H 3625 General Bill, By Harrell
 A BILL TO AMEND SECTION 12-6-3420, CODE OF LAWS OF SOUTH CAROLINA, 1976,
 RELATING TO CORPORATE INCOME TAX CREDIT FOR CONSTRUCTION OF OR IMPROVEMENT TO
 AN INFRASTRUCTURE PROJECT, SO AS TO REDEFINE "INFRASTRUCTURE PROJECT", TO
 CLARIFY THE MEANING OF "QUALIFIED PRIVATE ENTITY", TO DEFINE "RELATED
 TAXPAYER", TO PROHIBIT A CLAIM FOR THE CREDIT BEFORE DEDICATION OR CONVEYANCE
 OF THE PROJECT, TO PROVIDE FOR PAYMENT OF TAX DUE ON A ROAD THAT IS LATER
 REMOVED FROM THE INFRASTRUCTURE PROJECT, AND TO DELETE ALLOWANCE OF THE TAX
 CREDIT TO CORPORATIONS ON A CONSOLIDATED BASIS.

   03/11/97  House  Introduced and read first time HJ-6
   03/11/97  House  Referred to Committee on Ways and Means HJ-7
   04/22/97  House  Committee report: Favorable Ways and Means HJ-4
   04/29/97  House  Read second time HJ-49
   04/30/97  House  Read third time and sent to Senate HJ-18
   05/01/97  Senate Introduced and read first time SJ-11
   05/01/97  Senate Referred to Committee on Finance SJ-11
   05/21/97  Senate Committee report: Favorable Finance SJ-25

COMMITTEE REPORT

May 21, 1997

H. 3625

S. Printed 5/21/97--S.

Read the first time May 1, 1997.

To whom was referred a Bill (H. 3625), to amend Section 12-6-3420, Code of Laws of South Carolina, 1976, relating to corporate income tax credit for construction of or improvement to an infrastructure project, etc., respectfully

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

JOHN DRUMMOND, for Committee.

TO AMEND SECTION 12-6-3420, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CORPORATE INCOME TAX CREDIT FOR CONSTRUCTION OF OR IMPROVEMENT TO AN INFRASTRUCTURE PROJECT, SO AS TO REDEFINE "INFRASTRUCTURE PROJECT", TO CLARIFY THE MEANING OF "QUALIFIED PRIVATE ENTITY", TO DEFINE "RELATED TAXPAYER", TO PROHIBIT A CLAIM FOR THE CREDIT BEFORE DEDICATION OR CONVEYANCE OF THE PROJECT, TO PROVIDE FOR PAYMENT OF TAX DUE ON A ROAD THAT IS LATER REMOVED FROM THE INFRASTRUCTURE PROJECT, AND TO DELETE ALLOWANCE OF THE TAX CREDIT TO CORPORATIONS ON A CONSOLIDATED BASIS.

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

SECTION 1. Section 12-6-3420 of the 1976 Code, as added by Act 76 of 1995, is amended to read:

"Section 12-6-3420. (A) A corporation may claim a credit against taxes due under Section 12-6-530 for the construction of or improvement of to an infrastructure project against taxes due under Section 12-6-530 for benefiting a single development or enterprise. The credit is allowed for:

(1) expenses paid or accrued by the taxpayer;

(2) contributions made to a governmental entity; or

(3) contributions made to a qualified private entity in the case of water or sewer lines and their related facilities in areas served by a private water and sewer company; provided that the expenses or contributions are used solely to fund an infrastructure project.

(B) For expenses paid or accrued by the taxpayer in building or improving any one infrastructure project:

(1) the The credit is equal to fifty percent of the expenses or contributions; made for the infrastructure project and is

(2) the credit is limited to a total credit of ten thousand dollars annually; and for each infrastructure project.

(3) any Any unused credit, up to a total amount of thirty thousand dollars, for each infrastructure project, may be carried forward three years.

(C) For purposes of this section:

(1) An infrastructure project includes water lines or sewer lines, their related facilities, and roads that:

(a) do not exclusively benefit the taxpayer;

(b) are built to applicable standards; and

(c) are dedicated to public use or, in the case of water and sewer lines and their related facilities in areas served by a private water and sewer company, the water and sewer lines are deeded to a qualified private entity Each infrastructure project means water lines, sewer lines, roads, and related facilities, to the extent they do not directly or indirectly benefit the taxpayer, are built to applicable standards, and are dedicated to public use. In the case of water and sewer lines and related facilities in areas served by a private water and sewer company, the water and sewer lines may be deeded to a qualified private entity instead of being dedicated to public use. For purposes of this section, a direct or indirect benefit to the taxpayer (a) includes the increase in value of property the taxpayer or a person related to the taxpayer intends to sell; and (b) does not include an increase in the business of the taxpayer or a person related to the taxpayer generated solely because of the increase in population or business in an area attributable to the infrastructure project.

(2) A Qualified private entity means is an entity holding the required permits, certifications, and licenses from the South Carolina Department of Health and Environmental Control, the South Carolina Public Service Commission, and any other state agencies, departments, or commissions, from which approvals must be obtained in order to operate as a utility furnishing water supply services or sewage collection or treatment services, or both, to the public, and which is not owned, leased, or operated by the taxpayer or a person related to the taxpayer.

(D) If an infrastructure project benefits more than the taxpayer, the expenses of the taxpayer must be allocated to the various beneficiaries and only those expenses not allocated to the taxpayer's benefit qualify for the credit A person or entity will be considered as related to the taxpayer if it would be considered a related taxpayer under Section 267 of the Internal Revenue Code.

(E) The credit may not be claimed before dedication or conveyance if the taxpayer submits with its tax return a letter of intent signed by the chief operating officer of the appropriate governmental entity or qualified private entity stating that upon completion the governmental entity or qualified private entity shall accept the infrastructure project for the appropriate use of the infrastructure project.

(F) A qualifying private entity is not allowed the credit provided by this section for expenses it incurs in building or improving facilities it owns, manages, or operates.

(G) If, within ten years of claiming the credit, a road that is part of the infrastructure project qualifying for the credit is subsequently removed or planned to be removed from the state highway or public road system, the amount of the credit allowed for the construction of the road must be added to any corporate income tax due from the taxpayer in the first taxable year following the removal of the road from public use. The department may implement the provisions of this subsection by rules or regulation.

(H) A corporation which files or is required to file a consolidated return is entitled to the income tax credit allowed by this section on a consolidated basis. The tax credit may be determined on a consolidated basis regardless of whether or not the corporation entitled to the credit contributed to the tax liability of the consolidated group.

(I) The merger, consolidation, or reorganization of a corporation where tax attributes survive does not create new eligibility in a succeeding corporation, but unused credits may be transferred and continued by the succeeding corporation. In addition, a A corporation may assign its rights to its unused credit to another corporation if it transfers all, or substantially all, of the assets of the corporation or all, or substantially all, of the assets of a trade or business or operating division of a corporation to another corporation."

SECTION 2. This act takes effect taxable years beginning after 1997.