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H. 4912
STATUS INFORMATION
General Bill
Sponsors: Rep. W.D. Smith
Document Path: l:\council\bills\agm\19168mm08.doc
Companion/Similar bill(s): 1217
Introduced in the House on April 1, 2008
Currently residing in the House Committee on Ways and Means
Summary: Job tax credit
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
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4/1/2008 House Introduced and read first time HJ-7
4/1/2008 House Referred to Committee on Ways and Means HJ-8
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-6-3685 SO AS TO ESTABLISH A TAX CREDIT AGAINST THE STATE'S INCOME TAX FOR AN EMPLOYER WHO PROVIDES OR SPONSORS A BASIC SKILLS EDUCATION PROGRAM, PROVIDE FOR QUALIFICATIONS FOR THE PROGRAM AND ELIGIBILITY FOR THE CREDIT, AS DETERMINED BY THE DEPARTMENT OF COMMERCE, THE PROCESS FOR CLAIMING THE CREDIT, AND DEFINITIONS; TO AMEND SECTION 12-6-3360, AS AMENDED, RELATING TO TAXPAYERS WHO QUALIFY FOR AN ANNUAL JOB TAX CREDIT AGAINST THE STATE'S INCOME TAX, BANK TAX, OR INSURANCE PREMIUM TAX, SO AS TO PROVIDE FOR DESIGNATION OF EACH COUNTY BY THE DEPARTMENT OF COMMERCE AS A TIER ONE, TIER TWO, OR TIER THREE COUNTY PURSUANT TO ITS DEVELOPMENT FACTOR, TO DESCRIBE AND DEFINE A QUALIFYING FACILITY, TO MODIFY THE AMOUNTS OF THE CREDITS FOR JOB CREATION, TO SPECIFY MAINTENANCE OF STATEWIDE EMPLOYMENT, TO FURTHER DEFINE TERMS, AND TO DESCRIBE NEW ELIGIBILITY FOR THE JOB TAX CREDIT; TO AMEND SECTION 12-6-3367, RELATING TO THE MORATORIUM ON TAXES FOR CERTAIN COMPANIES CREATING NEW JOBS IN THE STATE, AND SECTION 12-6-3470, AS AMENDED, RELATING TO THE EMPLOYER INCOME TAX CREDIT FOR HIRING A PERSON RECEIVING FAMILY INDEPENDENCE PAYMENTS, BOTH SO AS TO CONFORM TO THE NEW COUNTY DESIGNATIONS; TO AMEND SECTION 12-6-3530, AS AMENDED, RELATING TO CREDIT AGAINST THE STATE INCOME, BANK, OR INSURANCE PREMIUM TAX, SO AS TO REDEFINE QUALIFICATIONS AND PROCESSES FOR CLAIMING THE CREDIT FOR AMOUNTS DONATED TO A COMMUNITY DEVELOPMENT CORPORATION AND TO LIMIT THE AGGREGATE AMOUNT OF THE CREDITS; TO AMEND SECTIONS 12-10-60, 12-10-80, 12-10-81, 12-10-85, ALL AS AMENDED, AND 12-10-90, ALL RELATING TO THE ENTERPRISE ZONE ACT OF 1995 PROVIDING FOR A JOB DEVELOPMENT TAX CREDIT AVAILABLE TO A QUALIFYING BUSINESS IN CONNECTION WITH JOB CREATION AND MINIMUM INVESTMENT IN ACCORDANCE WITH A REVITALIZATION AGREEMENT WITH THE SOUTH CAROLINA COORDINATING COUNCIL, SO AS TO CONFORM THE PROVISIONS TO THE NEW COUNTY DESIGNATIONS; AND TO REPEAL CHAPTER 14 OF TITLE 12 RELATING TO THE ECONOMIC IMPACT ZONE COMMUNITY DEVELOPMENT ACT OF 1995 AND A TAX CREDIT FOR CERTAIN MANUFACTURERS MAKING QUALIFIED INVESTMENTS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1.A. Article 25, Chapter 6, Title 12 of the 1976 Code, is amended by adding:
"Section 12-6-3685. (A) As used in this section:
(1) 'Approved basic skills education' means employer-provided or employer-sponsored education that:
(a) enhances reading, writing, or mathematical skills up to and including the twelfth-grade level for employees whose basic skills deficiencies affect their job performance and ability to be trained in new technologies;
(b) is approved and certified by the Department of Commerce; and
(c) is offered to the employee at no cost. For purposes of this subitem (c), 'cost' includes forfeiture of leave time, vacation time, or other compensable time.
(2) 'Cost of education' means direct instructional costs as defined by the Department of Commerce including instructor salaries, materials, supplies, and textbooks but specifically excluding costs associated with renting or otherwise securing or upfitting premises to conduct the training pursuant to this section.
(3) 'Employee' means an individual who is a resident in this State, is employed for at least twenty-four hours a week, and has been employed by the employer for at least sixteen consecutive weeks.
(4) 'Employer' means a lawfully organized entity subject to income tax pursuant to this chapter.
(5) 'Employer-provided' means approved basic skills education offered by an employer on the employer's premises or on premises approved by the Department of Commerce using qualified instructors engaged or employed by the employer.
(6) 'Employer-sponsored' means approved basic skills education offered by an employer pursuant to a contractual arrangement with a school, university, college, or other instructional facility.
(B) A tax credit is granted to an employer who provides or sponsors an approved basic skills education program. The amount of the tax credit is equal to one-half of the costs of education for each full-time equivalent student or five hundred dollars for full-time equivalent student, whichever is less, for each employee who successfully completes an approved basic skills education program.
(C) Credits pursuant to this section may be claimed against income taxes imposed by Section 12-6-510 or 12-6-530. 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 and may not exceed one million six hundred thousand dollars for credits for all taxpayers in one year. If the claims for credits exceed that amount in one year, the credits must be awarded to all claimants on a pro rata basis. A credit claimed pursuant to this section but not used in a taxable year may be carried forward for ten years from the taxable year in which the credit is earned by the taxpayer.
(D) To be eligible to claim the credit granted in this section, the employer must certify to the Department of Commerce the name of the employee, the course work successfully completed by the employee, the name of the approved basic skills education provider, and other information as may be required by the Department of Commerce to ensure that credits are granted only to employers who provide or sponsor approved basic skills education pursuant to this section and that the credits are granted only to employers with respect to employees who successfully complete the approved basic skills education. The Department of Commerce shall develop guidelines and documentation necessary to implement this credit program. The Department of Revenue shall work with the Department of Commerce to ensure the proper granting of credits pursuant to this section.
(E) The Department of Commerce shall establish standards it considers necessary and convenient in approving employer-provided and employer-sponsored basic skills education programs. In establishing standards, the Department of Commerce shall establish required hours of classroom instruction, required courses, certification of teachers or instructors, and progressive levels of instruction and standardized measures of employee evaluation to determine successful completion of a course of study."
B. This section takes effect upon approval by the Governor and applies to tax years beginning after December 31, 2009.
SECTION 2. Section 12-6-3360 of the 1976 Code, as last amended by Act 116 of 2007, is further amended to read:
"Section 12-6-3360. (A) Taxpayers that operate manufacturing, tourism, processing, warehousing, distribution, research and development, corporate office, qualifying service-related facilities technology intensive, extraordinary retail establishment, qualifying technology intensive facilities and qualifying service-related facilities, and banks as defined pursuant to this title are allowed an annual jobs job tax credit as provided in this section. In addition, taxpayers that operate retail facilities and service-related industries qualify for an annual jobs tax credit in tier one counties designated as least developed or distressed, and in counties that are under developed and not traversed by an interstate highway. As used in this section, 'corporate office' includes general contractors licensed by the South Carolina Department of Labor, Licensing and Regulation qualify for an annual job tax credit. Credits pursuant to this section may be claimed against income taxes imposed by Section 12-6-510 or 12-6-530 this chapter, bank taxes imposed pursuant to Chapter 11 of this title, and insurance premium taxes imposed pursuant to Chapter 7 of Title 38, and are limited in use to fifty percent of the taxpayer's South Carolina income tax, bank tax, or insurance premium tax liability. In computing a tax payable by a taxpayer pursuant to Section 38-7-90, the credit allowable pursuant to this section must be treated as a premium tax paid pursuant to Section 38-7-20.
(B) The department Department of Commerce 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 in accordance with this subsection and submit the county designations to the department for publication. The county designations are effective for taxable years that begin in the following calendar year. A county's designation may not be lowered in credit amount more than one tier in the following calendar year. The counties are ranked using the last three completed calendar years of per capita income data and the last thirty-six months of 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.
(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.
(f) In a county in which one employer has lost at least 1,500 jobs in a calendar year, the credit allowed is one tier higher than the credit for which the county would otherwise qualify. The one-tier-higher credit allowed by this subsection is allowed for five taxable years for jobs created in 2006, 2007, and 2008. This subsection does not apply to a job created in a county eligible for a higher tier pursuant to another provision of this section.
(g) In a county which is at least one thousand square miles in size and which has had an unemployment rate greater than the state average for the past ten years and an average per capita income lower than the average state per capita income for the past ten years, and which is not included in any of the county classifications contained in subitems (a) through (f) of this item, the credit allowed is two tiers higher than the credit for which the county otherwise would qualify.
(h) In a county in which one employer has lost at least 1,500 jobs in calendar year 2006, the credit allowed is three tiers higher than the credit for which the county would otherwise qualify. The three-tier-higher credit allowed by this subsection is allowed for five taxable years for jobs created in 2007 and 2008. This subsection does not apply to a job created in a county eligible for a higher tier pursuant to another provision of this section.
(1) Each county must be assigned a development factor that is the sum of the following ranks:
(a) its rank in a ranking of counties by percentage or residents whose incomes are below poverty level from lowest to highest, for the most recent twelve months for which data are available by November first and published by the United States Census Bureau;
(b) its rank in a ranking of counties by median household income from highest to lowest, for the most recent twelve months for which data are available by November first and published by the United States Census Bureau;
(c) its rank in a ranking of counties by percentage growth in population from highest to lowest, for the most recent thirty-six months for which data are available by November first and published by the United States Census Bureau;
(d) its rank in a ranking of counties by adjusted assessed property value per capita from highest to lowest, for the most recent twelve months for which data are available by November first and published by the department; and
(e) its rank in a ranking of counties by yearly average of unemployment claims filed as a percentage of the total population within the county from lowest to highest, for the most recent twelve months for which data are available by November first and published by the South Carolina Employment Security Commission.
(2) After computing the development factor as provided in this subsection, each county must be ranked according to its development factor from highest to lowest and designated as follows:
(a) A county whose ranking is one of the sixteen highest in the State must be designated a tier one county.
(b) A county whose ranking is one of the next sixteen highest in the State must be designated a tier two county.
(c) A county that is not in a lower-numbered development tier must be designated a tier three county.
(3) In the case of a tie that would place tied counties in two different tiers, the tie must be broken in the following manner: the county with the highest yearly average of unemployment claims filed as a percentage of the total population within the county must be in the lower tier. If the counties are tied on the highest yearly average of unemployment claims filed as a percentage of the total population within the county, the county with the lowest median household income must be in the lower tier. If the counties are tied on both yearly average of unemployment claims field as a percentage of the total population within the county and median household income, the county with the highest percentage of residents whose incomes are below poverty level must be in the lower tier. If the counties are tied on all three categories, then all remaining tied counties must be in the lower tier.
(C)(1) Subject to the conditions provided in subsection (N) of this section, Taxpayers that meet the qualifications of this section are allowed a job tax credit is allowed for five years beginning in year two after the creation of the job for each new full-time job created at the qualifying facility described in subsection (A) and defined in subsection (M) if the minimum level of new jobs is maintained. The credit is available to taxpayers that increase employment by ten or more full-time jobs at the qualifying facility, and no credit is allowed for the year or any subsequent year in which the net employment increase falls below the minimum level of ten. The amount of the initial job credit is as follows:
(a) Eight Seven thousand six hundred fifty dollars for each new full-time job created in distressed counties at the qualifying facility in a tier one county.
(b) Four thousand five one hundred fifty dollars for each new full-time job created in least developed counties. at the qualifying facility in a tier two county; and
(c) Three thousand five hundred dollars for each new full-time job created in under developed counties.
(d) Two thousand five hundred dollars for each new full-time job created in moderately developed counties.
(e) One thousand five seven hundred fifty dollars for each new full-time job created in developed counties at the qualifying facility in a tier three county.
(2)(a) Subject to the conditions provided in subsection (N) of this section, Taxpayers that meet the qualifications of this section are allowed a job tax credit is allowed for five years beginning in year two after the creation of the job for each new full-time job created at the qualifying facility described in subsection (A) and defined in subsection (M) if the minimum level of new jobs is maintained. The credit is available to taxpayers with ninety-nine or fewer employees that increase employment by two or more full-time jobs at the qualifying facility, and may be received only if the gross wages of the full-time jobs created pursuant to this section amount to a minimum of one hundred twenty percent of the county's or state's average per capita income, whichever is lower. No credit is allowed for the year or any subsequent year in which the net employment increase falls below the minimum level of two. The amount of the initial job credit is as described in (C)(1).
(b) If the taxpayer with ninety-nine or fewer employees increases employment by two or more full-time jobs but the gross wages do not amount to a minimum one hundred twenty percent of the county's or state's average per capita income, whichever is lower, then the amount of the initial job credit is as follows:
(i) Four Three thousand eight hundred twenty-five dollars for each new full-time job created in distressed counties a tier one county.
(ii) Two thousand two hundred fifty seventy-five dollars for each new full-time job created in least developed counties a tier two county.
(iii) One thousand seven hundred fifty dollars for each new full-time job created in under developed counties.
(iv) One thousand two hundred fifty dollars for each new full-time job created in moderately developed counties.
(v) Seven Eight hundred fifty seventy-five dollars for each new full-time job created in developed counties a tier three county.
(D) If the taxpayer qualifying Taxpayers that qualify for the new jobs credit under in subsection (C) creates and create additional new full-time jobs at the qualifying facility in years two through six, the taxpayer may obtain a credit for those new jobs for five years following the year in which the job is created. The amount of the credit for each new full-time job is the same as provided in subsection (C).
(E)(1) Taxpayers which that qualify for the jobs tax credit provided in subsection (C) and which are whose qualifying facility is located in a business or industrial park jointly established and developed by a group of counties pursuant to Section 13 of Article VIII of the Constitution of this State are allowed an additional one thousand dollar credit each year for each new full-time job created. This additional credit is permitted for five years beginning in the taxable year following the creation of the job as provided in this section.
(2) Taxpayers which that otherwise qualify for the jobs tax credit provided in subsection (C) and which are whose qualifying facility is located and the qualifying jobs are located on property where a response action has been completed pursuant to a nonresponsible party voluntary cleanup contract pursuant to Article 7, Chapter 56 of Title 44, the Brownfields Voluntary Cleanup Program, are allowed an additional one thousand dollar credit each year for each new full-time job created. This additional credit is permitted for five years beginning in the taxable year following the creation of the job. No credit under this item is allowed a taxpayer that is a 'responsible party' as defined in that article.
(F)(1) The number of new and additional new full-time jobs is determined by comparing the monthly average number of full-time employees employed by the taxpayer at a qualifying facility and subject to South Carolina income tax withholding in the applicable county for the taxable year with the monthly average in the prior taxable year. For purposes of calculating the monthly average number of full-time employees in the first year of operation in this State, a taxpayer may use the actual months in operation or a full twelve-month period. If a taxpayer's business qualifying facility is in operation for less fewer than twelve months a year, the number of new and additional new full-time jobs is determined using the monthly average for the months the business is in operation.
(2)(a) A taxpayer who makes a capital investment of at least fifty million dollars at a single site within a three-year period may elect to have the number of new and additional new full-time jobs determined by comparing the monthly average number of full-time jobs subject to South Carolina income tax withholding at the site for the taxable year with the monthly average for the prior taxable year.
(b) For purposes of this item, 'single site' means a stand-alone building whether or not several stand-alone buildings are located in one geographical location.
(c) The calculation of new and additional jobs provided for in this item is allowed for only a five-year period commencing in the year in which the fifty million dollars of capital investment is completed. In addition to creating, as applicable, ten or two new full-time jobs at the qualifying facility in accordance with subsection (F)(1) above, a taxpayer must maintain employment statewide to claim the job tax credit. A taxpayer has maintained employment statewide if the monthly average number of full-time employees employed by the taxpayer and subject to South Carolina income tax withholding in the State for the taxable year compared with the monthly average for the prior taxable year results in a net increase of, as applicable, ten or two employees statewide.
(b) This requirement that employment be maintained statewide does not apply if the new full-time jobs are at a qualifying facility located in a Tier One County.
(d) (3) For purposes of this subsection a 'new job' does not include a job an employee transferred from one site a job at one facility to another site a job at another facility by the taxpayer or a related person. A related person includes any entity or person that bears a relationship to the taxpayer as set forth in Section 267 of the Internal Revenue Code. However, this exclusion of a new job created by a job transferred from one site to another site 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) A 'new job' does not include an employee at the qualifying facility for whom the taxpayer is not liable for withholding taxes.
(G) Except for credits carried forward under pursuant to subsection (H), the credits available under pursuant to this section are only allowed only for the job level that is maintained in the taxable year that the credit is claimed. If the job level for which a credit was claimed decreases below ten or two, as applicable, the five-year period for eligibility for the credit continues to run.
(H) A credit claimed pursuant to this section but not used in a taxable year may be carried forward for fifteen years from the taxable year in which the credit is earned by the taxpayer. Credits that are carried forward must be used in the order earned and before jobs credits claimed in the current year. A taxpayer who earns credits allowed by this section and who also is eligible for the moratorium provided in Section 12-6-3367 may claim the credits and may carry forward unused credits beginning after the moratorium period expires.
(I) Except for employees in tier one counties, the maximum aggregate credit that may be claimed in any tax year for a single employee pursuant to this section and Section 12-6-3470(A) is five thousand one hundred fifty dollars.
(J) The merger, consolidation, or reorganization of a taxpayer, where tax attributes survive, does not create new eligibility in a succeeding taxpayer, but unused jobs tax credits may be transferred and continued by the succeeding taxpayer subject to the limitations of Section 12-6-3320. In addition, a taxpayer may assign its rights to its jobs any remaining job tax credit, including any carryforwards to another taxpayer if it transfers all or substantially all of the its assets of the taxpayer or all or substantially all of the assets of a trade or business or operating division of a taxpayer related to the generation of the jobs tax credits to that taxpayer if the required number of new jobs is maintained for that amount of credit. A taxpayer is not allowed a jobs tax credit if the net employment increase for that taxpayer falls below two. The appropriate agency shall determine if qualifying net increases or decreases have occurred and may require reports, adopt rules or promulgate regulations, and hold hearings needed for substantiation and qualification the qualifying facility to that taxpayer.
(K) A taxpayer is considered to have new eligibility for the credit allowed pursuant to this section and any employees hired or retained at the qualifying facility are considered new full-time jobs if:
(1) the taxpayer acquires an existing facility that has been closed for business for three months;
(2) a taxpayer that owns a qualifying facility has filed for Chapter 11 bankruptcy and the new taxpayer acquires the qualifying facility out of bankruptcy;
(3) a taxpayer that owned the qualifying facility was required to file a notice of plant closing or mass layoff under the federal Worker Adjustment and Retraining Notification Act, 29 USC Section 2101 for the facility before it was acquired by the new taxpayer;
(4) the qualifying facility is destroyed or damaged by accidental fire, natural disaster, or act of God. 'Destroyed or damaged' for purposes of this item means that more than fifty percent of the qualifying facility was destroyed; or
(5) the qualifying facility suffers an 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. For purposes of the item, '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.
(J) (L) For a taxpayer which that plans a significant expansion in its labor forces at a location in this State, the appropriate agency shall prescribe certification procedures to ensure that the taxpayer can claim credits in future years even if a particular county is removed from the list of distressed, least developed, under developed, or moderately developed tier one or tier two counties.
(K)(1) An S corporation, limited liability company taxed as a partnership, or partnership that qualifies for a credit under this section may pass through the credit earned to each shareholder of the S corporation, partner of the partnership, or member of the limited liability company. For purposes of this subsection, limited liability company means a limited liability company taxed as a partnership.
(a) The amount of the credit allowed a shareholder, partner, or member by this subsection is equal to the shareholder's percentage of stock ownership, partner's interest in the partnership, or member's interest in the limited liability company for the taxable year multiplied by the amount of the credit earned by the entity. This nonrefundable credit is allowed against taxes due under Section 12-6-510 or 12-6-530 and bank taxes imposed pursuant to Chapter 11 of this title and may not exceed fifty percent of the shareholder's, partner's, or member's tax liability under Section 12-6-510 or 12-6-530 or bank tax liability imposed pursuant to Chapter 11 of this title.
(b) Notwithstanding subitem (a), the credit earned pursuant to this section by 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.
(3) A credit claimed pursuant to this subsection but not used in a taxable year may be carried forward by each shareholder, partner, or member for fifteen years from the close of the tax year in which the credit is earned by the S corporation, partnership, or limited liability company. The entity earning the credit may not carry over credit that passes through to its shareholders, partners, or members.
(L) Notwithstanding any other provision of this section, a county with a population under twenty-five thousand as determined by the most recent United States Census shall receive the next increased credit designation for purposes of the credit allowed by this section.
(M) As used in this section:
(1) 'Taxpayer' means a sole proprietor, partnership, corporation of any classification, limited liability company, or association taxable as a business entity that is subject to South Carolina taxes as contained in Section 12-6-510, Section 12-6-530, Chapter 11 of Title 12, or Chapter 7 of Title 38.
(2) 'Appropriate agency' means the Department of Revenue, except that for taxpayers subject to the premium tax imposed by Chapter 7 of Title 38, it means the Department of Insurance.
(3) 'New job' means a job created in this State at the time a new qualifying facility or an expansion is initially staffed that represents a net increase in the number of the taxpayer's employees statewide as described in subsection (F). 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 another location in this State 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 another 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 as distressed;
(b) immediately before their employment by the taxpayer, the individuals were employed by a company operating, as of the effective date of this paragraph, under Chapter 11 of the United States Bankruptcy Code; and
(c) the taxpayer, as an unrelated entity, acquires as of March 12, 2004, substantially all of the assets of the company operating under Chapter 11 of the United States Bankruptcy Code.
(4) 'Full-time' means a job requiring a minimum of thirty-five hours of an employee's time a week for the entire normal year of company operations or a job requiring a minimum of thirty-five hours of an employee's time for a week for a year in which the employee was hired initially for or transferred to the South Carolina at the qualifying facility. For the purposes of this section, two half-time jobs are considered one full-time job. A 'half-time job' is a job requiring a minimum of twenty hours of an employee's time a week for the entire normal year of the company's operations or a job requiring a minimum of twenty hours of an employee's time a week for a year in which the employee was hired initially for or transferred to the South Carolina at the qualifying facility.
(5) 'Manufacturing facility' means an establishment where tangible personal property is produced or assembled.
(6) 'Processing facility' means an establishment that prepares, treats, or converts tangible personal property into finished goods or another form of tangible personal property. The term includes a business engaged in processing agricultural, aquacultural, or maricultural products. It does not include an establishment in which retail sales of tangible personal property are made to retail customers.
(7) 'Warehousing facility' means an establishment where tangible personal property is stored but does not include any establishment where retail sales of tangible personal property are made to retail customers.
(8) 'Distribution facility' means an establishment where shipments of tangible personal property are processed for delivery to customers. The term does not include an establishment where retail sales of tangible personal property are made to retail customers on more than twelve days in a calendar year except for a facility which processes customer sales orders by mail, telephone, or electronic means, if the facility also processes shipments of tangible personal property to customers and if at least seventy-five percent of the dollar amount of goods sold through the facility are sold to customers outside of South Carolina. Retail sales made inside the facility to employees working at the facility are not considered for purposes of the twelve-day and seventy-five percent limitation. For purposes of this definition, 'retail sale' and 'tangible personal property' have the meaning provided in Chapter 36 of this title.
(9) 'Research and development facility' means an establishment engaged in laboratory, scientific, or experimental testing and development related to new products, new uses for existing products, or improving existing products. The term does not include an establishment engaged in efficiency surveys, management studies, consumer surveys, economic surveys, advertising, promotion, banking, or research in connection with literary, historical, or similar projects.
(10) 'Corporate office facility' means a corporate headquarters that meets the definition of a 'corporate headquarters' contained in Section 12-6-3410(J)(1). The corporate headquarters of a general contractor licensed by the South Carolina Department of Labor, Licensing and Regulation qualifies even if it is not a regional or national headquarters as those terms are defined in Section 12-6-3410(J)(1).
(11) The terms 'retail sales' and 'tangible personal property' for purposes of this section are defined in Chapter 36 of this title.
(12) 'Tourism facility' means an establishment used for a facility that consists of a theme park; amusement park; historical, educational, or trade museum; botanical garden; cultural center; theater; motion picture production studio; convention center; arena; auditorium; or a spectator or participatory sports facility; and similar establishments facilities where the primary function is to provide entertainment, education, or recreation is provided to the general public. Tourism facility also includes new hotel and motel construction facilities that are subject to the accommodations tax provisions of Section 12-36-920, except that to qualify for the credits allowed by this section and regardless of the county in which the facility is located, the number of new jobs that must be created by the new hotel or motel that facility is twenty or more. It does not include that portion of an establishment the facility where retail merchandise or retail services are sold directly to retail customers.
(13) 'Qualifying service-related facility' means:
(a) an establishment a facility engaged in an activity or activities listed under the North American Industry Classification System Manual (NAICS) Section 62, subsectors 621, 622, and 623; or
(b) a business facility, other than a business engaged in legal, accounting, banking, or investment services or facility making retail sales, which has a net increase of at least:
(i) two hundred fifty jobs at a single location the facility;
(ii) one hundred twenty-five jobs at a single location the facility and the jobs have an average cash compensation level of more than one and one-half times the lower of state per capita income or per capita income in the county where the jobs are facility is located;
(iii) seventy-five jobs at a single location and the jobs have an average cash compensation level of more than twice the lower of state per capita income or per capita income in the county where the jobs are facility is located; or
(iv) thirty jobs at a single location the facility and the jobs have an average cash compensation level of more than two and one-half times the lower of state per capita income or per capita income in the county where the jobs are located.
A taxpayer shall use the most recent per capita income data available as of the end of the taxable year in which the jobs are filled to determine whether the definition is met. Determination of the required number of jobs is in accordance with the monthly average described in subsection (F).
(14) 'Technology intensive facility' means:
(a) a facility at which a firm engages in the design, development, and introduction of new products or innovative manufacturing processes, or both, through the systematic application of scientific and technical knowledge. Included in this definition are the following North American Industrial Classification Systems, NAICS, codes published by the Office of the Management and Budget of the federal government:
(i) 5114 database and directory publishers;
(ii) 5112 software publishers;
(iii) 54151 computer systems design and related services;
(iv) 541511 custom computer programming services;
(v) 541512 computer systems design services;
(vi) 541710 scientific research and development services;
(vii) 9271 space research and technology; or
(b) a facility primarily used for one or more activities listed under the 2002 version of the NAICS Codes 51811 (Internet Service Providers and Web Search Portals).
(15) 'Extraordinary retail establishment' is as defined in Sections 12-21-6520 and 12-21-6590.
(N) Except for employees employed in distressed counties, the maximum aggregate credit that may be claimed in any tax year for a single employee pursuant to this section and Section 12-6-3470(A) is five thousand five hundred dollars."
SECTION 3. Section 12-6-3367(B)(1) of the 1976 Code, as added by Act 297 of 2006, is amended to read:
"(1) To qualify for the moratorium pursuant to subsection (A), a taxpayer shall:
(a)(i) create at least one hundred full-time new jobs at a facility in a county with an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years, based on the most recent unemployment rates available, or that is one of the three lowest per capita income counties, based on the average of the three most recent years of available average per capita income data; and
(ii) invest at least ninety percent of its total investment in this State in the moratorium county; or
(b)(i) create at least one hundred full-time new jobs, and invest at least one hundred fifty million dollars, at a manufacturing facility in a county with an average annual unemployment rate of at least twice the state average during each of the last two completed calendar years, based on the most recent unemployment rates available, or that is one of the three lowest per capita income counties, based on the average of the three most recent years of available average per capita income data;
(ii) create at least one hundred full-time new jobs, and invest at least one hundred fifty million dollars, at a manufacturing facility in a second county which is designated as distressed, least developed, or underdeveloped tier one or tier two pursuant to Section 12-6-3360; and
(iii) invest at least ninety percent of its total investment in this State in one or both of the counties specified in subsubitems (i) and (ii) of subsection (B)(1)(b)."
SECTION 4.A. Section 12-6-3470(A)(2) of the 1976 Code, as last amended by Act 69 of 2003, is further amended to read:
"(2) Except for employees employed in distressed tier one counties, the maximum aggregate credit that may be claimed in a tax year for a single employee pursuant to this subsection and Section 12-6-3360 is five thousand five one hundred fifty dollars."
B. Section 12-6-3470(B) of the 1976 Code, as last amended by Act 332 of 2002, is further amended to read:
"(B) In addition to the credits provided for in subsection (A) and Section 12-6-3360, 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 and employs that person to work full time in a distressed county or a least developed tier one county, as defined in Section 12-6-3360, is allowed a credit in an amount equal to one hundred seventy-five dollars for each full month during the first thirty-six months of employment."
SECTION 5. Section 12-6-3530 of the 1976 Code, as last amended by Act 89 of 2001, is further amended to read:
"Section 12-6-3530. (A) A Subject to the limitations below, a taxpayer may claim as a credit against his state income tax, bank tax, or premium tax liability equal to thirty-three percent of all amounts invested in contributed to a community development corporation or in a community development financial institution, as defined in Section 34-43-20(2) or (3).
To qualify for this credit the taxpayer must obtain a certificate from the South Carolina Department of Commerce certifying that the entity into which the funds are invested is a community development corporation or a community development financial institution within the meaning of Section 34-43-20(2) or (3) and certifying that the credit taken or available to that taxpayer will not exceed the aggregate five million dollar limitation of all those credits as provided in subsection (B) when added to the credits previously taken or available to other taxpayers making similar investments. A taxpayer who invested in good faith in a certified corporation or institution may claim the credit provided in this section, notwithstanding the fact that the certification is later revoked or not renewed by the department.
(B) The total amount of credits allowed pursuant to this section may not exceed in the aggregate five million dollars for all taxpayers and all calendar years and one million dollars for all taxpayers in one calendar year.
(C) A single community development corporation or community development financial institution may not receive more than twenty-five percent of the total tax credits authorized pursuant to this section in any one calendar year.
(D) The department shall monitor the investments made by taxpayers in community development corporations and community development financial institutions as permitted by this section and shall perform the functions as provided in subsection (A) above.
(E) If the amount of the credit determined, pursuant to subsection (A), exceeds the taxpayer's state tax liability for the applicable taxable year, the taxpayer may carry over the excess to the immediately succeeding taxable years. However, the credit carry-over may not be used for a taxable year that begins on or after ten years from the date of the acquisition of stock or other equity interest that is the basis for a credit pursuant to this section. The amount of the credit carry-over from a taxable year must be reduced to the extent that the carry-over is used by the taxpayer to obtain a credit provided for in this section for a later taxable year.
(F) Notwithstanding the provisions of subsections (A), (B), (C), (D), and (E) above, if on April 1, 2001, or as soon after that as the department is able to determine, the total amount of tax credits which may be claimed by all taxpayers exceeds the total amount of tax credits authorized by this section, the credits must be determined on a pro rata basis. For purposes of this subsection, a community development corporation or community development financial institution for which an investment may be claimed as a tax credit pursuant to this section must report all investments made before April 1, 2001, to the department by April 1, 2001, which shall inform, as soon as reasonably possible, all community development corporations and community development financial institutions of the total of all investments in all institutions and corporations as of April 1, 2001.
(G) If stock or another equity interest that is the basis for a credit provided for in this section is redeemed by the community development corporation or the community development financial institution within five years of the date it is acquired, the credit provided by this section for the stock or other equity interest is disallowed, and credit previously claimed and allowed with respect to the redeemed stock or other equity interest must be paid to the Department of Revenue with the appropriate return of the taxpayer covering the period in which the redemption occurred. When payments are made to the Department of Revenue pursuant to this section, the amount collected must be handled as if no credit had been allowed.
(H) To receive the credit provided by this section, a taxpayer shall:
(1) claim the credit on his annual state income or premium tax return as prescribed by the Department of Revenue; and
(2) file with the Department of Revenue and with his annual state income or premium tax return a copy of the form issued by the department as to the stock or other equity interest that is the basis for a credit claimed pursuant to this section, by the taxpayer, including an undertaking by the taxpayer to report to the Department of Revenue a redemption of the stock or other equity interest by the community development corporation or the community development financial institution.
(I) The department shall complete forms prescribed by the Department of Revenue which must show as to each stock or other equity interest in a community development corporation or a community development financial institution that is the basis for a credit pursuant to this section:
(1) the name, address, and identification number of the taxpayer who acquired the stock or other equity interest; and
(2) the nature of the stock or other equity interest acquired by the taxpayer and the amount advanced for it.
These forms must be filed with the Department of Revenue on or before the fifteenth day of the third month following the month in which the stock or other equity interest is acquired. Copies of the forms to be provided to the Department of Revenue must be mailed to the taxpayer on or before the fifteenth day of the second month following the month in which the acquisition is made.
(J) A taxpayer may not claim the tax credit provided in this section unless the community development corporation or community development financial institution in which the investment is made has been certified at the time the investment is made.
(K) If the community development financial institution in which the investment is made is a tax-exempt nonprofit corporation, the tax credit provided in this section is not allowed if the taxpayer claims the investment as a deduction pursuant to Section 170 of the Internal Revenue Code.
(L) Banks and financial institutions chartered by the State of South Carolina may invest in community development corporations and community development financial institutions incorporated pursuant to the laws of this State, up to a maximum of ten percent of a chartered bank or financial institution's total capital and surplus.
(B) For purposes of this credit, amounts contributed to a community development corporation include contributions of cash or any noncash contribution that is valued in accordance with regulations and guidance issued by the Internal Revenue Service interpreting Section 170 of the Internal Revenue Code in existence as of the date specified in Section 12-6-50 and state laws of regulations addressing charitable contributions and deductions. Contributions of personal services do not qualify for the credit.
(C) By February first of each calendar year, a taxpayer seeking to claim a credit for a contribution made in the past calendar year must submit an application for approval to the South Carolina Department of Commerce. By March first of each calendar year, if a taxpayer qualifies for the credit, the Department of Commerce shall issue an approval letter to the taxpayer certifying that the entity to which the funds are contributed is a community development corporation within the meaning of Section 34-43-20(2) and certifying the amount of credit that has been allocated to the taxpayer. The Department of Commerce may require information about the contribution as well as any other information necessary in the application for approval.
(D) The total amount of credits allowed pursuant to this section may not exceed in the aggregate five million dollars for all taxpayers and all calendar years and one million dollars for all taxpayers in one calendar year. If the amount of credits submitted for approval exceeds the one million or five million dollar limitations, the available credit must be allocated among all qualifying taxpayers on a pro rata basis based on the amount contributed by a taxpayer to the total amounts contributed by all taxpayers for the calendar year.
(E) Contributions to a single community development corporation may not result in allocations of more than two hundred fifty thousand dollars in tax credits in any one calendar year. To the extent that contributions result in tax credits that do exceed the two hundred fifty thousand dollar limitation, tax credits for contributions made by all eligible taxpayers to that community development corporation must be prorated based on the amount contributed by each eligible taxpayer as compared to the total amount contributed to that community development corporation by all taxpayers for the calendar year.
(F) If the amount of the credit allocated to a taxpayer pursuant to subsection (B) exceeds the taxpayer's state tax liability for the applicable taxable year, unused credit may be carried forward for the succeeding ten taxable years.
(G) To receive the credit provided by this section, a taxpayer shall:
(1) claim the credit on his annual state income, bank, or premium tax return as prescribed by the Department of Revenue; and
(2) make available to the Department of Revenue a copy of the approval letter issued by the Department of Commerce.
(H) To the extent that a taxpayer is allowed the credit provided by this section, the taxpayer is not required to include the amount of the contribution as an addition to South Carolina taxable income if the contribution qualified for a deduction under Section 170 of the Internal Revenue Code."
SECTION 6.A. Section 12-10-60(B) of the 1976 Code, as added by Act 399 of 2000, is amended to read:
"(B) If a qualifying business that entered into a revitalization agreement before January 1, 1997, receives council approval to amend its revitalization agreement to increase its minimum job requirement, the law in effect on the date of the amendment determines the amount of job development credit a qualifying business may claim pursuant to Section 12-10-80 for additional jobs created after the date of the amendment. This subsection does not apply to a business whose application for job development fees or credits pursuant to Section 12-10-81 has been approved by council before the effective date of this act August 17, 2000.
(C) The council, in its discretion, may negotiate a provision in a revitalization agreement entered into after June 30, 2008, that requires a qualifying business to repay job development credits previously claimed and collected."
B. Section 12-10-80(D)(1) of the 1976 Code, as last amended by Act 332 of 2002, is further amended to read:
"(1) The amount of job development credits a qualifying business may claim for its use for qualifying expenditures is limited according to the designation of the county as defined in Section 12-6-3360(B) as follows:
(a) one hundred percent of the maximum job development credits may be claimed by businesses located in counties designated as distressed or least developed tier one;
(b) eighty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'underdeveloped';
(c) seventy-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'moderately developed' tier two; or
(d)(c) fifty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'developed' tier three."
C. Section 12-10-81(E)(1) of the 1976 Code, as last amended by Act 332 of 2002, is further amended to read:
"(1) For purposes of subsection (C)(1)(a) through (d), the amount of job development credits a qualifying business may claim for its use for qualifying expenditures is limited according to the designation of the county as defined in Section 12-6-3360(B) as follows:
(a) one hundred percent of the maximum job development credits may be claimed by businesses located in counties designated as distressed or least developed tier one;
(b) eighty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'underdeveloped';
(c) seventy-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'moderately developed' tier two; or
(d)(c) fifty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'developed' tier three."
D. Section 12-10-85(B) of the 1976 Code, as last amended by Act 161 of 2005, is further amended to read:
"(B) Rural Infrastructure Fund grants must be available to benefit counties or municipalities designated as 'distressed' or 'least developed' tier one or tier two as defined in Section 12-6-3360 according to guidelines established by the council, except that up to twenty-five percent of the funds annually available in excess of ten million dollars must be set aside for grants to areas of 'underdeveloped', 'moderately developed', and 'developed" tier three counties'. A governing body of an 'underdeveloped', 'moderately developed', or 'developed' a tier three county must apply to the council for these set-aside grants stating the reasons that certain areas of the county qualify for these grants because the conditions in that area of the county are comparable to those conditions qualifying a county as 'distressed' or 'least developed' tier one or tier two."
E. Section 12-10-90 of the 1976 Code is amended to read:
"Section 12-10-90. If a qualifying business fails to achieve and maintain the level of capital investment or employment set forth in the revitalization agreement, the council may terminate the revitalization agreement and reduce or suspend all or any part of the incentives until the time the anticipated capital investment and employment levels are met. However, these incentives must not be suspended retroactively and maintained. The council, in its discretion, may further require repayment of job development credits previously claimed and collected as provided in Section 12-10-60(C). The council shall provide in the revitalization agreement entered into in connection with a project for the levels of capital investment and employment which must be achieved and for the time period in which the levels must be achieved. A statute of limitations that may apply pursuant to Section 12-54-85 is suspended for all qualifying businesses that enter into a revitalization agreement, and the department or the council may seek to collect amounts that may be due pursuant to this section."
SECTION 7. Chapter 14, Title 12 of the 1976 Code is hereby repealed.
SECTION 8. Except as otherwise provided herein, this act is effective for taxable years beginning on or after January 1, 2009, except that:
(A) Section 12-6-3360 as amended by this act applies to all taxpayers that create the number of new jobs necessary to qualify for the job tax credit in taxable years ending on or after January 1, 2009. Section 12-6-3360 of the 1976 Code as it existed before amendment by this act applies to all new jobs created in taxable years ending before January 1, 2009, and all increases after that which do not result in eligibility for a new five-year credit period. For increases of two or ten, as applicable, more jobs in a five-year credit period that began in or before 2009, the taxpayer may choose to treat these new jobs as additional increases of the existing credit or choose to start a new five-year credit period as governed by Section 12-6-3360 as amended by this act. The Department of Revenue shall continue to publish county rankings in accordance with Section 12-6-3360 as it exited before the amendment by this act until 2018.
(B) Taxpayers entering into revitalization agreements pursuant to Section 12-10-60 on or after January 1, 2009, will be governed by this act. Taxpayers entering into revitalization agreements before January 2, 2009, are governed by Title 12, Chapter 10 as it existed before amendment by this act.
(C) Any provision in this act that has been amended to conform to changes in county designations in Section 12-6-3360(B) are effective for taxable years ending on or after January 1, 2009.
(D) Notwithstanding the repeal of Chapter 14, Title 12 of the 1976 Code, effective for taxable years beginning on or after January 1, 2010, taxpayer with existing carryforward of credits earned under Section 12-14-60 may continue to carryforward those credits as provided by Section 12-14-60.
(E) Notwithstanding the repeal of Chapter 14, Title 12 of the 1976 Code, effective for taxable years beginning on or after January 1, 2010, a taxpayer qualifying for the tax credit allowed by former Section 12-14-80 may continue to claim credits as allowed by that section for capital investments placed in service outside an economic impact zone after June 20, 2007, and for quarterly state withholding returns due on or after that date, provided that for the period July 1, 2007 to June 20, 2008, a taxpayer qualifying for credits allowed by Section 12-14-80 may not reduce its state withholding tax to less than the withholding tax remitted for the period June 30, 2006 to July 1, 2007.
This web page was last updated on Monday, October 10, 2011 at 1:40 P.M.