H 4995 Session 119 (2011-2012) H 4995 General Bill, By Stringer, Bingham, Harrell, Parker, Ballentine, Ryan, Bedingfield, G.R. Smith, Brady, Thayer, Patrick, Erickson, Nanney, Taylor, J.R. Smith, Allison, Bannister, Bowen, Hamilton, Henderson, Hixon, Horne, Limehouse, Loftis, Long, Owens, Tallon, Forrester, Pope, Simrill and Sottile
Indicates New Matter AMENDED April 26, 2012 H. 4995 Introduced by Reps. Stringer, Bingham, Harrell, Parker, Ballentine, Ryan, Bedingfield, G.R. Smith, Brady, Thayer, Patrick, Erickson, Nanney, Taylor, J.R. Smith, Allison, Bannister, Bowen, Hamilton, Henderson, Hixon, Horne, Limehouse, Loftis, Long, Owens, Tallon, Forrester, Pope, Simrill and Sottile S. Printed 4/26/12--H. [SEC 5/1/12 11:48 AM] Read the first time March 13, 2012.
REVENUE IMPACT 1/ This amended bill is not expected to increase or decrease state general fund revenue in FY2012-13. The increase in revenue from the repeal of sales and use tax exemptions amounting to an estimated $12,877,500 in FY2012-13 would be offset by lowering the current state sales tax rate of six percent to 5.977604 percent in FY2012-13. Explanation of Amendment (April 18, 2012) - By the House Ways & Means Committee This amended bill would reinsert eighteen sales and use tax exemptions from Section 12-36-2120, Section 12-36-2610, and Section 12-36-2620(2). Items subject to a maximum sales tax cap limitation pursuant to Section 12-36-2110 are not affected by this bill. This bill has the intended effect of broadening the sales tax base by eliminating various sales and use tax exemptions, reducing the sales tax rate, while keeping the total amount of sales tax collected unchanged, or revenue neutral. This amended bill would repeal twenty-four sales and use tax items from Section 12-36-2120 and Section 12-36-2620 amounting to an increase in sales tax revenue by an estimated $12,877,500 in FY2012-13. Of this amount, general fund revenue would be increased by $8,585,000, the Education Improvement Act Fund would be increased by $2,146,250, and the Homestead Exemption Fund would be increased by $2,146,250 in FY2012-13. This amended bill requires that the revenue generated pursuant to this Act to be used to reduce the overall sales tax rate set forth in Section 12-36-910 and Section 12-36-1110. Section 12-36-910 allows a sales tax equal to five percent of the gross proceeds of sales to be imposed upon every person or business of selling tangible personal property at retail. Section 12-36-1110 permits an additional sales, use, and casual excise tax equal to one percent to be imposed on certain items. This additional penny is commonly referred to as the "sixth penny", and is used to reimburse school districts for the local school operating portion of a homeowner's property tax bill exempted by Act 388 of 2006. These two sections permit a sales tax equal to six percent to be levied on the gross proceeds of tangible personal property offered for sales at retail, with several exceptions. Based on the Board of Economic Advisors' general fund revenue estimate of February 15, 2012, the revenue expected to be collected from one penny of sales tax is an estimated $575,000,000 in FY2012-13. This bill would affect an estimated $12,877,500 of sales and use tax revenue in FY2012-13. The fraction of the repealed sales tax exemptions to the revenue generated from one penny of sales tax is an estimated 0.022396 in FY2012-13. To remain revenue neutral, therefore, the sales tax rate would need to be lowered from the current sales tax rate of six percent to 5.977604 percent in FY2012-13. Explanation of Bill Filed March 13, 2012 This bill would delete specific sales and use tax exemptions from Section 12-36-2120, repeal Section 12-36-2130 and Section 12-36-2610, and amend Section 12-36-2620(2). These changes would affect an estimated $220,500,837 of sales and use tax revenue in FY2012-13. Items subject to a maximum sales tax cap limitation pursuant to Section 12-36-2110 are not affected by this bill. This bill has the intended effect of broadening the sales tax base by eliminating various sales and use tax exemptions, reducing the sales tax rate, while keeping the total amount of sales tax collected unchanged, or revenue neutral. Section 1. This section would delete various sales tax exemptions contained in Section 12-36-2120 and use the revenue generated to reduce the overall sales tax rate set forth in Section 12-36-910 and Section 12-36-2610. This bill would repeal forty-two sales tax items from Section 12-36-2120 amounting to an increase in sales tax revenue by an estimated $191,124,951 in FY2012-13. Of this amount, general fund revenue would be increased by $127,416,633, the Education Improvement Act Fund would be increased by $31,854,159, and the Homestead Exemption Fund would be increased by $31,854,159 in FY2012-13. This section takes effect July 1, 2012. Section 2. This section would amend Section 12-36-2620(2) that requires one percent of the sales and use tax to be credited to the South Carolina Education Improvement Act of 1984 Fund by deleting the exclusion granting a one percent (one penny per each dollar) sales tax exemption to an individual eighty-five years of age or older. The repeal of this section would increase sales tax revenue by an estimated $4,219,466 in FY2012-13. Of this amount, general fund revenue would be increased by $2,812,978, the Education Improvement Act Fund would be increased by $703,244, and the Homestead Exemption Fund would be increased by $703,244 in FY2012-13. Section 3. This section would repeal Section 12-36-2130 and Section 12-36-2610. Section 12-36-2130 allows specific exemptions from the use tax. Section 12-36-2610 allows a discount for timely payment of sales and use tax. The discount for timely filing of taxes of less than $100 is three percent, and the discount for timely filing of taxes of more than $100 is two percent. These discounts for timely filing are subject to maximum limits. The repeal of these code sections would increase sales and use tax revenue by an estimated $25,156,420 in FY2012-13. Of this amount, general fund revenue would be increased by $16,770,946, the Education Improvement Act Fund would be increased by $4,192,737, and the Homestead Exemption Fund would be increased by $4,192,737 in FY2012-13. Section 4. This section requires that the revenue generated pursuant to this Act to be used to reduce the overall sales tax rate set forth in Section 12-36-910 and Section 12-36-1110. Section 12-36-910 allows a sales tax equal to five percent of the gross proceeds of sales to be imposed upon every person or business of selling tangible personal property at retail. Section 12-36-1110 permits an additional sales, use, and casual excise tax equal to one percent to be imposed on certain items. This additional penny is commonly referred to as the "sixth penny", and is used to reimburse school districts for the local school operating portion of a homeowner's property tax bill exempted by Act 388 of 2006. These two sections permit a sales tax equal to six percent to be levied on the gross proceeds of tangible personal property offered for sales at retail, with several exceptions. Based on the Board of Economic Advisors' general fund revenue estimate of February 15, 2012, the revenue expected to be collected from one penny of sales tax is an estimated $575,000,000 in FY2012-13. This bill would affect an estimated $220,500,837 of sales and use tax revenue in FY2012-13. The fraction of the repealed sales tax exemptions to the revenue generated from one penny of sales tax is an estimated 0.383480 in FY2012-13. To remain revenue neutral, therefore, the sales tax rate would need to be lowered from the current sales tax rate of six percent to 5.383480 percent in FY2012-13. Section 5. This section repeals the language contained in Section 4, verbatim, and is construed to be a scrivener's error. Section 6. This section reenacts the Joint Committee on Taxation as established by Act 334 of 2002, except for the provisions of Section 2-41-60, which contained specific reporting dates in 2006. This section requires the Joint Committee on Taxation to convene by September 1, 2012 to conduct a cost-benefit analysis on the sales tax exemptions contained in Section 12-36-2120. The committee shall submit a report detailing its findings to the Governor, the General Assembly, and be made available to the public. The committee shall review the sales tax exemptions as it deems necessary, but no later than five years after the initial review. Section 7. Except as otherwise provided this act takes effect upon approval by the Governor.
Line Code Year Description FY2013 FY2013 Notes Section Enacted of Exemption Exemption Subtotal Estimate (Dollars) (Dollars) 1 12-36-2110 Maximum Sales Tax Caps 2 (A) 1984 Maximum tax on sale 169,119,572 or lease of motor vehicles, motorcycles, boats, airplanes, trailer or semitrailer pulled by a truck, horse trailers, recreational vehicles, and self-propelled light construction equipment 3 (A)(1) Airplanes, including 1,215,000 unassembled aircraft which is to be assembled by the purchaser 4 (A)(2) Motor vehicles 148,700,000 5 (A)(3) Motorcycles 2,582,748 6 (A)(4) Boats 4,954,212 7 (A)(5) Trailer or semitrailers, 825,527 pulled by a truck tractor, and horse trailers 8 (A)(6) Recreational vehicles, 7,912,005 including tent campers, travel trailer, park model, park trailer, motor home, and fifth wheel 9 (A)(7) Self-propelled light 2,930,080 construction equipment with compatible attachments limited to a maximum of 160 net engine horsepower 10 (B) Sale of manufactured 5,076,600 homes 11 (C) Sale of musical 96,396 instruments or office equipment purchased by religious organizations 12 (D) Repealed: Machines Repealed used in research and development (refer to Section 12-36-2120(56)) 13 (E) Equipment provided, 963,960 supplied, or installed on a firefighting vehicle 14 15 12-36-2120 Exemptions From Sales Tax 16 (1) 1951 Tangible personal property or reciepts of business which the State is prohibited from taxing by the US or SC Constitutions 0 17 (2) 1984 Tangible personal property sold to the federal government 244,552,800 18 (3) 1951 Textbooks, books, magazines, periodicals, newspapers, and on-line access used in a course of study in all schools or for students' use in the school library 15,553,974 19 (4) 1951 Sale of livestock used primarily as beasts of burden and livestock that provide, food, pelts, or fur 82,209,300 20 (5) 1951 Feed used for production and maintenance of poultry and livestock 41,853,480 21 (6) 1951 Insecticides, chemicals, fertilizers, soil conditioners, seeds, or seedlings, or nursery stock, used in production of farm, dairy, grove, vineyard, or garden products, or in the cultivation of poultry or livestock feed 20,576,340 22 (7) 1951 Containers and labels used in preparing agriculture, dairy, grove, or garden products, turpentine gum, gum spirits of turpentine, and gum resin for sale 612,000 23 (8) 1951 Newsprint paper, newspapers, religious publications, including the Holy Bible, and the SC Department of Agriculture's "The Market Bulletin" 13,101,656 24 Newsprint paper 3,680,363 25 Newspaper sales 9,140,727 26 The Holy Bible * 27 The Market Bulletin 10,566 28 (9) 1951 Coal, or coke, or other fuel sold to manufacturers, electric power companies, and transportation companies 127,485,792 29 Electric Utility 87,867,531 30 Other Industry (Manufacturers) 26,896,265 31 Transportation 12,721,996 32 (10) 1951 Meals or foodstuffs used in furnishing meals to school children, and meals provided to the elderly, disabled, homeless, needy, or disabled adults 7,804,174 33 (11) 1986 Toll charges for the transmission of voice or messages between telephone exchanges and transactions 57,814,950 34 (A) Toll charges for the transmission of voice messages between telephone exchanges (long distance) 38,881,200 35 (B) Charges for telegraph messages negligible 36 (C) Carrier and customer access charges established by the FCC or the SC Public Service Commission 17,013,750 37 (D) Automatic teller machine transactions 1,920,000 38 (12) 1951 Water sold by public utilities, if rates and charges are the kind determined by the Public Service Commission or water sold by nonprofit corporations organized under Chapter 36 of Title 33 19,629,637 39 (13) 1951 Fuel, lubricants, and supplies for use or consumption aboard ships in intercoastal trade or foreign commerce. (Commonly referred to as vessel bunkering) 14,572,404 40 (14) 1951 Wrapping paper, wrapping twine, paper bags, and containers used in the sale and delivery of tangible personal property 27,671,968 41 (15) 1988 Motor fuel, blended fuel, and alternative fuel subject to tax under Chapter 28 Title 12 721,793,461 42 (A) On-Highway 698,848,578 43 (A) Off-Highway 22,944,883 44 (C) Farm machinery and tractors 1,619,442 45 (D) Commercial fishing vessels 14,115,865 46 Construction 6,984,450 47 Military 225,126 48 (16) 1951 Farm machinery and replacement parts and attachments used in planting, cultivating or harvesting farm crops, the preservation of milk on dairy farms, and machines used in poultry production on poultry farms, when sold in the original state of production or preparation for sale 8,351,000 49 (17) 1951 Machines used in manufacturing, processing, recycling, compounding, mining, or quarrying tangible personal property for sale 69,889,455 50 (18) 1951 Fuel used exclusively to cure agriculture products 934,110 51 (19) 1951 Electricity used by cotton gins, manufacturers, miners, or quarriers to manufacture, mine, or quarry tangible personal property for sale 97,031,815 52 (20) 1951 Railroad cars, locomotives, and their parts, monorail cars, and the engines or motors that propel them, and their parts 352,710 53 (21) 1951 Vessels and barges of more than 50 tons burden 169,546 54 (22) 1990 Missile assembly materials used by the Armed Forces of the US Classified 55 (23) 1951 Farm, grove, vineyard, and garden products, sold in the original state of production or preparation for sale, when sold by the producer or members of the producers immediately family 693,042 56 (24) 1986 Supplies and machinery used by laundries, cleaning, dyeing, pressing, or garment rental establishments (excludes coin- operated laundromats) 1,932,492 57 (25) 1985 Motor vehicles (excluding trucks) or motorcycles sold to out-of-state residents of the US Armed Forces when by reason of orders is located in SC 800,000 58 (26) 1993 Supplies, technical equipment, machinery, and electricity sold to radio and television stations, and cable television systems, for use in producing, broadcasting, or distributing programs 10,568,784 59 (27) 1990 Plants and animal sales to public zoos or gardens or its nonprofit support corporations 4,290 60 (28) 1976 Medicine and prosthetic devices sold by prescription, radiopharmaceuticals used in treatment of cancer and other related diseases, free samples donated by manufacturer, and medicines used to prevent respiratory syncytial virus 448,752,036 61 (A) Medicine and prosthetic devices 435,842,016 62 (B) Diabetic supplies, including hypodermic needles, insulin, and blood sugar test strips 9,996,000 63 (C) Disposable medical supplies used in the treatment of patient outside of a hospital, skilled nursing facility, or ambulatory surgical treatment center 260,400 64 (D) Medicine donated donated by its manufacturer to SC medical schools for research, or for treatment of indigent patients 90,420 65 (E) Dental prosthetics 2,563,200 66 (29) 1996 Sale of tangible personal property by persons under written contract with the federal government where the property is later transferred to the federal government 0 67 (30) 1978 Supplies, commodities, and services resold by the Division of General Services of State Budget and Control Board to departments and state agencies, if the tax was paid on the divisions original purchase 0 68 (31) 1979 Vacation time sharing plans, vacation multiple ownership interests, and exchanges of interests in vacation time sharing plans and vacation multiple ownership interests as provided by Chapter 32 of Title 27, and any other exchange of accommodations in which the accommodations to be exchanged are the primary consideration 3,306,240 69 (32) 1979 Natural and liquefied petroleum gas and electricity used exclusively in the production of poultry, livestock, swine, and milk 1,300,000 70 (33) 1979 Electricity or any combustible heating material or substance used for residential purposes 276,725,575 71 Electricity 208,305,660 72 Natural Gas 35,985,035 73 Kerosene 11,128,400 74 Fuel Oil 12,526,530 75 Coal 22,230 76 LP Gas 8,757,720 77 (34) 1980 Modular homes, both on-frame and off-frame, 50% of gross proceeds of the sale 762,450 78 (35) 1983 Motion picture film sold or rented to or by theaters 2,825,765 79 (36) 1983 Tangible personal property sold out of state 0 80 (37) 1983 Petroleum asphalt products, used in paving, purchased in this state, which are transported and consumed out of state 614,000 81 (38) 1985 Hearing aids 2,897,063 82 (39) 1986 Concession sales at a festival by an organization devoted exclusively to public or charitable purposes 475,000 83 (40) 1988 Containers and chassis, including parts, components, and attachments, sold to international shipping lines in contract with the SC State Ports Authority and used for the import and export of goods to and from South Carolina 550,000 84 (41) 1989 Organizations exempt under 12-37-220(A), (3-4), and B(5-8), (12), (16), (19), (22), and (24), if the net proceeds are used exclusively for exempt purposes and no benefit inures to any individual 6,725,000 85 (42) 1989 Depreciable assets, used in the operation of a business, pursuant to the sale of the business, when the entire business is sold by the owner and the purchaseer continues operation of the business 125,000 86 (43) 1991 All supplies, technical equipment, machinery, and electricity sold to motion picture companies for use in filming or producing a motion picture 359,146 87 (44) 1991 Electricity used to irrigate crops 296,040 88 (45) 1991 Building materials, supplies, fixtures, and equipment for the construction, repair or improvement of commercial housing of poultry or livestock 417,555 89 (46) 1991 War memorials or monuments, including US military vessels, affixed to public property 50,000 90 (47) 1994 Tangible personal property sold to charitable hospitals serving children where care is provided without charge 50,000 91 (48) 1994 Solid waste disposal collection bags when the county or political subdivision requires the purchase of a specific bag for solid waste disposal 38,979 92 (49) 1994 Postage paid by a person engaged in the business of selling advertising services for clients 825,000 93 (50) 1995 Recycling property, including fuels and gasses of any type, fluids, and lubricants used by a qualified recycling facility 2,827,022 94 (51) 1996 Material handling systems and equipment used in distribution or manufacturing facilities 1,400,000 95 (52) 1996 Parts and supplies used by business for repairing aircraft owned or leased to the federal government or commercial air carriers 561,567 96 (53) 1996 Motor vehicle extended service contracts and warranties 3,194,280 97 (54) 1999 Clothing and attire for working in a Class 100 or better clean room environment 40,000 98 (55) 2000 Audiovisual masters made or used by a production company for first generation reproduction 60,000 99 (56) 2000 Machines used in research and development 5,475,600 100 (57) 2000 Sales tax holiday in August (beginning the first Friday in August at 12:01 AM and ending at 12:00 midnight the following Sunday) 2,250,000 101 (58) 2000 Cooperative direct mail promotional advertising materials, and promotional maps, brochures, pamphlets, or discount coupons by nonprofit chambers of commerce or convention and visitor bureaus, delivered to residents of SC at no charge from locations inside or outside the State 886,400 transmitting electricity that is transferred, sold, or exchanged to a limited liability company controlling electric transmission assets 0 103 (60) 2001 Lottery ticket sales 38,552,130 104 (61) 2002 Copies of or access to legislation or other informational documents provided to the general public or any other person by a legislative agency when a charge for these copies is made reflecting the agency's cost of the copies 7,500 105 (62) 2003 Seventy percent of portable toilet gross rental sales or leases 487,220 106 (63) 2005 Prescription and over- the-counter medicines and supplies sold to charitable clinics 229,700 107 (64) 2005 Sweet grass baskets made by SC artists 374,400 108 (65) 2006 Computer equipment used in a technology intensive facility 0 109 (66) 2006 Electricity used by a technology intensive facility 0 110 (67) 2006 Sales tax on construction materials of a new or expanded single manufacturing or distribution facility with a capital investment of at least $100 million in real and personal property at a single site 14,160,000 111 (68) 2006 Any property sold to the public through a sheriff's sale as provided by law 58,116 112 (69) 2006 The sale or renewal of a warranty, maintenance, or similar service contract if the sale of the personal property covered by the contract is exempt or excluded from sales tax Reserved 113 (70) 2007 Gold, silver, or platinum bullion; legal tender coins and currency 82,860 114 (71) 2007 Any device, equipment, or machinery operated by hydrogen or fuel cells, or any device, equipment,or machinery used to generate, produce, or distribute hydrogen 0 115 (72) 2007 Building materials used to construct a new or renovated building or any machinery or equipment located in a research district 1,200,000 116 (73) 2007 Amusement park rides and any parts, machinery, and equipment used to assemble and operate a ride or performance venue facility 2,070,000 117 (74) 2007 Durable medical equipment which is paid by state or federal Medicaid funds 2,523,045 118 (75) 2007 Unprepared food that may be purchased with United States Department of Agriculture food coupons 435,200,249 119 (76) 2008 Sales tax holiday on firearms (beginning the Friday after Thanksgiving at 12:01 AM and ending at 12:00 midnight the following Saturday) ** 120 (77) 2008 Sales tax holiday on noncommercial home and personal energy efficient products meeting or exceeding the requirements of the ENERGY STAR program with a sales price of $2,500 or less ** 121 (78) 2010 Machinery and equipment, building and other raw materials, and electricity used by a nonprofit facility used for researching and testing the impact of natural disasters on building materials used in residential, commercial, and agricultural buildings 240,000 ** 122 123 12-36-2130 124 (1) Use Tax ExemptionIncluded with Sales Tax 125 (2) Purchases made by museums and exhibition rentals purchased or leased for sources outside of the State 36,000 126 127 12-36-2610 Discount for timely filed payment of tax, maximum discount of $10,000 for voluntarily registered out-of-state retailers and $3,000 for all other retailers ($3,100 for retailers filing by EFT) 25,120,420 128 129 12-36-2620 130 (2) 1% sales tax exemption for those 85 years and older 4,219,466 131 132 Provisos 133 89.44 Tangible personal property purchased for use in private primary and secondary schools, including kindergartens and early childhood education programs 134 89.67 2005 Respiratory syncytial virus medicines 2,358,175 135 89.72 2006 Viscosupplementation therapies sales (For FY2011-12, the provision is suspended) 440,001 136 137 Total Sales and Use Tax Exemptions 3,052,364,706 Notes: = Items amended in H.B.4995 * = Exemption ruled unconstitutional. ** = Act 338 of 2008 creating the exemptions was declared unconstitutional by the S.C. Supreme Court in South Carolina v. The American Petroleum Institution & BP Products North America, Inc., May 4, 2009. Statutory exemption is not effective. Sources: South Carolina Department of Revenue; South Carolina Budget and Control Board, Office of Economic Research; Legislative Printing and Information Technology Resources. South Carolina Board of Economic Advisors Approved By: Frank A. Rainwater 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.
TO AMEND SECTION 12-36-2120, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO SALES TAX EXEMPTIONS, SO AS TO DELETE VARIOUS EXEMPTIONS; TO AMEND SECTION 12-36-2620, RELATING TO THE COMPONENTS OF THE SALES TAX, SO AS TO DELETE THE ONE PERCENT EXEMPTION TO INDIVIDUALS OVER EIGHTY-FIVE YEARS OF AGE; TO REPEAL SECTIONS 12-36-2130 AND 12-36-2610 RELATING TO THE STATE SALES TAX; TO PROVIDE THAT THE ADDITIONAL REVENUE GENERATED BY THIS ACT MUST BE USED TO REDUCE THE OVERALL SALES TAX RATE; AND TO RE-ENACT THE JOINT COMMITTEE ON TAXATION AND REQUIRE THE COMMITTEE TO REVIEW THE PROVISIONS OF SECTION 12-36-2120. Amend Title To Conform Be it enacted by the General Assembly of the State of South Carolina: SECTION 1. A. Section 12-36-2120 of the 1976 Code, as last amended by Act 32 of 2011, is further amended to read: "Section 12-36-2120. Exempted from the taxes imposed by this chapter are the gross proceeds of sales, or sales price of: (1) tangible personal property or receipts of any business which the State is prohibited from taxing by the Constitution or laws of the United States of America or by the Constitution or laws of this State; (2) tangible personal property sold to the federal government; (3)(a) textbooks, books, magazines, periodicals, newspapers, and access to on-line information systems used in a course of study in primary and secondary schools and institutions of higher learning or for students' use in the school library of these schools and institutions; (b) books, magazines, periodicals, newspapers, and access to on-line information systems sold to publicly supported state, county, or regional libraries; Items in this category may be in any form, including microfilm, microfiche, and CD ROM; however, transactions subject to tax under Sections 12-36-910(B)(3) and 12-36-1310(B)(3) do not fall within this exemption; (4) livestock. 'Livestock' is defined as domesticated animals customarily raised on South Carolina farms for use primarily as beasts of burden, or food, and certain mammals when raised for their pelts or fur. Animals such as dogs, cats, reptiles, fowls (except baby chicks and poults), and animals of a wild nature, are not considered livestock; (5) feed used for the production and maintenance of poultry and livestock; (6) insecticides, chemicals, fertilizers, soil conditioners, seeds, or seedlings, or nursery stock, used solely in the production for sale of farm, dairy, grove, vineyard, or garden products or in the cultivation of poultry or livestock feed; (7) containers and labels used in: (a) preparing agricultural, dairy, grove, or garden products for sale; or (b) preparing turpentine gum, gum spirits of turpentine, and gum resin for sale. For purposes of this exemption, containers mean boxes, crates, bags, bagging, ties, barrels, and other containers; (8) newsprint paper, newspapers, and religious publications, including the Holy Bible and the South Carolina Department of Agriculture's The Market Bulletin; (9) coal, or coke or other fuel sold to manufacturers, electric power companies, and transportation companies for: (a) use or consumption in the production of by-products; (b) the generation of heat or power used in manufacturing tangible personal property for sale. For purposes of this item, 'manufacturer' or 'manufacturing' includes the activities of a processor; (c) the generation of electric power or energy for use in manufacturing tangible personal property for sale; (d) the generation of motive power for transportation. For the purposes of this exemption, 'manufacturer' or 'manufacturing' includes the activities of mining and quarrying; (e) the generation of motive power for test flights of aircraft by the manufacturer of the aircraft where: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at a single manufacturing facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the single manufacturing facility during that seven-year period; or (f) the transportation of an aircraft prior to its completion from one facility of the manufacturer of the aircraft to another facility of the manufacturer of the aircraft, not including the transportation of major component parts for construction or assembly, or the transportation of personnel. This exemption only applies when: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at a single manufacturing facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the single manufacturing facility during that seven-year period. To qualify for the exemptions provided for in subitems (e) and (f), the taxpayer shall notify the department before the first month it uses the exemption and shall make the required investment and create the required number of full-time new jobs over the seven-year period beginning on the date provided by the taxpayer to the department in its notices. The taxpayer shall notify the department in writing that it has met the seven hundred fifty million dollar investment requirement and has created the three thousand eight hundred full-time new jobs or, after the expiration of the seven-year period, that it has not met the seven hundred fifty million dollar investment requirement and created the three thousand eight hundred full-time new jobs. The department may assess any tax due on fuel purchased tax free pursuant to subitems (e) and (f) but due the State as a result of the taxpayer's failure to meet the seven hundred fifty million dollar investment requirement and create the three thousand eight hundred full-time new jobs. The running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for the time period beginning with notice to the department before the taxpayer uses the exemption and ending with notice to the department that the taxpayer either has met or has not met the seven hundred fifty million dollar investment requirement and created the three thousand eight hundred full-time new jobs. As used in subitems (e) and (f), 'taxpayer' includes a person who bears a relationship to the taxpayer as described in Section 267(b) of the Internal Revenue Code. (10)(a) meals or foodstuffs used in furnishing meals to school children, if the sales or use are within school buildings and are not for profit; (b) meals or foodstuffs provided to elderly or disabled persons at home by nonprofit organizations that receive only charitable contributions in addition to sale proceeds from the meals; (c) food stuffs, either prepared or packaged for the homeless or needy that are sold to nonprofit organizations, or food stuffs that are subsequently sold or donated by a nonprofit organization to another nonprofit organization. This subitem is only applicable to food stuffs which are eligible for purchase under the USDA food stamp program; (d) meals or foodstuffs prepared or packaged that are sold to public or nonprofit organizations for congregate or in-home service to the homeless or needy or disabled adults over eighteen years of age or individuals over sixty years of age. This subitem only applies to meals and foodstuffs eligible for purchase under the USDA food stamp program. (11)(a) toll charges for the transmission of voice or messages between telephone exchanges; (b) charges for telegraph messages; (c) carrier access charges and customer access line charges established by the Federal Communications department or the South Carolina Public Service department; and (d) transactions involving automatic teller machines;
(12) water sold by public utilities, if rates and charges are of the kind determined by the Public Service Commission, or water sold by nonprofit corporations organized pursuant to Chapter 36 (13) fuel, lubricants, and supplies for use or consumption aboard ships in intercoastal trade or foreign commerce. This exemption does not exempt or exclude from the tax the sale of materials and supplies used in fulfilling a contract for the painting, repair, or reconditioning of ships and other watercraft; (14) wrapping paper, wrapping twine, paper bags, and containers, used incident to the sale and delivery of tangible personal property; (15)(a) motor fuel, blended fuel, and alternative fuel subject to tax under Chapter 28 of Title 12; however, gasoline used in aircraft is not exempt from the sales and use tax; (b) if the fuel tax is subsequently refunded under Section 12-28-710, the sales or use tax is due unless otherwise exempt, and the person receiving the refund is liable for the sales or use tax; (c) fuels used in farm machinery and farm tractors; and (d) fuels used in commercial fishing vessels. (16) farm machinery and their replacement parts and attachments, used in planting, cultivating or harvesting farm crops, including bulk coolers (farm dairy tanks) used in the production and preservation of milk on dairy farms, and machines used in the production of poultry and poultry products on poultry farms, when such products are sold in the original state of production or preparation for sale. This exemption does not include automobiles or trucks; (17) machines used in manufacturing, processing, recycling, compounding, mining, or quarrying tangible personal property for sale. 'Machines' include the parts of machines, attachments, and replacements used, or manufactured for use, on or in the operation of the machines and which (a) are necessary to the operation of the machines and are customarily so used, or (b) are necessary to comply with the order of an agency of the United States or of this State for the prevention or abatement of pollution of air, water, or noise that is caused or threatened by any machine used as provided in this section. This exemption does not include automobiles or trucks. As used in this item 'recycling' means a process by which materials that otherwise would become solid waste are collected, separated, or processed and reused, or returned to use in the form of raw materials or products, including composting, for sale. In applying this exemption to machines used in recycling, the following percentage of the gross proceeds of sale, or sales price of, machines used in recycling are exempt from the taxes imposed by this chapter: Fiscal Year of Sale Percentage Fiscal year 1997-98 fifty percent After June 30, 1998 one hundred percent; (18) fuel used exclusively to cure agricultural products; (19) electricity used by cotton gins, manufacturers, miners, or quarriers to manufacture, mine, or quarry tangible personal property for sale. For purposes of this item, 'manufacture' or 'manufacturer' includes the activities of processors;
(20)
(21) (22) materials necessary to assemble missiles to be used by the Armed Forces of the United States; (23) farm, grove, vineyard, and garden products, if sold in the original state of production or preparation for sale, when sold by the producer or by members of the producer's immediate family; (24) supplies and machinery used by laundries, cleaning, dyeing, pressing, or garment or other textile rental establishments in the direct performance of their primary function, but not sales of supplies and machinery used by coin-operated laundromats;
(25) (26) all supplies, technical equipment, machinery, and electricity sold to radio and television stations, and cable television systems, for use in producing, broadcasting, or distributing programs. For the purpose of this exemption, radio stations, television stations, and cable television systems are deemed to be manufacturers;
(27) (28)(a) medicine and prosthetic devices sold by prescription, prescription medicines used to prevent respiratory syncytial virus, prescription medicines and therapeutic radiopharmaceuticals used in the treatment of rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, including prescription medicines used to relieve the effects of any such treatment, free samples of prescription medicine distributed by its manufacturer and any use of these free samples; (b) hypodermic needles, insulin, alcohol swabs, blood sugar testing strips, monolet lancets, dextrometer supplies, blood glucose meters, and other similar diabetic supplies sold to diabetics under the authorization and direction of a physician; (c) disposable medical supplies such as bags, tubing, needles, and syringes, which are dispensed by a licensed pharmacist in accordance with an individual prescription written for the use of a human being by a licensed health care provider, which are used for the intravenous administration of a prescription drug or medicine, and which come into direct contact with the prescription drug or medicine. This exemption applies only to supplies used in the treatment of a patient outside of a hospital, skilled nursing facility, or ambulatory surgical treatment center;
(d) medicine donated by its manufacturer to a public institution of higher education for research or for the treatment of indigent patients; (e) dental prosthetic devices; (f) prescription drugs dispensed to Medicare Part A patients residing in a nursing home are not considered sales to the nursing home and are not subject to the sales tax; (g) respiratory syncytial virus medicines; and (h) visosupplementaion therapies sales. (29) tangible personal property purchased by persons under a written contract with the federal government when the contract necessitating the purchase provides that title and possession of the property is to transfer from the contractor to the federal government at the time of purchase or after the time of purchase. This exemption also applies to purchases of tangible personal property which becomes part of real or personal property owned by the federal government or, as provided in the written contract, is to transfer to the federal government. This exemption does not apply to purchases of tangible personal property used or consumed by the purchaser;
(30)
(31) vacation time sharing plans, vacation multiple ownership interests, and exchanges of interests in vacation time sharing plans and vacation multiple ownership interests as provided by Chapter 32 (32) natural and liquefied petroleum gas and electricity used exclusively in the production of poultry, livestock, swine, and milk; (33) electricity, natural gas, fuel oil, kerosene, LP gas, coal, or any other combustible heating material or substance used for residential purposes. Individual sales of kerosene or LP gas of twenty gallons or less by retailers are considered used for residential heating purposes; (34) fifty percent of the gross proceeds of the sale of a modular home regulated pursuant to Chapter 43 of Title 23, both on-frame and off-frame. For purposes of this item only, 'gross proceeds of sale' equals the manufacturer's net invoice price of the modular home sold, including all accessories built in to the modular home at the time of delivery to the purchaser and not including freight or deposit on returnable materials. The manufacturer shall collect the tax and remit it to the Department of Revenue; (35) motion picture film sold or rented to or by theaters; (36) tangible personal property where the seller, by contract of sale, is obligated to deliver to the buyer, or to an agent or donee of the buyer, at a point outside this State or to deliver it to a carrier or to the mails for transportation to the buyer, or to an agent or donee of the buyer, at a point outside this State;
(37) (38) hearing aids, as defined by Section 40-25-20(5); (39) concession sales at a festival by an organization devoted exclusively to public or charitable purposes, if: (a) all the net proceeds are used for those purposes; (b) in advance of the festival, its organizers provide the department, on a form it prescribes, information necessary to ensure compliance with this item. For purposes of this item, a 'festival' does not include a recognized state or county fair; (40) containers and chassis, including all parts, components, and attachments, sold to international shipping lines which have a contractual relationship with the South Carolina State Ports Authority and which are used in the import or export of goods to and from this State; (41) items sold by organizations exempt under Section 12-37-220A(3) and (4) and B(5), (6), (7), (8), (12), (16), (19), (22), and (24), if the net proceeds are used exclusively for exempt purposes and no benefit inures to any individual. An organization whose sales are exempted by this item is also exempt from the retail license tax provided in Article 5 of this chapter;
(42) (43) all supplies, technical equipment, machinery, and electricity sold to motion picture companies for use in filming or producing motion pictures. For the purposes of this item, 'motion picture' means any audiovisual work with a series of related images either on film, tape, or other embodiment, where the images shown in succession impart an impression of motion together with accompanying sound, if any, which is produced, adapted, or altered for exploitation as entertainment, advertising, promotional, industrial, or educational media; and a 'motion picture company' means a company generally engaged in the business of filming or producing motion pictures; (44) electricity used to irrigate crops; (45) building materials, supplies, fixtures, and equipment for the construction, repair, or improvement of or that become a part of a self-contained enclosure or structure specifically designed, constructed, and used for the commercial housing of poultry or livestock. (46) War memorials or monuments honoring units or contingents of the Armed Forces of the United States or of the National Guard, including United States military vessels, which memorials or monuments are affixed to public property; (47) tangible personal property sold to charitable hospitals predominantly serving children exempt under Section 12-37-220, where care is provided without charge to the patient.
(48)
(49) (50)(a) recycling property; (b) electricity, natural gas, propane, or fuels of any type, oxygen, hydrogen, nitrogen, or gasses of any type, and fluids and lubricants used by a qualified recycling facility; (c) tangible personal property which becomes, or will become, an ingredient or component part of products manufactured for sale by a qualified recycling facility; (d) tangible personal property of or for a qualified recycling facility which is or will be used (1) for the handling or transfer of postconsumer waste material, (2) in or for the manufacturing process, or (3) in or for the handling or transfer of manufactured products; (e) machinery and equipment foundations used or to be used by a qualified recycling facility; (f) as used in this item, 'recycling property', 'qualified recycling facility', and 'postconsumer waste material' have the meanings provided in Section 12-6-3460; (51) material handling systems and material handling equipment used in the operation of a distribution facility or a manufacturing facility including, but not limited to, racks used in the operation of a distribution facility or a manufacturing facility and either used or not used to support a facility structure or part of it. To qualify for this exemption, the taxpayer shall notify the department before the first month it uses the exemption and shall invest at least thirty-five million dollars in real or personal property in this State over the five-year period beginning on the date provided by the taxpayer to the department in its notices. The taxpayer shall notify the department in writing that it has met the thirty-five million dollar investment requirement or, after the expiration of the five years, that it has not met the thirty-five million dollar investment requirement. The department may assess any tax due on material handling systems and material handling equipment purchased tax-free pursuant to this item but due the State as a result of the taxpayer's failure to meet the thirty-five million dollar investment requirement. The running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for the time period beginning with notice to the department before the taxpayer uses the exemption and ending with notice to the department that the taxpayer either has met or has not met the thirty-five million dollar investment requirement.
(52)
(53)
(54)
(55)
(56) Machines used in research and development. 'Machines' includes machines and parts of machines, attachments, and replacements which are used or manufactured for use on or in the operation of the machines, which are necessary to the operation of the machines, and which are customarily used in that way. 'Machines used in research and development' means machines used directly and primarily in research and development, in the experimental or laboratory sense, of new products, new uses for existing products, or improvement of existing products. (57)(a) sales taking place during a period beginning 12:01 a.m. on the first Friday in August and ending at twelve midnight the following Sunday of: (i) clothing; (ii) clothing accessories including, but not limited to, hats, scarves, hosiery, and handbags; (iii) footwear; (iv) school supplies including, but not limited to, pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes, and calculators; (v) computers, printers and printer supplies, and computer software; (vi) bath wash clothes, blankets, bed spreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath rugs and mats, pillows, and pillow cases. (b) The exemption allowed by this item does not apply to: (i) sales of jewelry, cosmetics, eyewear, wallets, watches; (ii) sales of furniture; (iii) a sale of an item placed on layaway or similar deferred payment and delivery plan however described; (iv) rental of clothing or footwear; (v) a sale or lease of an item for use in a trade or business. (c) Before July tenth of each year, the department shall publish and make available to the public and retailers a list of those articles qualifying for the exemption allowed by this item.
(58) (59) facilities for transmitting electricity that is transferred, sold, or exchanged by electrical utilities, municipalities, electric cooperatives, or political subdivisions to a limited liability company which is subject to regulation under the Federal Power Act (16 U.S.C. Section 791(a)) and which is formed to operate or to take functional control of electric transmission assets as defined in the Federal Power Act; (60) a lottery ticket sold pursuant to Chapter 150 of Title 59;
(61)
(62) (63) prescription and over-the-counter medicines and medical supplies, including diabetic supplies, diabetic diagnostic equipment, and diabetic testing equipment, sold to a health care clinic that provides medical and dental care without charge to all of its patients. (64) Sweetgrass baskets made by artists of South Carolina using locally grown sweetgrass. (65)(a) computer equipment, as defined in subitem (c) of this item, used in connection with a technology intensive facility as defined in Section 12-6-3360(M)(14)(b), where: (i) the taxpayer invests at least three hundred million dollars in real or personal property or both comprising or located at the facility over a five-year period; (ii) the taxpayer creates at least one hundred new full-time jobs at the facility during that five-year period, and the average cash compensation of at least one hundred of the new full-time jobs is one hundred fifty percent of the per capita income of the State according to the most recently published data available at the time the facility's construction starts; and (iii) at least sixty percent of the three hundred million dollars minimum investment consists of computer equipment; (b) computer equipment, as defined in subitem (c) of this item, used in connection with a manufacturing facility, where: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at the facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the facility during that seven-year period. As used in this subitem, 'taxpayer' includes a person who bears a relationship to the taxpayer as described in Section 267(b) of the Internal Revenue Code. (c) For the purposes of this item, 'computer equipment' means original or replacement servers, routers, switches, power units, network devices, hard drives, processors, memory modules, motherboards, racks, other computer hardware and components, cabling, cooling apparatus, and related or ancillary equipment, machinery, and components, the primary purpose of which is to store, retrieve, aggregate, search, organize, process, analyze, or transfer data or any combination of these, or to support related computer engineering or computer science research. (d) These exemptions apply from the start of the investment in or construction of the technology intensive facility or the manufacturing facility. The taxpayer shall notify the Department of Revenue of its use of the exemption provided in this item on or before the first sales tax return filed with the department after the first such use. Upon receipt of the notification, the department shall issue an appropriate exemption certificate to the taxpayer to be used for qualifying purposes under this item. Within six months after the fifth anniversary of the taxpayer's first use of this exemption, the taxpayer shall notify the department in writing that it has or has not met the investment and job requirements of this item by the end of that five-year period. Once the department certifies that the taxpayer has met the investment and job requirements, all subsequent purchases of or investments in computer equipment, including to replace originally deployed computer equipment or to implement future expansions, likewise shall qualify for the exemption described above, regardless of when the taxpayer makes the investments. (e) The department may assess any tax due on property purchased tax free pursuant to this item but due the State if the taxpayer subsequently fails timely to meet the investment and job requirements of this item after being granted the exemption; for purposes of determining whether the taxpayer has timely satisfied the investment requirement, replacement computer equipment counts toward the investment requirement to the extent that the value of the replacement computer equipment exceeds the cost of the computer equipment so replaced, but, provided the taxpayer otherwise qualifies for the exemption, the full value of the replacement computer equipment is exempt from sales and use tax. The running of the periods of limitation within which the department may assess taxes provided pursuant to Section 12-54-85 is suspended during the time period beginning with the taxpayer's first use of this exemption and ending with the later of the fifth anniversary of first use or notice to the department that the taxpayer either has met or has not met the investment and job requirements of this item; (66) electricity used by a technology intensive facility as defined in Section 12-6-3360(M)(14)(b) and qualifying for the sales tax exemption provided pursuant to item (65) of this section, and the equipment and raw materials including, without limitation, fuel used by such qualifying facility to generate, transform, transmit, distribute, or manage electricity for use in such a facility. The running of the periods of limitation within which the department may assess taxes pursuant to Section 12-54-85 is suspended during the same time period it is suspended in item (65)(d) of this section. (67) effective July 1, 2011, construction materials used in the construction of a new or expanded single manufacturing or distribution facility, or one that serves both purposes, with a capital investment of at least one hundred million dollars in real and personal property at a single site in the State over an eighteen-month period, or effective November 1, 2009, construction materials used in the construction of a new or expanded single manufacturing facility where: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at the facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the facility during that seven-year period. To qualify for this exemption, the taxpayer shall notify the department before the first month it uses the exemption and shall make the required investment over the applicable time period beginning on the date provided by the taxpayer to the department in its notices. The taxpayer shall notify the department in writing that it has met the investment requirement or, after the expiration of the applicable time period, that it has not met the investment requirement. The department may assess any tax due on construction materials purchased tax free pursuant to this subitem but due the State as a result of the taxpayer's failure to meet the investment requirement. The running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for the time period beginning with notice to the department before the taxpayer uses the exemption and ending with notice to the department that the taxpayer either has met or has not met the investment requirement. As used in this subitem, 'taxpayer' includes a person who bears a relationship to the taxpayer as described in Section 267(b) of the Internal Revenue Code.
(68) (69) [Reserved] (70)(a) gold, silver, or platinum bullion, or any combination of this bullion; (b) coins that are or have been legal tender in the United States or other jurisdiction; and (c) currency. The department shall prescribe documentation that must be maintained by retailers claiming the exemption allowed by this item. This documentation must be sufficient to identify each individual sale for which the exemption is claimed. (71) any device, equipment, or machinery operated by hydrogen or fuel cells, any device, equipment, or machinery used to generate, produce, or distribute hydrogen and designated specifically for hydrogen applications or for fuel cell applications, and any device, equipment, or machinery used predominantly for the manufacturing of, or research and development involving hydrogen or fuel cell technologies. For purposes of this item: (a) 'fuel cells' means a device that directly or indirectly creates electricity using hydrogen (or hydrocarbon-rich fuel) and oxygen through an electro-chemical process; and (b) 'research and development' means laboratory, scientific, or experimental testing and development of hydrogen or fuel cell technologies. Research and development does not include efficiency surveys, management studies, consumer surveys, economic surveys, advertising, or promotion, or research in connection with literary, historical, or similar projects. (72) any building materials used to construct a new or renovated building or any machinery or equipment located in a research district. However, the amount of the sales tax that would be assessed without the exemption provided by this section must be invested by the taxpayer in hydrogen or fuel cell machinery or equipment located in the same research district within twenty-four months of the purchase of an exempt item. 'Research district' means land owned by the State, a county, or other public entity that is designated as a research district by the University of South Carolina, Clemson University, the Medical University of South Carolina, South Carolina State University, or the Savannah River National Laboratory.
(73)
(74) durable medical equipment and related supplies: (a) as defined under federal and state Medicaid and Medicare laws; (b) which is paid directly by funds of this State or the United States under the Medicaid or Medicare programs, where state or federal law or regulation authorizing the payment prohibits the payment of the sale or use tax; and (c) sold by a provider who holds a South Carolina retail sales license and whose principal place of business is located in this State. (75) unprepared food that lawfully may be purchased with United States Department of Agriculture food coupons. However, the exemption allowed by this item applies only to the state sales and use tax imposed pursuant to this chapter. (76) sales of handguns as defined pursuant to Section 16-23-10(1), rifles, and shotguns during the forty-eight hours of the Second Amendment Weekend. For purposes of this item, the 'Second Amendment Weekend' begins at 12:01 a.m. on the Friday after Thanksgiving and ends at twelve midnight the following Saturday.
(77)
(78) B. This section takes effect July 1, 2012. SECTION 2. Section 12-36-2130 of the 1976 Code is repealed. SECTION 3. The revenue generated pursuant to this Act must be used to reduce the overall sales tax rate set forth in Sections 12-36-910 and 12-36-1110. SECTION 4. The revenue generated pursuant to this Act must be used to reduce the overall sales tax rate set forth in Sections 12-36-910 and 12-36-1110. SECTION 5. A. The Joint Committee on Taxation, as established by Act 334 of 2002, and contained in Chapter 41, Title 2, is re-enacted under the same provisions as it was originally enacted by Act 334 of 2002, except for the provisions of Section 2-41-60. B. By September 1, 2012, the Joint Committee on Taxation shall convene for the purpose of conducting a cost benefit analysis on the provisions of Section 12-36-2120. The committee shall submit a report to the Governor and the General Assembly detailing its findings and recommendations. The report must be made available to the public. The committee shall review the feasibility of the exemptions as often as it deems appropriate, but no later than its session every five years after the initial review. SECTION 6. Except as otherwise provided this act takes effect upon approval by the Governor.
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