South Carolina General Assembly
119th Session, 2011-2012

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S. 591

STATUS INFORMATION

General Bill
Sponsors: Senators Peeler, Ryberg, Bryant, Massey, Rose and Setzler
Document Path: l:\council\bills\bbm\10088htc11.docx
Companion/Similar bill(s): 3540

Introduced in the Senate on February 17, 2011
Currently residing in the Senate

Summary: Tax credit for employers hiring an unemployed individual

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
   2/17/2011  Senate  Introduced and read first time (Senate Journal-page 6)
   2/17/2011  Senate  Referred to Committee on Finance (Senate Journal-page 6)
   3/30/2011  Senate  Committee report: Favorable Finance 
                        (Senate Journal-page 29)
   3/31/2011          Scrivener's error corrected

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

2/17/2011
3/30/2011
3/31/2011

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

COMMITTEE REPORT

March 30, 2011

S. 591

Introduced by Senators Peeler, Ryberg, Bryant, Massey, Rose, Setzler and Reese

S. Printed 3/30/11--S.    [SEC 3/31/11 3:14 PM]

Read the first time February 17, 2011.

            

THE COMMITTEE ON FINANCE

To whom was referred a Bill (S. 591) to amend the Code of Laws of South Carolina, 1976, by adding Section 12-6-3765, so as to allow a state tax credit for employers hiring an unemployed, etc., respectfully

REPORT:

That they have duly and carefully considered the same and recommend that the same do pass:

HUGH K. LEATHERMAN, SR. for Committee.

            

STATEMENT OF ESTIMATED FISCAL IMPACT

REVENUE IMPACT 1/

This bill would reduce general fund individual income tax, corporate income tax, bank tax, savings and loan association taxes, corporate license tax, and insurance premium tax revenue by an estimated $31,639,410 in FY2011-12 and by an estimated $63,278,820 in FY2012-13.

Explanation

This bill would add Section 12-6-3760 to allow an employer that hires a "creditable employee" to claim a $100 per month nonrefundable income tax credit for each unemployed creditable employee first hired by the employer after June 30, 2011 and before July 1, 2012. A "creditable employee" must also meet the remaining conditions - has filed a claim for unemployment compensation and is currently receiving weekly unemployment compensation benefits for at least four weeks (30 days); was unemployed immediately before becoming employed; has no return to work date or promise of future employment; remains employed by the employer for at least four consecutive work weeks (30 days) and consists of at least a 35-hour work week; and the employee must be a U.S. citizen or a lawfully present alien confirmed through the federal employment verification system known as "E-Verify".

According to the latest data from the Employment Security Commission, an average of 70,155 individuals received unemployment compensation checks during the first five weeks in 2011, of which an estimated 30,155 unemployed individuals would be hired and become creditable employees. Based upon data from the Bureau of Labor Statistics, it takes a typical unemployed person an average of 19.9 weeks (5 months) to find employment after a job separation. Since individuals are constantly added to and removed from the unemployment rolls, the number of initial claimants for unemployment insurance turns over 2.61 times each year (52 weeks divided by 19.9 weeks equals 2.61). Multiplying the additional 30,155 unemployed claimants by an unemployment turnover rate of 2.61 yields an estimated 78,705 of potential creditable employees. Applying an annual nonrefundable income tax credit of $1,200 per claimant yields an estimated $94,446,000 in tax credits. Adjusting for one-third of employers that would not have enough taxable liability to claim a credit yields an estimated $63,278,820 of income tax credits. Since one-half of the tax credits would be claimed from July 1, 2011 to December 31, 2011, general fund income tax revenue would thereby be reduced by an estimated $31,639,410 in FY2011-12. Any unused credits may be carried forward to succeeding years and the tax credit remains in effect for twenty-four consecutive months for each creditable employee. In the second year, a full year of tax credits yields a reduction of general fund income tax revenue of $63,278,820 in FY2012-13. This act takes effective upon approval by the Governor.

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 by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1-85(B) for an estimate of the shift in local property tax incidence by the Office of Economic Research.

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-6-3765, SO AS TO ALLOW A STATE TAX CREDIT FOR EMPLOYERS HIRING AN UNEMPLOYED INDIVIDUAL RECEIVING UNEMPLOYMENT COMPENSATION BENEFITS, TO PROVIDE THE AMOUNT OF THE CREDIT, THOSE TAXES AGAINST WHICH THE CREDIT IS ALLOWED, AND THE ELIGIBILITY REQUIREMENTS FOR CREDITABLE EMPLOYEES, TO PROVIDE FOR THE ADMINISTRATION OF THE CREDIT, AND TO PROVIDE THAT THE CREDIT IS ALLOWED FOR ELIGIBLE INDIVIDUALS HIRED AFTER JUNE 30, 2011, AND BEFORE JULY 1, 2013, AND EXTENDS FOR TWENTY-FOUR MONTHS FOR EACH CREDITABLE EMPLOYEE.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Article 25, Chapter 6, Title 12 of the 1976 Code is amended by adding:

"Section 12-6-3765.    (A)    As used in this section, 'creditable employee' means an employee of a taxpayer employer who:

(1)    is first employed by the employer after June 30, 2011, and before July 1, 2013;

(2)    has filed a claim for unemployment compensation in this State and is currently receiving weekly unemployment compensation benefits on that claim for at least four weeks;

(3)    was unemployed immediately before becoming employed;

(4)    has no return to work date or promise of future employment;

(5)    remains employed by the employer for at least four consecutive work weeks and the employment with that employer consists of at least thirty-five hours a week; and

(6)    executes and provides a notarized affidavit swearing or affirming that the employee is eligible to work in the United States because the person is either a United States citizen or a lawfully present alien according to federal law.

(B)    An employer who has one or more creditable employees and who provides a notarized affidavit attesting to use of the federal employment verification system now known as 'E-Verify' or any future federal employment verification system is eligible to apply for and receive a credit against these taxes as provided in subsection (C) of this section. The amount of the credit is one hundred dollars a month for each creditable employee. Eligibility for the credit must be established as of the time the creditable employee completes thirty consecutive days of employment and the credit must be claimed for the taxable year in which the employment was completed.

(C)    The credit allowed pursuant to subsection (B) of this section may be taken against the income taxes imposed pursuant to this chapter, the bank tax imposed pursuant to Chapter 11 of this title, the savings and loan association tax imposed pursuant to Chapter 13 of this title, the corporate license tax imposed pursuant to Chapter 20 of this title, and insurance premium taxes imposed pursuant to Chapter 7, Title 38.

(D)    The total amount of any tax credit for a taxable year may not exceed the taxpayer's tax liability. Any unused tax may be carried over to apply to the taxpayer's succeeding year's liability.

(E)    The tax credit provided for in subsection (B) remains in effect for twenty-four consecutive months for each creditable employee."

SECTION    2.    This act takes effect upon approval by the Governor.

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