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Indicates Matter Stricken
Indicates New Matter
COMMITTEE AMENDMENT ADOPTED
April 30, 2008
H. 3649
Introduced by Reps. Witherspoon, Merrill, Agnew, Anthony, Brady, R. Brown, Duncan, Funderburk, Hagood, Hardwick, Herbkersman, Hiott, Kelly, Loftis, Moss, Ott, E.H. Pitts, Scott, Talley, Toole, Umphlett, Cobb-Hunter, Leach, Cato, Clemmons, Barfield, Ceips, Dantzler, Hamilton, Howard, Jefferson, Lowe, Phillips, G.R. Smith, J.R. Smith, Stavrinakis, Bannister, J.H. Neal, Stewart, Sellers, Mitchell, Williams, G.M. Smith and Mahaffey
S. Printed 4/30/08--S.
Read the first time May 22, 2007.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 63 TO TITLE 12 SO AS TO ENACT THE "ENERGY FREEDOM AND RURAL DEVELOPMENT ACT" TO ALLOW A SALES TAX REBATE FOR THE PURCHASE OF CERTAIN FUEL EFFICIENT VEHICLES AND EQUIPMENT USED TO CONVERT A HYBRID VEHICLE INTO A HYBRID PLUG-IN VEHICLE, TO ALLOW AN INCENTIVE PAYMENT FOR ALTERNATIVE FUEL PURCHASES, AND TO ESTABLISH THE SOUTH CAROLINA RENEWABLE ENERGY INFRASTRUCTURE DEVELOPMENT FUND; BY ADDING SECTION 12-6-3376 SO AS TO ALLOW AN INCOME TAX CREDIT FOR THE PURCHASE OR LEASE OF A PLUG-IN HYBRID VEHICLE; BY ADDING SECTION 12-6-3630 SO AS TO ALLOW AN INCOME TAX CREDIT FOR QUALIFIED EXPENDITURES FOR RESEARCH AND DEVELOPMENT OF FEEDSTOCKS AND PROCESSES FOR CELLULOSIC ETHANOL AND FOR ALGAE-DERIVED BIODIESEL; BY AMENDING SECTION 12-6-3587, RELATING TO TAX CREDITS FOR SOLAR ENERGY HEATING AND COOLING SYSTEMS, SO AS TO ALLOW A TAX CREDIT EQUAL TO THREE THOUSAND FIVE HUNDRED DOLLARS FOR EACH BUILDING THAT IS INSTALLED WITH A SOLAR ENERGY SYSTEM; BY AMENDING SECTION 12-6-3600, RELATING TO TAX CREDITS FOR AN ETHANOL AND BIODIESEL FACILITY, SO AS TO ALLOW A TAX CREDIT FOR A CORN-BASED ETHANOL AND SOY-BASED BIODIESEL FACILITY AND A NONCORN ETHANOL AND NONSOY OIL BIODIESEL FACILITY; BY AMENDING SECTION 12-6-3610, RELATING TO TAX CREDITS FOR THE COST OF PURCHASING AND INSTALLING PROPERTY TO DISTRIBUTE AND DISPENSE RENEWABLE FUELS, SO AS TO LIMIT THE CREDIT TO ONE MILLION DOLLARS, TO DEFINE THE TERM "RENEWABLE FUEL", AND TO ADD CLARIFYING LANGUAGE; BY AMENDING SECTION 12-6-3620, RELATING TO TAX CREDITS FOR THE COST OF METHANE GAS USE, SO AS TO ALLOW A TAX CREDIT FOR THE COST OF EQUIPMENT TO CREATE A FORM OF ENERGY FROM A BIOMASS RESOURCE AND TO LIMIT THE CREDIT TO ONE MILLION DOLLARS; AND BY AMENDING SECTION 12-28-110, AS AMENDED, RELATING TO THE MOTOR FUEL FEES, SO AS TO CHANGE THE DEFINITION OF "BIODIESEL".
Amend Title To Conform
Whereas, energy, like any basic need, is an absolute necessity for individuals, businesses, and government; and
Whereas, energy costs have a profound impact on South Carolina's economy, affecting households, businesses, healthcare, public institutions, and government; and
Whereas, South Carolinians spend more than eighteen billion dollars a year on energy with a majority of these expenditures leaving the State's economy because South Carolina produces no coal, oil, or natural gas; and
Whereas, biomass fuels can create over twelve thousand permanent jobs in South Carolina, with revenues to the local economy of over one billion dollars each year; and
Whereas, biomass energy resources can produce over 1.7 billion dollars in construction investments and seventeen thousand construction jobs over the next fifteen years; and
Whereas, the development of biomass energy resources will open new markets for South Carolina farmers and forest product producers and new opportunities for entrepreneurs; and
Whereas, a high proportion of the new jobs and additional income resulting from biomass energy will go to economically depressed rural areas of the State; and
Whereas, all petroleum fuels consumed in South Carolina come from out of state, primarily through two pipelines originating in the hurricane-prone coastal areas of Louisiana and Texas; and
Whereas, two-thirds of all oil consumed in America is imported from foreign countries and most oil reserves are in troublesome areas for the United States, such as the Middle East, Russia, West Africa, and Venezuela; and
Whereas, environmental effects of energy use have a major impact on the quality of our natural resources, the quality of human life, and the ability of the State to attract and retain both industrial and service-related jobs; and
Whereas, biomass fuels can reduce the production of air pollutants including carbon dioxide which causes climate change; nitrogen oxide, which is known to create smog; sulfur oxides, which contribute to acid rain; particulate matter, which can cause health problems such as asthma, lung cancer, and cardiovascular disease; and mercury, a toxic substance that may cause fetal development problems; and
Whereas, it is critical to address economic, security, and environmental concerns created by current energy use patterns, and it is in the State's best interest to adopt a comprehensive set of recommendations to support and encourage biomass fuel development and utilization. Now, therefore,
Be it enacted by the General Assembly of the State of South Carolina:
Section 1. Section 12-63-20 of the 1976 Code is amended to read:
"Section 12-63-20. (A)(1) A sales tax rebate must be applied to a vehicle purchase beginning after June 30, 2008, and ending before July 1, 2013, as follows:
(a) three hundred dollars for an in-state purchase or lease of a Flex-Fuel Vehicle (FFV), which is capable of operating on E85 motor fuel. An eligible vehicle for each model year is a model identified by the manufacturer as being a flexible-fuel vehicle capable of operating on E85 motor fuel. E85 motor fuel is a fuel comprised of eighty-five percent ethanol fuel and fifteen percent gasoline fuel;
(b) three hundred dollars for an in-state purchase or lease of a hydrogen-fueled vehicle and an advanced lean-burn vehicle. A hydrogen-fueled vehicle and an advanced lean-burn vehicle is a vehicle classified by the United States Department of Energy as a hydrogen-fueled vehicle or lean-burn vehicle;
(c) three hundred dollars for an in-state purchase or lease of a hybrid vehicle, an electric vehicle, and a plug-in hybrid vehicle. A hybrid vehicle is defined as a hybrid gasoline-electric vehicle that is partially powered by a large on-board battery. An electric vehicle is defined as having at least three wheels, uses a large on-board battery or electrical storage device, and is rated for more than thirty-five miles per hour and approved for use by the United States Department of Transportation for use on United States highways (excludes neighborhood electric vehicles (NEVs)). A plug-in hybrid vehicle is a vehicle classified by the United States Department of Energy as a hybrid vehicle capable of being propelled by both a gasoline-fueled internal combustion engine and an electric motor powered by a battery that can be recharged by being plugged into an external source of electricity;
(d) three hundred dollars for the in-state purchase or lease of a high fuel-economy vehicle with a city fuel-economy rating by the United States Environmental Protection Agency (EPA) of thirty miles a gallon or higher; and
(e) not more than five hundred dollars for the purchase of equipment for conversion of a conventional hybrid electric vehicle to a plug-in hybrid electric vehicle or for the in-state purchase of EPA-certified equipment for conversion of conventional vehicles to operate on propane, compressed natural gas, liquefied natural gas, hydrogen, or E85 (eighty-five percent ethanol and fifteen percent gasoline).
(2) The rebates allowed pursuant to this subsection must be in the form of a payment sent to the buyer upon completion of a form created by the Department of Revenue and made available to the public, dealers, and the Department of Motor Vehicles.
(3) The rebates allowed pursuant to this subsection shall be phased in at twenty percent a year until the rebate equals three hundred dollars for subitems (a) through (d) of subsection (A)(1) and five hundred dollars for subitem (e) of subsection (A)(1). The amount of rebate that a person may claim is limited to the amount of rebate in effect for the year in which the vehicle was purchased or converted, whichever is applicable.
(B) (A)(1) An incentive payment for an alternative fuel purchase is provided beginning after June 30, 2009, and ending before July 1, 2012, and shall be provided from the general fund, excluding revenue derived from the sales and use tax as follows:
(a) five cents to the retailer for each gallon of E70 fuel or greater sold provided that the ethanol-based fuel is subject to the South Carolina motor fuel user fee;
(b) twenty-five cents to the retailer for each gallon of pure biodiesel fuel sold so that the biodiesel in the blend is at least two percent B2 or greater, provided that the qualified biodiesel content fuel is subject to the South Carolina motor fuel user fee. Biodiesel fuel is a fuel for motor vehicle diesel engines comprised of vegetable oils or animal fats and meeting the specifications of the American Society of Testing and Materials (ASTM) D6751 or ASTM D975 blended stock; and
(c) twenty-five cents to the retailer or wholesaler for each gallon of pure biodiesel fuel sold as dyed diesel fuel for 'off-road' uses, so that the biodiesel in the blend is at least two percent B2 or greater.
(2) The payments allowed pursuant to this subsection must be made to the retailer upon compliance with verification procedures set forth by the Department of Agriculture.
(C) (B)(1) An incentive payment for production of electricity or methane gas fuel energy is provided pursuant to subitems (a) and (b), beginning after June 30, 2008, and ending before July 1, 2018, and shall be provided from the general fund, excluding revenue derived from the sales and use tax as follows:
(a) One cent per kilowatt-hour (kwh) for electricity produced from biomass resources in a facility not using biomass resources before June 30, 2008, or facilities which produce at least twenty-five percent more electricity from biomass resources than the greatest three-year average before June 30, 2008, up to a maximum of one hundred thousand dollars per year per taxpayer for five years. The rebate incentive payment is also applicable to energy electricity from a qualifying facility placed in service and first producing energy electricity on or after July 1, 2008. , and The incentive payment extends for five years, ending and ends on July 1, 2013, or, if later, five years from the date the facility was placed in service and first produced electricity. In no case shall the rebate incentive payment apply after June 30, 2018.
(b) Nine Thirty cents per therm (100,000 Btu) for methane gas fuel energy produced from biomass resources in a facility not using biomass resources before June 30, 2008, or facilities which produce utilize at least twenty-five percent more methane gas energy from biomass resources than the greatest three-year average before June 30, 2008, up to a maximum of one hundred thousand dollars per year per taxpayer for five years. The rebate incentive payment is also applicable to energy from a qualifying facility placed in service and first producing energy on or after July 1, 2008. , and The incentive payment extends for five years, and ending before ends on July 1, 2013, or, if later, five years from the date the facility was placed in service and first produced electricity energy. In no case shall the rebate incentive payment apply after June 30, 2018.
The incentive payment for the production of electricity or thermal energy may not be claimed for both electricity and energy produced from the same biomass resource.
(2) For purposes of this subsection, a biomass resource means wood, wood waste, agricultural waste, animal waste, sewage, landfill gas, and other organic materials, not including fossil fuels.
(D) (C) The Department of Revenue may prescribe forms and procedures, issue policy documents, and distribute funds as necessary to ensure the orderly and timely implementation of the provisions of this section. The Department of Revenue shall coordinate with the Department of Agriculture as necessary.
(E) Notwithstanding the incentive amounts provided pursuant to this section:
(1) for a fiscal year all claims made pursuant to subsection (A)(1)(a) of this section must not exceed 2,050,000 dollars and must apply proportionately to all eligible claimants;
(2) for a fiscal year all claims made pursuant to subitems (b) through (e) of subsection (A)(1) of this section must not exceed 2.1 million dollars and must apply proportionately to all eligible claimants; and
(3) for a fiscal year all claims made pursuant to subsections (B) and (C) of this section must not exceed 2.1 million dollars and must apply proportionately to all eligible claimants."
SECTION 2. A. Section 46-3-260(A)(2)(c) of the 1976 Code is amended to read:
"(c) matching grants up to two hundred thousand dollars are available for demonstration projects that validate the effectiveness of new and future biomass solar, geothermal, wind energy, and small hydropower technologies and products, provided that the grant does not exceed fifty percent of the total cost of the demonstration project."
B. Section 46-3-260(B) of the 1976 Code is amended to read:
"(B) The Department of Revenue Agriculture may prescribe forms, procedures, issue policy documents, and distribute funds as necessary to ensure the orderly and timely implementation of the provisions herein. The Department of Revenue Agriculture shall coordinate with the Department of Agriculture State Energy Office as necessary."
SECTION 3. A. Section 12-6-3600 of the 1976 Code is amended to read:
"Section 12-6-3600. (A)(1) For taxable years beginning after 2006, and before 2014 2017, there is allowed a credit against the tax imposed pursuant to this chapter for any corn-based ethanol or soy-based biodiesel facility which is in production at the rate of at least twenty-five percent of its name plate design capacity for the production of corn-based ethanol or soy-based biodiesel, before denaturing, on or before December 31, 2009 2011. The credit equals twenty cents a gallon of corn-based ethanol or soy-based biodiesel produced and is allowed for sixty months beginning with the first month for which the facility is eligible to receive the credit and ending not later than December 31, 2014 2016. The credit only may be claimed if the corn-based ethanol or soy-based biodiesel facility maintains an average production rate of at least twenty-five percent of its name plate design capacity for at least six months after the first month for which it is eligible to receive the credit. The taxpayer is eligible to claim the credit after the facility has six consecutive months of operation at an average production rate of at least twenty-five percent of its name plate design capacity. In the first taxable year in which the taxpayer is eligible to claim the credit, the taxpayer may claim the credit for the first six months it met the requirements in addition to qualifying production during its current taxable year.
(B)(2) For taxable years beginning after 2006, and before 2014 2017, there is allowed a credit against the tax imposed pursuant to this chapter for an ethanol facility using a feedstock other than corn or a biodiesel facility using a feedstock other than soy oil which is in production at the minimum rates provided pursuant to this subsection the rate of at least twenty-five percent of its name plate design capacity for the production of ethanol or biodiesel, before denaturing, on or before December 31, 2009 2011. The credit equals thirty cents a gallon of noncorn ethanol or nonsoy oil biodiesel produced and is allowed for up to sixty months beginning with the first month for which the facility is eligible to receive the credit and ending no later than December 31, 2014 2016. The credit is continued only if the ethanol or biodiesel facility maintains the average minimum production rates provided pursuant to this subsection of its name plate design capacity for at least six months after the first month for which it is eligible to receive the credit. The taxpayer is eligible to claim the credit after the facility has six consecutive months of operation at an average production rate of at least twenty-five percent of its name plate design capacity. In the first taxable year in which the taxpayer is eligible to claim the credit, the taxpayer may claim the credit for the first six months it met the requirements in addition to qualifying production during its current taxable year.
(3) Any unused credit may be carried forward for ten years.
(C) (B) As used in this section:
(1) 'Ethanol facility' means a plant or facility primarily engaged in the production of ethanol or ethyl alcohol derived from renewable and sustainable bioproducts used as a substitute for gasoline fuel.
(2) 'Biodiesel facility' means a plant or facility primarily engaged in the production of plant- or animal-based fuels used as a substitute for diesel fuel.
(3) 'Name plate design capacity' means the original designed capacity of an ethanol or biodiesel facility. Capacity may be specified as bushels of grain ground or gallons of ethanol or biodiesel produced a year.
(D) (C)(1) Pursuant to this chapter, beginning Beginning January 1, 2014 2017, an ethanol or biodiesel facility must receive a credit against the tax imposed by this chapter in the amount of seven and one-half cents a gallon of ethanol or biodiesel, before denaturing, for new production for a period not to exceed thirty-six consecutive months.
(2) For purposes of this subsection, 'new production' means production which results from a new facility, a facility which has not received credits before 2014 2017, or the expansion of the capacity of an existing facility by at least two million gallons first placed into service after 2014 2016, as certified by the design engineer of the facility to the Department of Revenue State Energy Office.
(3) For expansion of the capacity of an existing facility, 'new production' means annual production in excess of twelve times the monthly average of the highest three months of ethanol or biodiesel production at an ethanol or biodiesel facility during the twenty-four-month period immediately preceding certification of the facility by the design engineer.
(4) Credits are not allowed pursuant to this subsection for expansion of the capacity of an existing facility until production is in excess of twelve times the three-month average amount determined pursuant to this subsection during any twelve-consecutive-month period beginning no sooner than January 1, 2014 2017.
(5) The amount of a credit granted pursuant to this section based on new production must be approved by the Department of Revenue State Energy Office based on the ethanol or biodiesel production records as may be necessary to reasonably determine the level of new production.
(E) (D)(1) The credits described in this section are allowed only for ethanol or biodiesel produced at a plant in this State at which all fermentation, distillation, and dehydration takes place. Credit is not allowed for ethanol or biodiesel produced or sold for use in the production of distilled spirits.
(2) Not more than twenty-five million gallons of ethanol or biodiesel produced annually at an ethanol or biodiesel facility is eligible for the credits in subsections (A) and (C) (B) of this section, and the credits only may be claimed by a producer for the periods specified in subsections (A) and (C) (B) of this section.
(3) Not more than ten million gallons of ethanol or biodiesel produced during a twelve-consecutive-month period at an ethanol or biodiesel facility is eligible for the credit described in subsection (D) (C) of this section, and the credit only may be claimed by a producer for the periods specified in subsection (D) (C) of this section.
(4) Not more than one hundred twenty-five million gallons of ethanol or biodiesel produced at an ethanol or biodiesel facility by the end of the sixty-month period set forth in subsection (A) or (C) (B) of this section is eligible for the credit under the subsection. An ethanol or biodiesel facility which receives a credit for ethanol or biodiesel produced under subsection (A) or (C) (B) of this section may not receive a credit pursuant to subsection (D) (C) of this section until its eligibility to receive a credit under subsection (A) or (C) (B) of this section has been completed.
(F) (E) The Department of Revenue State Energy Office shall prescribe an application form and procedures for claiming credits under this section.
(G) (F) For purposes of ascertaining the correctness of any application for claiming a the credit allowed pursuant to this section, the Department of Revenue State Energy Office or the department may examine or cause to have examined, by any agent or representative designated for that purpose, any books, papers, records, or memoranda bearing upon these matters.
(H) (G) Notwithstanding the credit amount allowed by this section, for a fiscal year 2008-2009 all claims made pursuant to this section must not exceed eight hundred thousand dollars and must apply proportionately to all eligible claimants.
(H)(1) To obtain the maximum amount of the credit available to a taxpayer, each taxpayer must submit a request for credit to the State Energy Office by January thirty-first for all gallons of qualifying fuel produced in the previous calendar year and the State Energy Office must notify the taxpayer that it qualifies for the credit and the amount of credit allocated to the taxpayer by March first of that year. A taxpayer may claim the maximum credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.
(2) For the state's fiscal year beginning July 1, 2008, the maximum amount of credit is to be determined based on an eighteen-month period beginning July 1, 2008, through December 31, 2009. Applications are to be made by January 31, 2010, for the previous eighteen-month period commencing July 1, 2008, and ending December 31, 2009. A taxpayer allocated a credit for this eighteen-month period may claim the credit for its tax year which contains December 31, 2009.
(3) To the extent the maximum amount of the credit contained in this section is repealed, the elimination of the maximum amount shall be seen as the last expression of the legislature and to the extent any language in this act conflicts with that repeal, it shall be considered null and void."
B. Section 12-6-3610 of the 1976 Code is amended to read:
"Section 12-6-3610. (A) As used in this section, "renewable fuel" means liquid nonpetroleum based fuels that can be placed in motor vehicle fuel tanks and used as a fuel in a highway vehicle. It includes all forms of fuel commonly or commercially known or sold as biodiesel and ethanol.
(B)(1) A taxpayer that purchases or constructs and installs and places in service in this State property that is used for distribution or dispensing renewable fuel specified in this subsection, at a new or existing commercial fuel distribution or dispensing facility is allowed a credit equal to twenty-five percent of the cost to the taxpayer of purchasing, constructing, and installing the property against the taxpayer's liability for a tax imposed pursuant to this chapter.
(2) Eligible property includes pumps, storage tanks, and related equipment that is directly and exclusively used for distribution, dispensing, or storing renewable fuel. A taxpayer is qualified for a tax credit provided pursuant to this subsection if the equipment used to store, distribute, or dispense renewable fuel is labeled for this purpose and clearly identified as associated with renewable fuel.
(3) The entire credit may not be taken for the taxable year in which the property is placed in service but must be taken in three equal annual installments beginning with the taxable year in which the property is placed in service. If, in one of the years in which the installment of a credit accrues, property directly and exclusively used for distributing, dispensing, or storing renewable fuel is disposed of or taken out of service and is not replaced, so that the facility no longer distributes, dispenses, or stores renewable fuel, the credit expires and the taxpayer may not take any remaining installment of the credit.
(4) The unused portion of an unexpired credit may be carried forward for not more than ten succeeding taxable years.
(2) (5) For purposes of this subsection, 'renewable fuel' means E70 or greater ethanol fuel dispensed at the retail level for use in motor vehicles and pure ethanol or biodiesel fuel dispensed by a distributor or facility that blends these nonpetroleum liquids with gasoline fuel or diesel fuel for use in motor vehicles.
(C) (B)(1) A taxpayer that constructs and places in service in this State a commercial facility for the production of renewable fuel is allowed a credit equal to twenty-five percent of the cost to the taxpayer of constructing or renovating a building and equipping the facility for the purpose of producing renewable fuel. Production of renewable fuel includes intermediate steps such as milling, crushing, and handling of feedstock and the distillation and manufacturing of the final product.
(2) The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. A taxpayer's total credit in all years, for all expenditures allowed pursuant to this subsection, must not exceed one million dollars.
(3) The unused portion of an unexpired credit may be carried forward for not more than ten succeeding taxable years.
(4) As used in this subsection, 'renewable fuel' means liquid petroleum based fuels that may be placed in motor vehicle fuel tanks and used as a fuel in a highway vehicle. It includes all forms of fuel commonly or commercially known or sold as biodiesel and ethanol.
(D) (5) A taxpayer that claims any other credit allowed under this article with respect to the costs of constructing and installing a facility may not take the credit allowed in this section with respect to the same costs.
(E) (C)(1) Notwithstanding the credit amounts allowed pursuant to this section, for a fiscal year all claims made pursuant to this section must not exceed one hundred fifty thousand dollars and must apply proportionately to all eligible claimants. To obtain the amount of credit available to a taxpayer, the taxpayer must submit a request for credit to the State Energy Office by January thirty-first for all qualifying property or a qualifying facility, as applicable, placed in service in the previous calendar year and the State Energy Office must notify the taxpayer that it qualifies for the credit and the amount of credit allocated to the taxpayer by March first of that year. A taxpayer may claim the credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.
(2) For the state's fiscal year beginning July 1, 2008, the credit is to be determined based on an eighteen-month period beginning July 1, 2008, through December 31, 2009. Applications are to be made by January 31, 2010, for the previous eighteen-month period commencing July 1, 2008, and ending December 31, 2009. A taxpayer allocated a credit for this eighteen-month period may claim the credit for its tax year which contains December 31, 2009.
(D) To claim the credits allowed in this section, the taxpayer must place the property or facility in service prior to January 1, 2020."
C. Section 12-6-3620 of the 1976 Code is amended to read:
"Section 12-6-3620. [For taxable year 2007, this section reads as follows:]
(A) For taxable years beginning after 2006, there is allowed a tax credit against the tax imposed pursuant to Section 12-6-530 for twenty-five percent of the costs incurred by a taxpayer for use of methane gas taken from a landfill to provide energy for a manufacturing facility.
(B) The tax credit allowed by this section may not exceed fifty percent of the liability of the taxpayer for the tax imposed pursuant to Section 12-6-530. Unused credits may be carried forward for ten years.
(C) For purposes of this section, manufacturing facility is as defined in Section 12-6-3360(M)(5).
[For taxable years beginning after 2007, this section reads as follows:]
(A) For taxable years beginning after 2007, and ending before taxable year 2020, there is allowed a credit against the income tax imposed pursuant to Section 12-6-530 or license fees imposed pursuant to Section 12-20-50, or both, for twenty-five percent of the costs incurred by a taxpayer for the purchase and installation of equipment used to create heat, power, steam, electricity, or another form of energy for commercial use from a fuel consisting of no less than ninety percent biomass resource. Costs incurred by a taxpayer and qualifying for the credit allowed by this section must be certified by the State Energy Office, in consultation with the Department of Agriculture and the South Carolina Institute for Energy Studies. The State Energy Office may consult with the Department of Agriculture and the South Carolina Institute for Energy Studies on standards for certifying the costs incurred by the taxpayer. The credit may be claimed in the year in which the equipment is placed in service and may be claimed for all expenditures incurred for the purchase and installation of the equipment.
(B) A taxpayer's credit utilization in any one year, for all expenditures allowed pursuant to this section, must not exceed taxpayer may use up to six hundred fifty thousand dollars of credit for a single taxable year. The tax credit allowed by this section may not exceed the liability of the taxpayer for the taxes imposed pursuant to Sections 12-6-530 and 12-20-50. Unused credits is nonrefundable but unused credits may be carried forward for fifteen years.
(C) For purposes of this section:
(1) 'Biomass resource' means non-commercial wood, by-products of wood processing, demolition debris containing wood, wood waste, agricultural waste, animal waste, sewage, landfill gas, and other organic materials, not including fossil fuels.
(2) 'Commercial use' means a use intended for the purpose of generating a profit.
(3) If the facility equipment ceases to use biomass resources as its primary fuel source before the entire credit has been utilized, it the taxpayer is ineligible to utilize any remaining credit until it resumes using biomass resources as its primary fuel source (at least ninety percent). The fifteen-year carry forward period must not be extended due to periods of noncompliance.
(D) Notwithstanding the credit amount allowed pursuant to this section, for a fiscal year all claims made pursuant to this section must not exceed six hundred fifty thousand dollars and must apply proportionately to all eligible claimants.
(D)(1) To obtain the maximum amount of credit available to a taxpayer, a taxpayer must submit a request for credit to the State Energy Office by January thirty-first for all qualifying equipment placed in service in the previous calendar year and the State Energy Office must notify the taxpayer that it qualifies for the credit and the amount of credit allocated to the taxpayer by March first of that year. A taxpayer may claim the maximum amount of the credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.
(2) For the state's fiscal year beginning July 1, 2008, the maximum amount of the credit is to be determined based on an eighteen-month period beginning July 1, 2008, through December 31, 2009. Applications are to be made by January 31, 2010, for the previous eighteen-month period commencing July 1, 2008, and ending December 31, 2009. A taxpayer allocated a credit for this eighteen-month period may claim the credit for its tax year which contains December 31, 2009.
(3) To the extent the maximum amount of the credit contained in this section is repealed, the elimination of the maximum amount shall be seen as the last expression of the legislature and to the extent any language in this act conflicts with that repeal, it shall be considered null and void."
D. Section 12-6-3631 of the 1976 Code is amended to read:
"Section 12-6-3631. (A) For taxable years beginning after 2007, and before 2012, a taxpayer is allowed a credit against the income tax imposed pursuant to this chapter for qualified expenditures for research and development.
(B) For purposes of this section:
(1) 'Qualified expenditures for research and development' include means expenditures to develop feedstocks and processes for cellulosic ethanol and for algae-derived biodiesel, including:
(a) enzymes and catalysts involving cellulosic ethanol and algae-derived biodiesel;
(b) best and most cost efficient feedstocks for South Carolina; or
(c) product and development, including cellulosic ethanol or algae-derived biodiesel products.
(2) 'Cellulosic ethanol' means fuel from ligno-cellulosic materials, including wood chips derived from noncommercial sources, corn stover, and switchgrass.
(C) The credit is equal to twenty-five percent of qualified expenditures for research and development. A taxpayer's total credit in all years, for all expenditures allowed pursuant to this section, must not exceed one hundred thousand dollars. Unused credits may be carried forward for five years after the tax year in which a qualified expenditure was made. The credit is nonrefundable.
(D) The amount of the credit provided by this section to a taxpayer must be invested by the taxpayer in demonstration projects on or research and development of:
(1) enzymes and catalysts;
(2) best and most cost efficient feedstocks for South Carolina; and
(3) product development.
(E) Expenditures qualifying for a tax credit allowed by this section and investments made by a taxpayer pursuant to subsection (D) must be certified by the State Energy Office. , in consultation with The State Energy Office may consult with the Department of Agriculture and the South Carolina Institute for Energy Studies on standards for certification.
(F) Notwithstanding the credit amount allowed pursuant to this section, for a fiscal year all claims made pursuant to this section must not exceed one hundred thousand dollars and must apply proportionately to all eligible claimants.
(E)(1) To obtain the maximum amount of the credit available to a taxpayer, each taxpayer must submit a request for the credit to the State Energy Office by January thirty-first for qualifying research expenses incurred in the previous calendar year and the State Energy Office must notify the taxpayer that the submitted expenditures qualify for the credit and the amount of credit allocated to such taxpayer by March first of that year. A taxpayer may claim the maximum amount of the credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.
(2) For the state's fiscal year beginning July 1, 2008, the maximum amount of the credit is to be determined based on an eighteen-month period beginning July 1, 2008, through December 31, 2009. Applications are to be made by January 31, 2010, for the previous eighteen-month period commencing July 1, 2008, and ending December 31, 2009. A taxpayer allocated a credit for this eighteen-month period may claim the credit for its tax year which contains December 31, 2009.
(3) To the extent the maximum amount of the credit contained in this section is repealed, the elimination of the maximum amount shall be seen as the last expression of the legislature and to the extent any language in this act conflicts with that repeal, it shall be considered null and void."
SECTION 4. This act takes effect upon approval by the Governor.
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