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COMMITTEE REPORT
April 22, 1999
H. 3649
S. Printed 4/22/99--H.
Read the first time March 2, 1999.
To whom was referred a Bill (H. 3649), to amend Section 12-6-3360, as amended, Code of Laws of South Carolina, 1976, relating to the definition of "new job" for purposes of claiming the job tax credit, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by adding a new section to be appropriately numbered to read:
/SECTION ____. Section 12-20-105 of the 1976 code, as last amended by Act 151 of 1997, is further amended to read:
"Section 12-20-105. (A) Any company subject to a license tax under Section 12-20-100 may claim a credit against its license tax liability for amounts paid in cash to provide infrastructure for an eligible project.
(B)(1) In order to be considered an eligible project for purposes of this section, the project must qualify for income tax credits under Chapter 6 of Title 12, withholding tax credit under Chapter 10 of Title 12, income tax credits under Chapter 14 of Title 12, or fees in lieu of property taxes under Chapter 12 of Title 4.
(2) If a project consists of an office, business, commercial, or industrial park which is constructed by a county or political subdivision of this State, the project does not have to meet the qualifications of item (1) in order to be considered an eligible project.
(C) For the purpose of this section 'infrastructure' means improvements for water, sewer, gas, steam, electric energy, and communication services made to a building or land which are considered necessary, suitable, or useful to an eligible project. These improvements include, but are not limited to:
(1) improvements to both public or private water and sewer systems;
(2) improvements to both public or private electric, natural gas, and telecommunication systems including, but not limited to, ones owned or leased by an electric cooperative, electric utility, or electric supplier, as defined in Chapter 27, Title 58;
(3) fixed transportation facilities including highway, road, rail, water, and air;
(4) for a qualifying project under subsection (B)(2), infrastructure improvements include industrial shell buildings and the purchase of land for an office, business, commercial, or industrial park which is constructed by a county or political subdivision of this State.
(D) A company is not allowed the credit provided by this section for actual expenses it incurs in the construction and operation of any building or infrastructure it owns, leases, manages, or operates.
(E) The maximum aggregate credit that may be claimed in any tax year by a single company is three hundred thousand dollars.
(F) The credits allowed by this section may not reduce the license tax liability of the company below zero. If the applicable credit originally earned during a taxable year exceeds the liability and is otherwise allowable under subsection (D), the amount of the excess may be carried forward to the next taxable year.
(G) For South Carolina income tax and license purposes, a company that claims the credit allowed by this section is ineligible to claim the credit allowed by Section 12-6-3420." /
Renumber sections to conform.
Amend totals and title to conform.
HENRY E. BROWN, JR., for Committee.
REVENUE IMPACT1
This bill is not expected to reduce state general fund income tax revenue in FY1999-00.
Explanation
Currently, reinstated jobs at facilities that have been rebuilt due to "destruction by accidental fire, natural disaster, or act of God" are considered "new jobs" for purposes of claiming a job tax credit. This bill would broaden the definition of a "new job" as described in Section 12-6-3360(M)(3) to include jobs that have been reinstated at a facility that has been rebuilt due to the "involuntary conversion as result of condemnation or exercise of eminent domain by the State or any of its political subdivisions or by the federal government." The revenue projection would not include jobs gained as a result of a facility being reinstated, so the BEA would not need to adjust its estimate as a result of this bill. This bill, therefore, is not expected to reduce state general fund income tax revenue in FY1999-00.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND SECTION 12-6-3360, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE DEFINITION OF "NEW JOB" FOR PURPOSES OF CLAIMING THE JOB TAX CREDIT, SO AS TO INCLUDE A JOB REINSTATED AFTER THE EMPLOYER HAS REBUILT A FACILITY DUE TO INVOLUNTARY CONVERSION, BY EMINENT DOMAIN OR CONDEMNATION, OF A PRIOR EXISTING FACILITY; AND TO AMEND SECTIONS 12-10-30, AS AMENDED, AND 12-10-35, BOTH RELATING TO QUALIFICATION OF A BUSINESS PURSUANT TO THE ENTERPRISE ZONE ACT OF 1995, SO AS TO CONFORM CRITERIA TO INCLUDE THE DEFINITION OF "NEW JOB" AS A JOB CREATED OR REINSTATED PURSUANT TO SECTION 12-6-3360.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-6-3360(M)(3) of the 1976 Code, as last amended by Act 143 of 1997, is further amended to read:
"(3) 'New job' means a job created in this State at the time a new facility or an expansion is initially staffed. The term does not include a job created when an employee is shifted from an existing location in this State to a new or expanded facility whether the transferred job is from, or to, a facility of the taxpayer or a related person. A related person shall include includes any entity or person that bears a relationship to the taxpayer as set forth 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 jobs job at a facility of an employer which are 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 considered to be the year of creation of the job. All such reinstated jobs so reinstated qualify for the credit under pursuant to this section, and no 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."
SECTION 2, Section 12-10-30 of the 1976 Code, as last amended by Act 462 of 1996, is further amended to read:
"Section 12-10-30. As used in this chapter:
(1) 'Council' means the Advisory Coordinating Council for Economic Development.
(2) 'Department' means the South Carolina Department of Revenue.
(3) 'Employee' means an employee of the qualifying business who works full time within the enterprise zone.
(4) 'Manufacturing' means engagement primarily in an activity or activities listed under the Standard Industrial Classification (SIC) Codes 20 through 39 as published in the Office of Management and Budget's Standard Industrial Classification Manual.
(5) 'New Job' means a job created or reinstated as defined in Section 12-6-3360(M)(3).
(6) 'Qualifying business' means an employer that meets the requirements of Section 12-10-50 and other applicable requirements of this chapter and, where required under Section 12-10-50, enters into a revitalization agreement with the council to undertake a project under the provisions of this chapter.
(6)(7) 'Project' means an investment for one or more purposes in Section 12-10-80(B) needed for a qualifying business to locate, remain, or expand in an enterprise zone and otherwise fulfill the requirements of this chapter.
(7)(8) Reserved.
(8)(9) 'Withholding' means employee withholding under Chapter 9 of this title."
SECTION 3. A. Section 12-10-35(A) of the 1976 Code, as added by Act 419 of 1998, is amended to read:
"(A) If a qualifying business creates at least one hundred new full-time jobs, as defined and determined in Section 12-6-3360(F), 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 and at least ninety percent of the investment of the qualifying businesses' investment business in this State is in such a that county, then the company is allowed a moratorium on state corporate income taxes imposed pursuant to Section 12-6-530 for the company's first ten taxable years beginning with the taxable year after it first qualifies. The moratorium applies to that portion of the company's corporate income tax that represents the ratio that the company's new investment is of its total investment in this State."
B. The repeal of Section 12-10-35 effective July 1, 2003, pursuant to Section 37B, Part II, Act 419 of 1998, applies to this section.
SECTION 4. Upon approval by the Governor, this act is effective for taxable years after 1998.
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