S*1065 Session 108 (1989-1990)
S*1065(Rat #0495, Act #0424 of 1990) General Bill, By Passailaigue,
S.S. Martschink, McConnell and M.T. Rose
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Article 6
in Chapter 9 of Title 12 so as to provide for state income tax withholding on
the amount realized from the sale of real property and associated tangible
personal property by nonresidents, to provide that the buyer shall withhold
and pay over the tax, to provide the method for computing and paying over the
amounts withheld, to limit the amount required to be withheld to the total of
the net proceeds due the seller, to allow withholding on gain from the sale if
the seller provides the purchaser an affidavit stating the amount of the gain
and to provide that the seller may apply to the South Carolina Tax Commission
for refund of excess withholding, to provide the time for payment, to allow
the South Carolina Tax Commission to exempt classes of transactions and extend
time for payment, to provide definitions, and to provide that the lending
institution, real estate agent, and closing attorney are not liable for
collecting the amount to be withheld; and to amend Section 12-9-310, as
amended, relating to income tax withholding, so as to delete the withholding
requirement on sales of real property and associated tangible personal
property by nonresidents.-amended title
01/11/90 Senate Introduced and read first time SJ-14
01/11/90 Senate Referred to Committee on Finance SJ-14
01/31/90 Senate Committee report: Favorable with amendment
Finance SJ-14
01/31/90 Senate Read second time SJ-15
01/31/90 Senate Ordered to third reading with notice of
amendments SJ-15
02/01/90 Senate Amended SJ-14
02/01/90 Senate Read third time and sent to House SJ-16
02/06/90 House Introduced and read first time HJ-16
02/06/90 House Referred to Committee on Ways and Means HJ-17
03/07/90 House Committee report: Favorable Ways and Means HJ-12
03/21/90 House Debate adjourned until Wednesday, April 4, 1990 HJ-29
04/04/90 House Read second time HJ-27
04/04/90 House Reconsider vote whereby read second time HJ-30
04/04/90 House Debate adjourned until Thursday, April 5, 1990 HJ-3
04/05/90 House Read second time HJ-23
04/05/90 House Unanimous consent for third reading on next
legislative day HJ-24
04/06/90 House Read third time and enrolled HJ-6
04/19/90 Ratified R 495
04/25/90 Signed By Governor
04/25/90 Act No. 424
04/25/90 See act for exception to or explanation of
effective date
05/14/90 Copies available
(A424, R495, S1065)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING
ARTICLE 6 IN CHAPTER 9 OF TITLE 12 SO AS TO PROVIDE FOR STATE INCOME TAX
WITHHOLDING ON THE AMOUNT REALIZED FROM THE SALE OF REAL PROPERTY AND
ASSOCIATED TANGIBLE PERSONAL PROPERTY BY NONRESIDENTS, TO PROVIDE THAT
THE BUYER SHALL WITHHOLD AND PAY OVER THE TAX, TO PROVIDE THE METHOD FOR
COMPUTING AND PAYING OVER THE AMOUNTS WITHHELD, TO LIMIT THE AMOUNT
REQUIRED TO BE WITHHELD TO THE TOTAL OF THE NET PROCEEDS DUE THE SELLER,
TO ALLOW WITHHOLDING ON GAIN FROM THE SALE IF THE SELLER PROVIDES THE
PURCHASER AN AFFIDAVIT STATING THE AMOUNT OF THE GAIN AND TO PROVIDE THAT
THE SELLER MAY APPLY TO THE SOUTH CAROLINA TAX COMMISSION FOR REFUND OF
EXCESS WITHHOLDING, TO PROVIDE THE TIME FOR PAYMENT, TO ALLOW THE SOUTH
CAROLINA TAX COMMISSION TO EXEMPT CLASSES OF TRANSACTIONS AND EXTEND TIME
FOR PAYMENT, TO PROVIDE DEFINITIONS, AND TO PROVIDE THAT THE LENDING
INSTITUTION, REAL ESTATE AGENT, AND CLOSING ATTORNEY ARE NOT LIABLE FOR
COLLECTING THE AMOUNT TO BE WITHHELD; AND TO AMEND SECTION 12-9-310, AS
AMENDED, RELATING TO INCOME TAX WITHHOLDING, SO AS TO DELETE THE
WITHHOLDING REQUIREMENT ON SALES OF REAL PROPERTY AND ASSOCIATED TANGIBLE
PERSONAL PROPERTY BY NONRESIDENTS.
Be it enacted by the General Assembly of the State of South Carolina:
Withholding on sales by nonresidents
SECTION 1. Chapter 9, Title 12 of the 1976 Code is amended by
adding:
"Article 6
Withholding on Sales of Real Property
and Associated Tangible Personal Property
by Nonresidents
Section 12-9-510. (A) In a sale of real property and associated
tangible personal property owned by a nonresident, the buyer shall
withhold and pay over to the commission an amount equal to seven percent
of the amount realized by the seller on the sale if the seller is other
than a corporation or five percent if the seller is a corporation.
However, if the amount required to be withheld pursuant to this
subsection exceeds the net proceeds payable to the seller, the buyer
shall withhold and pay over to the commission only the net proceeds
otherwise payable to the seller.
(B) If the seller determines that the amount required to be
withheld pursuant to subsection (A) will result in excess withholding on
any gain required to be recognized from the sale, the seller may provide
the buyer an affidavit signed under penalties of perjury stating the
amount of the gain required to be recognized from the sale, and the buyer
shall withhold the applicable percentage of the amount of the gain
required to be recognized, if any, stated in the affidavit rather than
as provided in subsection (A). However, if the amount required to be
withheld pursuant to this subsection exceeds the net proceeds payable to
the seller, the buyer shall withhold and pay over to the commission only
the net proceeds otherwise payable to the seller.
(C) If a withholding payment made pursuant to subsection (A)
results in excess withholding on any gain required to be recognized from
the sale, the seller may file a claim for refund of excess withholding
with the commission that includes an affidavit as provided in subsection
(B) and the commission shall refund the difference between the amount
withheld pursuant to subsection (A) and the amount required to be
withheld as provided in subsection (B).
Section 12-9-520. The commission may exempt classes of transactions
from the provisions of this article and may extend the time for
withholding and paying over amounts from seller financed sales when the
commission determines the interest of the State is protected sufficiently
to warrant the exemption or delay. The commission may also exempt
classes of seller financed sales from the provisions of this article when
the commission determines that the benefit the State would derive from
compliance with this article is insufficient to justify the burdens on
the purchaser and seller of complying with it.
Section 12-9-530. The tax withheld under this article must be
paid to the commission on or before the fifteenth day of the month
following the month in which the completion of the sale occurs. The
commission shall develop forms for reporting and remitting.
Section 12-9-540. For the purposes of this article:
'nonresident', 'gain', 'amount realized', and the date the sale occurs
are determined as they are for South Carolina income tax purposes
including the adoption of Section 1001 of the Internal Revenue Code as
defined in Section 12-7-20(11).
Section 12-9-550. The lending institution, real estate agent, and
closing attorney are not liable for the collection of any amount due from
the buyer pursuant to this article."
Existing withholding repealed
SECTION 2. Section 12-9-310 of the 1976 Code is amended by deleting
the unnumbered item added by Section 55B, Part II, Act 189 of 1989.
Time effective
SECTION 3. This act is effective on the first day of the second
month following approval by the Governor and applies with respect to
sales which are finally completed on and after that date. For sales
which are finally completed before the effective date of this act, the
law in effect before the effective date of this act continues to apply,
except that for sales made before the effective date of this act, the
seller may apply for a refund under the provisions of item (C) of Section
12-9-510 of the 1976 Code as contained in this act.
Approved the 25th day of April, 1990.
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