H 4400 General Bill, By Richardson
 A Bill to amend the Code of Laws of South Carolina, 1976, by adding Sections
 12-21-2787 and 12-21-2797 so as to require a video game with a free play
 feature to house a credit payback of at least sixty percent and authorize the
 Department of Revenue and Taxation to establish the mechanism to insure this
 payback compliance, to require additional licenses and impose a gross proceeds
 tax on video games with a free play feature and provide for the distribution
 of the revenue; to amend Section 12-21-2776, relating to metering requirements
 of video games with a free play feature, so as to provide that machines must
 be equipped with such devices by July 1, 1994; and to amend Section
 12-21-2720, as amended, relating to license fees for coin-operated devices, so
 as to revise the payment period for the one-time five hundred dollar
 monitoring fee.

   12/15/93  House  Prefiled
   12/15/93  House  Referred to Committee on Ways and Means
   01/11/94  House  Introduced and read first time HJ-43
   01/11/94  House  Referred to Committee on Ways and Means HJ-43

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTIONS 12-21-2787 AND 12-21-2797 SO AS TO REQUIRE A VIDEO GAME WITH A FREE PLAY FEATURE TO HOUSE A CREDIT PAYBACK OF AT LEAST SIXTY PERCENT AND AUTHORIZE THE DEPARTMENT OF REVENUE AND TAXATION TO ESTABLISH THE MECHANISM TO INSURE THIS PAYBACK COMPLIANCE, TO REQUIRE ADDITIONAL LICENSES AND IMPOSE A GROSS PROCEEDS TAX ON VIDEO GAMES WITH A FREE PLAY FEATURE AND PROVIDE FOR THE DISTRIBUTION OF THE REVENUE; TO AMEND SECTION 12-21-2776, RELATING TO METERING REQUIREMENTS OF VIDEO GAMES WITH A FREE PLAY FEATURE, SO AS TO PROVIDE THAT MACHINES MUST BE EQUIPPED WITH SUCH DEVICES BY JULY 1, 1994; AND TO AMEND SECTION 12-21-2720, AS AMENDED, RELATING TO LICENSE FEES FOR COIN-OPERATED DEVICES, SO AS TO REVISE THE PAYMENT PERIOD FOR THE ONE-TIME FIVE HUNDRED DOLLAR MONITORING FEE.

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

SECTION 1. Article 20, Chapter 21, Title 12 of the 1976 Code, as added by Act 164 of 1993, is amended by adding:

"Section 12-21-2787. A machine must have a credit payback value of at least sixty percent. The department shall establish the mechanism for ensuring that the machines comply with this section.

Section 12-21-2797. (A) Every manufacturer in this State of video games with a free play feature must obtain a license from the Department of Revenue and Taxation before engaging in such manufacturing. Every owner or operator of an establishment on which video games with a free play feature are located must obtain an establishment license before the games may be placed on the premises.

(B) The department biennially shall issue the following licenses to qualified persons who meet the definitions provided in Section 12-21-2772 and who comply with the provisions of this article:

(1) Manufacturer $10,000

(2) Licensed Establishment$ 200

(C) No license may be issued under this section unless the applicant for a license or renewal presents to the department a signed statement from the department and from the Internal Revenue Service showing that the applicant does not owe the state or federal government any delinquent taxes, penalties, or interest.

(D) The licenses required under this section are in addition to all other licenses required by law.

(E) (1) Beginning July 1, 1994, a tax is imposed on the gross proceeds of machines licensed pursuant to Section 12-27-2720(A)(3) in an amount equal to ten percent of such proceeds. The revenue of the tax must be remitted twice monthly to the Department of Revenue and Taxation by electronic transfer in the manner and on the schedule that the department prescribes. Failure to transfer the funds when due shall subject the taxpayer to the penalties provided in Section 12-54-40.

(2) Revenues generated from the tax imposed pursuant to this subsection must be credited to a separate fund in the State Treasury and the fund's proceeds may be appropriated by the General Assembly only for nonrecurring purposes for state agencies as follows:

(a) Department of Corrections--ten percent;

(b) South Carolina Law Enforcement Division--ten percent;

(c) Department of Alcohol and Other Drug Abuse Services--seven percent;

(d) Department of Natural Resources--four percent;

(e) Department of Mental Health for use with the South Carolina Alliance for Children and other children's issues--three percent;

(f) Heritage Land Trust Fund--three percent;

(g) South Carolina Arts Commission--three percent.

(3) Revenues of the separate fund not appropriated pursuant to the provisions of item (2) of this subsection must be transferred to the general fund of the State and the highest priority for appropriations from this source must be for the Department of Revenue and Taxation for the enforcement of this article and for the medicaid pharmaceutical program."

SECTION 3. Section 12-21-2776(B) of the 1976 Code, as added by Section 19, Part II, Act 164 of 1993, is amended to read:

"(B) By July 1, 1995 1994, all machines registered and licensed by the commission department must be equipped with a commission department approved metering device. Each machine owner, operator, or licensed establishment must establish and implement cash controls required by the commission department."

SECTION 4. Section 12-21-2720(C) of the 1976 Code, as added by Section 19, Part II, Act 164 of 1993, is amended to read:

"(C) In addition to any fees set forth under subsection (A)(3), there is imposed a one-time nonrefundable fee of five hundred dollars on all licenses issued on such machines for the period between July 1, 1993, and June 30, 1995 1994. The revenue from this fee must be placed in a special account and used exclusively for the purpose of monitoring these machines on a twenty-four hour a day basis. The Tax Commission Department of Revenue and Taxation is responsible for administering this account and implementing, through regulations as approved by the General Assembly, its requirements."

SECTION 5. This act takes effect upon approval by the Governor.