replacement for economic development property may become economic development property. This replacement property is not required to serve the same function as the economic development property it is replacing. Replacement property is deemed to replace the oldest property subject to the fee, whether real or personal, which is disposed of in the same property tax year as the replacement property is placed in service. Replacement property qualifies as economic development property only to the extent of the original income tax basis of the economic development property which is being disposed of in the same property tax year. More than one piece of replacement property can replace a single piece of economic development property.
(B) To the extent that the income tax basis of the replacement property exceeds the original income tax basis of the economic development property which it is replacing, the excess amount is subject to annual payments calculated as if the exemption for economic development property were not allowed. Replacement property is entitled to the fee payment for the period of time remaining during the exemption period for the economic development property which it is replacing.
(C) The new replacement property which qualifies for the fee provided in Section 12-44-50 is recorded using its income tax basis, and the fee is calculated using the millage rate and assessment ratio provided on the original economic development property. The fee payment for replacement property must be based on Section 12-44-50(A)(3) if the sponsor originally used an alternative payment method.
Section 12-44-70. (A) If allowed by the fee agreement and subject to any limitations and conditions contained in the fee agreement, a sponsor may take a credit against the fee established in Section 12-44-50(A)(1) and (3) over the term specified in the fee agreement to offset improvement costs, except that a direct payment of cash must not be made to the sponsor:
(1) for a project not located in a an multicounty industrial development park, to the extent that the cumulative credit taken does not exceed the lesser of:
(a) the improvement costs of the project; or
(b) the county's share of fees distributed from the project under Section 12-44-80(A).
A municipality or special purpose district that would otherwise receive a distribution of fee in lieu of taxes under Section 12-44-80(A), may agree to allow to a sponsor a credit against the fee established in Section 12-44-50(A)(1) or (A)(3) in an amount not exceeding the share of the fee in lieu of taxes that would have been distributed to the municipality or special purpose district with respect to the sponsor's project; or
(2) for a project located within a multicounty an industrial development park, to the extent that the cumulative credit taken does not exceed the lesser of:
(a) the improvement costs of the project; or
(b) the county's share total amount of fees the county is entitled to retain under the industrial development park agreement.
(B) For purposes of this section, improvement costs include the cost of designing, acquiring, constructing, improving, or expanding:
(1) the infrastructure serving the issuer project; and
(2) improved and unimproved real property, buildings, and structural components of buildings used in the operation of a manufacturing or commercial enterprise project in order to enhance economic development.
Section 12-44-80. (A) For a project not located in a an multicounty industrial development park, distribution of the fee payments on the project must be made in the same manner and proportion that the millage levied for school and other purposes would be distributed if the property were taxable but without regard to exemptions otherwise available to the project pursuant to Section 12-37-220.
(B) For a project located in a an multicounty industrial development park, distribution of the fee payments on the project must be made in the same manner provided for by the agreement between or among counties establishing the multicounty industrial development park.
(C) Misallocations of the distribution of the fee payments on the project pursuant to this chapter may be corrected by adjusting later distributions, but these adjustments must be made in the same fiscal year as the misallocations. To the extent that distributions have been made improperly in previous years, claims for adjustment must be made within one year of the distribution.
Section 12-44-90. (A) The investor sponsor shall file returns, contracts, and other information which may be required by the department.
(B) Fee payments, and returns showing investments and calculating fee payments, are due at the same time as property tax payments and property tax returns are due.
(C) Failure to make a timely fee payment and file required returns results in penalties being assessed as if the payment or return were a property tax payment or return.
(D) The department may issue rulings and promulgate regulations as necessary to carry out the purpose of this section.
(E) The provisions of Chapters 4 and 54 of Title 12, applicable to property taxes, apply to this section, and for purposes of the application, the fee is considered a property tax. Section 12-54-155 does not apply to this section.
(F) The provisions of Chapters 49, 51, and 53 of Title 12 apply to a fee agreement and a fee due under the agreement. For purposes of those chapters, the fee is considered a property tax.
(G) Within thirty days of the date of execution of a fee agreement, a copy of the fee agreement must be filed with the Department of Revenue department, the county assessor, and the county auditor for the county in which the project is located. If the project is located in a an multicounty industrial development park the fee agreement must be filed with the auditors and assessors for all counties participating in the multicounty industrial development park.
(H) The department, for good cause, may allow additional time for filing of returns required under this chapter. The request for an extension may be granted only if the request is filed with the department on or before the date the return is due. However, the extension must not exceed sixty days from the date the return is due. The department shall develop applicable forms and procedures for handling and processing extension requests. An extension may not be granted to a taxpayer sponsor who has been granted an extension for a previous period and has not fulfilled the requirements of the previous period.
(I) To the extent a form or a return is filed with the department, the sponsor must file a copy of the form or return with the county auditor, assessor, and treasurer of the county or counties in which the project is located. To the extent requested, the county auditor of the county in which the project is physically located shall make these forms and returns available to any county auditor of a county participating in an industrial development park in which the project is located.
Section 12-44-100. (A) A fee agreement may provide that a sponsor who has committed to an enhanced investment or an investment above that required for a minimum investment may continue to receive the benefits of this chapter, even if the sponsor fails to make or maintain the required investment or fails to create the jobs required by the fee agreement, if the sponsor meets the minimum investment. If the sponsor fails to make or maintain the required investment or create the required number of jobs, the fee agreement may not provide for an assessment ratio and an exemption period more favorable than those allowed for the minimum investment.
(B) Notwithstanding the use of the term 'assessment ratio', a sponsor and a county may negotiate a fee agreement using differing assessment ratios for different assessment years or different levels of investment covered by the fee agreement, but the assessment ratio for an assessment year may not be lower than six percent or, if the project involves an enhanced investment, four percent.
(C) The fee agreement may provide that replacement property is not subject to Section 12-44-60 if the sponsor fails to make the level of investment specified in the fee agreement.
Section 12-44-110. Property which previously has been subject to property taxes in South Carolina does not qualify as economic development property, except that:
(1) land, excluding existing improvements on the land, on which a new project is to be located may qualify as economic development property even if it previously has been subject to property taxes in this State;
(2) property which has been subject to property taxes in this State, but which has never been placed in service in this State, may qualify as economic development property;
(3) property which previously has been placed in service in this State and previously has been subject to property taxes in this State which is purchased in a transaction other than between any of the entities specified in Section 267(b) of the Internal Revenue Code, as defined under Chapter 6 of Title 12 as of the time of the transfer, may qualify as economic development property if the sponsor invests at least an additional forty-five million dollars at the project;
(4) repairs, alterations, or modifications to real or personal property, which is not economic development property, are not eligible to be economic development property, even if they are capitalized expenditures, except for modifications which constitute an expansion to existing real property improvements.
Section 12-44-120. (A) An interest in a fee agreement and the economic development property to which the fee agreement relates may be transferred to another entity at any time. Notwithstanding another provision of this chapter, an equity or other interest in an entity with an interest in a fee agreement or the economic development property, or both, to which a fee agreement relates a sponsor may be transferred to another entity or person at any time. To the extent that the fee agreement is transferred, for the purposes of calculating the fee, the transferee assumes the current basis the sponsor has in real or personal property subject to the fee.
(B) A sponsor may enter into lending, financing, security, leasing, or similar arrangements, or succession of such arrangements, with a sponsor affiliate or other financing entity concerning all or part of a project including, without limitation, a sale-leaseback arrangement, equipment lease, build-to-suit lease, synthetic lease, nordic lease, defeased tax benefit, or transfer lease, an assignment, 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 economic development property. 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 sponsor, pursuant to terms in the sale-leaseback agreement, affects the amount of the payments fee due under Section 12-44-50.
(C) All transfers undertaken with respect to other projects to effect a financing authorized under this subsection must meet the following requirements:
(1) The department and the county must receive notification, in writing within sixty days after the transfer, of the identity of each transferee and other information required by the department with the appropriate returns. Failure to meet this notice requirement does not adversely affect the exemption fee, but a penalty may be assessed by the department for late notification for up to ten thousand dollars a year or portion of a year, up to a maximum penalty of fifty thousand dollars.
(2) If the sponsor affiliate or other a financing entity is the income tax owner of property, either the financing entity is primarily liable for the payments fee due under Section 12-44-50 as to that portion of the project to which the transfer relates, with the sponsor remaining secondarily liable for the payment, or the sponsor must agree to continue to be primarily liable for the annual payments as to that portion of the project to which the transfer relates.
(D) Before a A sponsor may transfer a fee agreement, or substantially all the economic development property to which the fee agreement relates, if it must obtain obtains the prior approval, or subsequent ratification, of the county with which it entered into the fee agreement. That approval is not required in connection with transfers to sponsor affiliates or other financing-related transfers.
Section 12-44-130. (A) To Except as otherwise provided in Section 12-44-30(18), to be eligible for the fee, a sponsor and each sponsor affiliate must invest the minimum investment as defined in Section 12-44-30(14). For an enhanced investment pursuant to Section 12-44-30(8), a single sponsor must make the investment, unless otherwise provided in that section. The county and the sponsors who are part of the fee agreement may agree that investments by other sponsors or sponsor affiliates within the investment period qualify for the payment fee regardless of whether the sponsor or sponsor affiliate was part of the fee agreement, except that each new sponsor affiliate must invest at least the minimum investment or the enhanced investment if applicable in the project, unless the project is a manufacturing, research and development corporate office, or distribution facility as provided in Section 12-44-30(18). To qualify for the exemption fee, the other sponsors or sponsor affiliates must be approved specifically by the county and must agree to be bound by agreements with the county relating to the exemption fee. These sponsors sponsor affiliates are not bound by agreements, or portions of agreements, which to the extent the agreements do not affect the county. The investments pursuant to this subsection must be at the sponsor's project. The fee agreement may provide for a process for approval of sponsor affiliates.
(B) The department and the county must be notified in writing of all sponsors or sponsor affiliates which have investments subject to the fee exemption before or within sixty ninety days after the execution of the fee agreement covering the investment by the sponsor or sponsor affiliate end of the calendar year during which the project, or a phase of it, was placed in service. The department may extend the sixty-day ninety-day period upon written request. Failure to meet this notice requirement does not affect adversely the exemption fee, but a penalty may be assessed by the department for late notification of up to in an amount of ten thousand dollars a month or portion of a month, with the total penalty not to exceed one hundred twenty fifty thousand dollars.
Section 12-44-140. (A) The county and the sponsor may agree to terminate the fee agreement at any time. From the date of termination, all economic development property is subject to ad valorem taxation as imposed by law. If the sponsor used an alternative payment method, the sponsor shall pay to the county at the time of termination an additional fee payment equal to the difference between the total amount of the fee payments that would have been made with respect to the economic development property by the sponsor if the standard fee calculation under Section 12-44-50(A)(1) had been used and the total amount of fee payments actually made by the sponsor. This amount is subject to interest as provided in Section 12-54-25.
(B) Except as provided in Section 12-44-100(A), A a fee agreement is automatically terminated if the sponsor fails to satisfy the minimum investment level provided in Section 12-44-30(14) within the investment period or otherwise fails to meet the applicable minimum investment or job creation requirements of a fee agreement to qualify for the benefits of this chapter provided in Section 12-44-30(8). If the fee agreement is terminated under this subsection, all economic development property is subject, as of the commencement date, to ad valorem property taxation as imposed by law. At the time of termination, the sponsor shall pay to the county an additional fee equal to the difference between the total amount of property taxes that would have been paid by the sponsor had the project been taxable, taking into account exemptions from property taxes that would have been available to the sponsor, and the total amount of fee payments actually made by the sponsor. This additional amount is subject to interest as provided in Section 12-54-25.
(C) If at any time a sponsor or sponsor affiliate no longer has the minimum level of investment as provided in subsection 12-44-30(14), without regard to depreciation, that sponsor or sponsor affiliate no longer qualifies for the fee. If the sponsor qualifies for the enhanced investment, the sponsor must maintain the applicable level of investment, without regard to depreciation. If the sponsor fails to maintain the applicable level of investment in Section 12-44-30(8), it no longer qualifies for the fee unless the provisions of Section 12-44-100 apply.
(D) To the extent necessary to determine if a sponsor or sponsor affiliate has met its minimum investment requirements, any statute of limitations that might apply pursuant to Section 12-54-85 is suspended for all sponsors and sponsor affiliates and the department or the county may seek to collect any amounts that may be the due pursuant to this section.
Section 12-44-150. Projects to which a fee agreement applies pursuant to this section are considered taxable property at the level of the negotiated payments for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State, and for purposes of computing the index of taxpaying ability pursuant to Section 59-20-20(3). However, for a project located in an industrial development park as defined in Section 4-1-170, projects are considered taxable property in the manner provided in Section 4-1-170 for purposes of bonded indebtedness pursuant to Sections 14 and 15 of Article X of the Constitution of this State, and for purposes of computing the index of taxpaying ability pursuant to Section 59-20-20(3). However, the computation of bonded indebtedness limitation is subject to the requirements of Section 4-29-68(E).
Section 12-44-160. If all or part of this chapter is determined to be unconstitutional or otherwise illegal by a court of competent jurisdiction, a sponsor has one hundred eighty days from the date of the determination to transfer title to economic development property to the county and have it qualify for a fee in lieu of taxes pursuant to Chapter 12 of Title 4 or Section 4-29-67.
Section 12-44-170. (A) Economic development property as defined in Section 12-44-30(7) may include property placed in service for property tax purposes after the effective date of this act.
(B) An entity with property subject to an existing fee in lieu of property taxes arrangement under Article 1, Chapter 12, Title 4 of the 1976 Code or Section 4-29-67 of the 1976 Code, or which has acquired or will acquire property pursuant to an inducement resolution, may elect, with the consent of the applicable county, to transfer property from the prior arrangement to the fee arrangements provided by this chapter and that property must be considered automatically economic development property as defined in Section 12-44-30(7) subject to:
(1) a continuation of the same fee payments required under the existing lease agreement;
(2) a continuation of the same fee in lieu of tax payments only for the time required for payments under the existing lease agreement;
(3) a carryover of minimum investment or employment requirements of the existing arrangements to the new fee arrangement; and
(4) appropriate agreements and amendments between the sponsor and the county entered into continuing the provisions and limitations of the prior agreement.
The entity and the governing body of the county may enter into a new fee agreement reflecting the appropriate handling of the transition with due regard to appropriate cancellation or amendment of existing financing arrangements."
2. The provisions of this SUBSECTION are effective as of January 1, 2003. For those projects that have been granted a two-year extension of time to complete the project and the two-year period has expired, the sponsor may request an additional three years to complete the project notwithstanding the provisions of Section 4-12-30(C)(2).
BBB. The Code Commissioner is directed to make the following changes in Title 12, Chapter 28: In all instances, substitute "user fee" for "tax" and "motor fuel subject to the user fee" for "taxable motor fuel" .
CCC. Unless otherwise provided, this act takes effect upon approval by the Governor, except that SUBSECTION M.3. applies to tax years beginning after 2003, Sections 12-609-440 and 12-60-450 as contained in SUBSECTION DD. take effect January 1, 2004, and SUBSECTIONS SS.2., TT., UU, and VV. take effect January 1, 2005.
SECTION 4. Section 56-3-115 of the 1976 Code, as last amended by Act 333 of 1998, is further amended to read:
"Section 56-3-115. The owner of a vehicle commonly known as a golf cart, if he has a valid driver's license, may obtain a permit from the department upon the payment of a fee of five dollars and proof of financial responsibility which permits his agent, employees, or him to:
(1) operate the golf cart on a secondary highway or street within two miles of his residence or place of business during daylight hours only; and
(2) cross a primary highway or street while traveling along a secondary highway or street within two miles of his residence or place of business during daylight hours only."
SECTION 5. This act takes effect upon approval by the Governor and applies for eligible motor vehicles leased on and after that date.
This web page was last updated on Thursday, June 25, 2009 at 9:30 A.M.