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Indicates Matter Stricken
Indicates New Matter
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
April 9, 2003
S. 516
S. Printed 4/9/03--S.
Read the first time March 26, 2003.
To whom was referred a Bill (S. 516) to amend Section 12-6-3360, as amended, Code of Laws of South Carolina, 1976, relating to the targeted jobs tax credit, so as to extend, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
HUGH K. LEATHERMAN, SR. for Committee.
REVENUE IMPACT 1/
The Board of Economic Advisors has reviewed the bill and has determined that there is no impact on state or local general fund revenue in FY2003-04.
Explanation
This bill would amend the definition of a "new job" as a condition for obtaining a jobs tax credit. Currently, under Section 12-6-3360(M)(3), a "new job" is a "job created in this State at the time a new facility or an expansion is initially staffed". The bill would apply to a situation in which an outside company purchases the assets of an existing company that is under Chapter 11 of the United States Bankruptcy Code. The bill provides jobs tax credits to the purchasing company for the employees at the facility. As a practical matter, corporations that are in bankruptcy do not pay corporation income tax to the State, except in rare instances. In its revisions to its estimates this past year, the BEA lowered its estimate of corporate income taxes, taking into account weak earnings of corporations, particularly those under Chapter 11. Because of these actions, it would not be necessary to make further adjustments to the estimate because of this provision. The proposed change in the definition of a "new job" would not have an impact on state or local General Fund revenue in FY2003-04.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND SECTION 12-6-3360, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE TARGETED JOBS TAX CREDIT, SO AS TO EXTEND THE DEFINITION OF "NEW JOB" TO INCLUDE JOBS MAINTAINED WHEN AN UNRELATED ENTITY ACQUIRES SUBSTANTIALLY ALL OF THE ASSETS OF A COMPANY OPERATING UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE, MORE THAN FIVE HUNDRED INDIVIDUALS ARE HIRED WHO WERE LAST EMPLOYED BY THE BANKRUPT TAXPAYER, AND THE JOBS ARE IN A MANUFACTURING FACILITY LOCATED IN A COUNTY CLASSIFIED AS DISTRESSED OR LEAST DEVELOPED.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-6-3360(M)(3) of the 1976 Code is amended to read:
"(3) 'New job' means a job created in this State at the time a new facility or an expansion is initially staffed. Except as otherwise provided in this item, the term does not include a job created when an employee is shifted from an existing location in this State to a new or expanded facility whether the transferred job is from, or to, a facility of the taxpayer or a related person. A related person includes any entity or person that bears a relationship to the taxpayer as described in Section 267 of the Internal Revenue Code. However, this exclusion of a new job created by employee shifting does not extend to a job created at a new or expanded facility located in a county in which is located an 'applicable federal facility' as defined in Section 12-6-3450(A)(1)(b). The term 'new job' also includes an existing job at a facility of an employer which is reinstated after the employer has rebuilt the facility due to:
(a) its destruction by accidental fire, natural disaster, or act of God;
(b) involuntary conversion as a result of condemnation or exercise of eminent domain by the State or any of its political subdivisions or by the federal government.
Destruction for purposes of this provision means that more than fifty percent of the facility was destroyed. For purposes of this section, involuntary conversion as a result of condemnation or exercise of eminent domain includes a legally binding agreement for the purchase of a facility of an employer entered into between an employer and the State of South Carolina or a political subdivision of the State under threat of exercise of eminent domain by the State or its political subdivision.
The year of reinstatement is the year of creation of the job. All reinstated jobs qualify for the credit pursuant to this section, and a comparison is not required to be made between the number of full-time jobs of the employer in the taxable year and the number of full-time jobs of the employer with the corresponding period of the prior taxable year.
Notwithstanding any other provision of law, 'new job' includes jobs created by a taxpayer when the taxpayer hires more than five hundred full-time individuals:
(a) at a manufacturing facility located in a county classified either as distressed or least developed;
(b) immediately before their employment by the taxpayer, the individuals were employed by a company operating under Chapter 11 of the United States Bankruptcy Code; and
(c) the taxpayer, as an unrelated entity, acquires substantially all of the assets of the company operating under Chapter 11 of the United States Bankruptcy Code."
SECTION 2. This act is effective for taxable years beginning after 2002 where the job tax credit pursuant to Section 12-6-3360 of the 1976 Code, as amended by this act, was earned after June 1, 2002.
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