S 0125 General Bill, By Passailaigue, McConnell, M.T. Rose and Washington
 A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 12
 IN TITLE 12, RELATING TO TAXATION, BY ENACTING THE ECONOMIC IMPACT ZONE
 COMMUNITY DEVELOPMENT ACT OF 1995, SO AS TO PROVIDE TAX INCENTIVES FOR
 BUSINESS AND ECONOMIC DEVELOPMENT IN AREAS AFFECTED BY MILITARY BASE CLOSURES
 OR REALIGNMENTS, AND TO AUTHORIZE A FIVE PERCENT PRICE PREFERENCE TO A
 "BUSINESS THAT IS HEAVILY DEPENDENT ON DEFENSE CONTRACTS OR SUBCONTRACTS" WHEN
 THE VENDOR SUBMITS A COMPETITIVE SEALED BID FOR A STATE CONTRACT, AND TO
 DESIGNATE THE BUSINESSES TO WHICH THIS PREFERENCE WOULD BE APPLICABLE.

   10/03/94  Senate Prefiled
   10/03/94  Senate Referred to Committee on Finance
   01/10/95  Senate Introduced and read first time SJ-48
   01/10/95  Senate Referred to Committee on Finance SJ-48

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 12 IN TITLE 12, RELATING TO TAXATION, BY ENACTING THE ECONOMIC IMPACT ZONE COMMUNITY DEVELOPMENT ACT OF 1995, SO AS TO PROVIDE TAX INCENTIVES FOR BUSINESS AND ECONOMIC DEVELOPMENT IN AREAS AFFECTED BY MILITARY BASE CLOSURES OR REALIGNMENTS, AND TO AUTHORIZE A FIVE PERCENT PRICE PREFERENCE TO A "BUSINESS THAT IS HEAVILY DEPENDENT ON DEFENSE CONTRACTS OR SUBCONTRACTS" WHEN THE VENDOR SUBMITS A COMPETITIVE SEALED BID FOR A STATE CONTRACT, AND TO DESIGNATE THE BUSINESSES TO WHICH THIS PREFERENCE WOULD BE APPLICABLE.

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

SECTION 1. Title 12 of the 1976 Code is amended by adding:

Section 12-12-10. This chapter may be cited as the Economic Impact Zone Community Development Act of 1995.

Section 12-12-20. It is the purpose of this chapter to establish a program of providing tax incentives for the creation of economic impact zones in order:

(1) to revitalize economically and physically distressed areas impacted as a result of the closing or realignment of a federal military installation area, primarily by encouraging the formation of new businesses and the retention and expansion of existing businesses;

(2) to promote meaningful employment for economic impact zone residents; and

(3) to encourage individuals to reside in the economic impact zones in which they are employed.

Section 12-12-30. For purposes of this chapter, `economic impact zone' means a county or municipality, any portion of which is located within fifty miles of the boundaries of an applicable federal military installation, and any area not otherwise included as part of the economic impact zone if the Department of Commerce determines the area to be adversely impacted by the closing or realignment of an applicable federal military installation which is closed or realigned under:

(1) the Defense Base Closure and Realignment Act of 1990;

(2) Title II of the Defense Authorization Amendments and Base Closure and Realignment Act; or

(3) Section 2687 of Title 10, United States Code.

Section 12-12-40. (A) A designation of an area as an economic impact zone remains in effect during the period beginning on the date of the designation and ending on the earlier of:

(1) December thirty-first of the fifteenth calendar year following the calendar year in which the designation occurs, or

(2) a termination date designated by legislative enactment of the General Assembly.

(B) A designation may be revoked by the General Assembly only after a hearing on the record in which officials of the county or municipality involved may participate.

Section 12-12-45. A taxpayer is allowed:

(1) a reduction in property taxes of fifty percent for new facilities built on former United States military installations for the first three tax years ending after the completion of the facility;

(2) an exemption from the taxes provided in Sections 12-7-210 and Section 12-7-230 for the first three consecutive tax years beginning after the business initially locates on a former United States military installation;

(3) beginning in the fourth tax year after the business initially locates on a former United States military installation, a nonrefundable credit against the tax imposed pursuant to Chapter 7 of this title equal to five percent of `qualified wages' paid in a taxable year as defined in Section 12-12-50.

(4) No taxpayer who qualifies for and receives a tax credit pursuant to Section 12-7-1273 may receive the benefits of the tax credits provided in this chapter.

Section 12-12-50. (A) In the case of an individual, there is allowed as a deduction against South Carolina taxable income an amount equal to twenty percent of the aggregate amount paid in cash by the taxpayer during the taxable year for the purchase of enterprise zone stock.

(B)(1) The maximum amount allowed as a deduction under subsection (A) to a taxpayer for the taxable year may not exceed the lesser of:

(a) ten thousand dollars; or

(b) the excess of one hundred thousand dollars over the amount allowed as a deduction under this section to the taxpayer for all prior taxable years.

(2) If the amount otherwise deductible by the person under subsection (A) exceeds the limitation under subsection (B)(1)(a):

(a) the amount of such excess is treated as an amount paid to which subsection (A) applies during the next taxable year; and

(b) the deduction allowed for any taxable year must be allocated proportionately among the economic impact zone stock purchased by the person on the basis of the respective purchase prices a share.

(3) The taxpayer and members of the taxpayer's family are treated as one person for purposes of subitem (1), and the limitations contained in such subitem must be allocated among the taxpayer and such members in accordance with their respective purchases of economic impact zone stock. For purposes of this section, an individual's family includes only such individual's spouse and minor children.

(C) For purposes of this section:

(1) the term `economic impact zone stock' means stock of a corporation if:

(a) such stock is acquired on original issue from the corporation; and

(b) such corporation is, at the time of issue, a qualified enterprise zone issuer.

(2)(a) Such term shall include such stock only to the extent that the proceeds of such issuance are used by such issuer during the twelve-month period beginning on the date of issuance to purchase qualified economic impact zone property.

(b) For purposes of this section, the term `qualified economic impact zone property' means property to which Section 168 of the Internal Revenue Code of 1986 applies:

(i) the original use of which in an economic impact zone commences with the issuer; and

(ii) substantially all of the use of which is in an economic impact zone.

(3) The term `economic impact zone stock' does not include any stock acquired from a corporation which made a substantial stock redemption or distribution (without a bona fide business purpose therefor) in an attempt to avoid the purposes of this section.

(D) For purposes of this section, the term `qualified economic impact zone issuer' means any domestic `C' corporation if:

(1) such corporation is an economic impact zone business or, in the case of a new corporation, such corporation is being organized for purposes of being an economic impact zone business;

(2) such corporation does not have more than one class of stock;

(3) the sum of:

(a) the money;

(b) the aggregate adjusted bases of property owned by such corporation; and

(c) the value of property leased to the corporation (as determined under regulations prescribed by the Department of Revenue and Taxation), does not exceed five million dollars; and

(4) more than twenty percent of the total voting power, and twenty percent of the total value, of the stock of such corporation is owned directly by individuals or estates or indirectly by individuals through partnerships or trusts. The determination under subsection (3) must be made as of the time of issuance of the stock in question but shall include amounts received for such stock.

(E)(1) For purposes of this section, the basis of any economic impact zone stock must be reduced by the amount of the deduction allowed under this section with respect to the stock in the manner prescribed by the Department of Revenue and Taxation.

(F)(1) If, during the ten-year period beginning on the date economic impact stock was purchased by the taxpayer, the issuer of such stock ceases to be a qualified economic impact zone issuer the taxpayer must be treated for purposes of subsection (E) as disposing of such stock (and any other property the basis of which is determined in whole or in part by reference to the adjusted basis of such stock) during the taxable year during which such cessation occurs at its fair market value as of the first day of such taxable year.

(2) A corporation does not fail to be treated as a qualified enterprise zone issuer for purposes of subsection (1) solely by reason of the termination or revocation of an economic enterprise zone designation.

(G)(1) In the case of a partnership or an `S' corporation, the limitations under subsection (B) apply at the partner and shareholder level and do not apply at the partnership or corporation level.

(2) Estates and trusts are not treated as individuals for purposes of this section.

Section 12-12-60. (A) At the election of an individual, qualified capital gain from the sale or exchange of a qualified economic impact zone asset is includable in South Carolina taxable income only to the extent that the amount realized from such sale or exchange, exceeds the cost (not heretofore taken into account under this subsection) of any qualified zone asset purchased directly by the taxpayer during the reinvestment period.

(B) For purposes of this section:

(1) `qualified economic impact zone asset' has the meaning given that term by Section 12-12-100.

(2)(a) In the case of a sale or exchange of property, the determination of whether the property is a qualified economic impact zone asset must be made as of the time of the sale or exchange.

(b) In the case of a purchase of property, the determination of whether such property is a qualified economic impact zone asset shall be made as of the time of such purchase.

(C) For purposes of this section:

(1) `Reinvestment period' means, with respect to any sale or exchange, the six-month period beginning on the date of such sale or exchange.

(2) `Purchase' has the meaning given to such term by Section 179(d)(2) of the Internal Revenue Code of 1986.

(D)(1) If, during the ten year period beginning on the date any qualified zone replacement asset was purchased by the taxpayer, such asset ceases to be a qualified economic impact zone asset, notwithstanding any provision of this chapter other than item (3) of this subsection, the taxpayer shall be treated as disposing of such asset during the taxable year during which such cessation occurs at its fair market value as of the first day of such taxable year.

(2) The amount of gain recognized pursuant to item (1) with respect to any asset may not exceed the lesser of:

(a) the amount of gain which was not recognized under subsection (A) by the reason of the purchase of such asset; or

(b) the excess of the fair market value referred to in item (1) over the adjusted basis of such asset.

(3) An asset shall not fail to be treated as a qualified zone asset for purposes of item (1) solely by reason of the termination of an economic impact zone designation.

(4) For purposes of item (1), the term `qualified economic impact zone replacement asset' means any such asset the purchase of which resulted in the nonrecognition of gain under subsection (A) with respect to any other property.

(E) If gain from the sale or exchange of any property is not recognized by reason of subsection (A), such gain must be applied to reduce (in the order acquired) the basis of any qualified zone replacement asset (as defined in subsection (D)(4) purchased during the reinvestment period.

(F) This section does not apply to any gain from any installment sale (as defined in Section 453(b) of the Internal Revenue Code of 1986) if Section 453(a) of such code applies to the sale.

(G) If any gain is realized by the taxpayer on any sale or exchange to which an election under this section applies, then:

(1) the statutory period for the assessment of any deficiency with respect to such gain shall not expire before the expiration of three years from the date the department is notified by the taxpayer (in such manner as the department may prescribe) of:

(a) the taxpayer's cost of purchasing any qualified zone replacement asset;

(b) the taxpayer's intention not to purchase qualified economic impact zone replacement asset within the reinvestment period; or

(c) a failure to make such purchase within the reinvestment period; and

(2) such deficiency may be assessed before the expiration of such three-year period notwithstanding the provisions of any law or rule of law which would otherwise prevent such assessment.

(H) For purposes of this section, the term `economic impact zone business' has the meaning given such term by Section 12-12-100, except that, in applying Section 12-12-100 for such purposes, the term `qualified business' does not include any trade or business or producing property of a character subject to the allowance for depletion under Section 611 of the Internal Revenue Code of 1986.

Section 12-12-70. In the case of economic impact zone business which has made a Section 179 election pursuant to the Internal Revenue Code of 1986, there is allowed an additional deduction against South Carolina taxable income equal to that amount of the asset cost which exceeds ten thousand dollars, but this state deduction may not exceed ten thousand dollars.

Section 12-12-80. (A) There is allowed as a credit against the tax imposed pursuant to Chapter 7 of this title an economic impact zone investment tax credit for any taxable year in an amount equal to five percent of the aggregate bases of qualified zone manufacturing and other productive equipment properties placed in service during such taxable year in the economic impact zone.

(B) For purposes of this section:

(1) `economic impact zone qualified manufacturing and productive equipment property' means any property:

(a) which is used as an integral part of manufacturing, production, or extraction of or furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services in the economic impact zone;

(b) which is tangible property to which Section 168 of the Internal Revenue Code of 1986 applies;

(c) which is Section 1245 of the Internal Revenue Code of 1986 applies property (as defined in Section 1245(a)(3)); and

(d)(i) the construction, reconstruction, or erection of which is completed by the taxpayer in the economic impact zone; or

(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer inside the economic impact zone.

(2) In the case of any computer software which is used to control or monitor a manufacturing or production process inside the economic impact zone and with respect to which depreciation (or amortization in lieu of depreciation) is allowable, such software shall be treated as qualified manufacturing and productive equipment property.

(C) This section does not apply to any property to which the other tax credits would apply unless the taxpayer elects to waive the application of such credits to such property.

Section 12-12-90. (A) For purposes of this chapter, `economic impact zone business' means:

(1) any qualified business entity; and

(2) any qualified proprietorship.

(B) For purposes of this chapter, `qualified business entity' means, with respect to any taxable year, any corporation or partnership if for such year:

(1)(a) every trade or business of such entity is the active conduct of a qualified business within a tax economic impact zone; and

(b) at least eighty percent of the total gross income of such entity is derived from the active conduct of such business;

(2) substantially all of the use of the tangible property of such entity (whether owned or leased) is within a tax economic impact zone;

(3) substantially all of the intangible property of such entity is used in, and exclusively related to, the active conduct of any such business;

(4) substantially all of the services performed for such entity by its employees are performed in a tax economic impact zone;

(5) at least one-third of its employees are residents of an economic impact zone;

(6) less than five percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to collectibles (as defined in Section 408(m)(2) of the Internal Revenue Code of 1986) other than collectibles that are held primarily for sale to customers in the ordinary course of such business; and

(7) less than five percent of the average of the aggregate unadjusted bases of the property of such entity is attributable to nonqualified financial property.

(C) For purposes of this chapter, the term `qualified proprietorship' means, with respect to any taxable year, any qualified business carried on by an individual as a proprietorship if for such year:

(1) at least eight percent of the total gross income of such individual from such business is derived from the active conduct of such business in an economic impact zone;

(2) substantially all of the use of the tangible property of such individual in such business (whether owned or leased) is within an economic impact zone;

(3) substantially all of the intangible property of such business is used in, and exclusively related to, the active conduct of such business;

(4) substantially all of the services performed for such individual in such business by employees of such business are performed in an economic impact zone;

(5) at least one-third of such employees are residents of an economic impact zone;

(6) less than five percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business is attributable to collectibles (as defined in Section 408(m)(2) of the Internal Revenue Code of 1986) other than collectibles that are held primarily for sale to customers in the ordinary course of such business; and

(7) less than five percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business is attributable to nonqualified financial property.

For purposes of this subsection, `employee' includes the proprietor.

(D) For purposes of this chapter:

(1) Except as otherwise provided in this subsection, the term `qualified business' means any trade or business.

(2) The rental to others of real property located in an economic impact zone may be treated as a qualified business only if:

(a) in the case of real property which is not residential rental property (as defined in Section 168(e)(2) of the Internal Revenue Code of 1986), the lessee is an economic impact zone business; or

(b) in the case of residential rental property:

(i) such property was originally placed in service after the date the economic impact zone was designated; or

(ii) such property is rehabilitated after such date in a rehabilitation which meets requirements based on the principles of Section 42(e)(3) of the Internal Revenue Code of 1986.

(3) The rental to others of tangible personal property shall be treated as a qualified business if and only if substantially all of the rental of such property is by economic impact zone businesses or by residents of an economic impact zone.

(4) `Qualified business' shall not include any trade or business consisting predominantly of the development or holding of intangibles for sale or license.

(5) The term `qualified business' shall not include:

(a) any trade or business consisting of the operation of any facility described in Section 144(c)(6)(B) of the Internal Revenue Code of 1986; and

(b) any trade or business the principal activity of which is farming (within the meaning of subsections (A) or (B) of Section 2032A(e)(5) of the Internal Revenue Code of 1986), but only if, as of the close of the preceding taxable year, the sum of:

(i) the aggregate unadjusted bases (or, if greater, the fair market value) of the assets owned by the taxpayer which are used in such trade or business; and

(ii) the aggregate value of assets leased by the taxpayer which are used in such a trade or business, exceeds five hundred thousand dollars.

For purposes of subitem (b), rules similar to the rules of Section 1395(b) of the Internal Revenue Code of 1986 shall apply.

(6) For purposes of this chapter, the term `nonqualified financial property' means debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, annuities, and other similar property specified in regulations, except that such term shall not include:

(a) reasonable amounts of working capital held in cash, cash equivalents, or debt instruments with a term of eighteen months or less; or

(b) debt instruments described in Section 1221(4) of the Internal Revenue Code.

Section 12-12-100. (A) For purposes of this chapter:

(1) `Qualified economic impact zone asset' means:

(a) any qualified economic impact zone stock;

(b) any qualified economic impact zone business property; and

(c) any qualified economic impact zone partnership interest.

(2) Except as provided in item (b), `qualified zone stock' means any stock in a domestic corporation if:

(a) such stock is acquired by the taxpayer on original issue from the corporation solely in exchange for cash;

(b) as of the time such stock was issued, such corporation was an economic impact zone business (or, in the case of a new corporation, such corporation was being organized for the purposes of being an economic impact zone business); and

(c) during substantially all of the taxpayer's holding period for such stock, such corporation qualified as an economic impact zone business.

(3) `Qualified zone stock' does not include any stock the basis of which is reduced under Section 12-12-50).

(4) `Qualified zone stock' does not include any stock acquired from a corporation which made a substantial stock redemption or distribution (without a bona fide business purpose therefor) in any attempt to avoid the purposes of this section.

(5) `Qualified zone business property' means tangible property if:

(a) such property was acquired by the taxpayer by purchase (as defined in Section 179(d)(2) of the Internal Revenue Code of 1986) after the date on which the designation of the economic impact zone took effect;

(b) the original use of such property in an economic impact zone commences with the taxpayer; and

(c) during substantially all of the taxpayer's holding period for such property, substantially all of the use of such property was in an economic impact zone and in an economic impact zone business of the taxpayer.

(6) The requirements of subitems (a) and (b) of item (5) must be treated as satisfied with respect to:

(a) property which is substantially improved by the taxpayer; and

(b) any land on which such property is located.

For purposes of the preceding sentence, property must be treated as substantially improved by the taxpayer if, during any twenty-four month period beginning after the date on which the designation of the economic impact zone took effect, additions to basis with respect to such property in the hands of the taxpayer exceed the greater of:

(i) an amount equal to the adjusted basis at the beginning of such twenty-four month period in the hands of the taxpayer; or

(ii) five thousand dollars.

(7) `Qualified zone business property' does not include land which is not an integral part of a qualified business (as defined in Section 12-12-60).

(8) `Qualified zone partnership interest' means any interest in a partnership if:

(a) such interest is acquired by the taxpayer from the partnership solely in exchange for cash;

(b) as of the time such interest was acquired, such partnership was an economic impact zone business (or, in the case of a new partnership, such partnership was being organized for purposes of being an economic impact zone business); and

(c) during substantially all of the taxpayer's holding period for such interest, such partnership qualified as an economic impact zone business.

A rule similar to the rule of subsection (A)(4) applies for purposes of this item.

(9) `Qualified zone asset' includes any property which would be a qualified zone asset but for item (2)(a), (5)(b), or (8)(a) in the hands of the taxpayer if such property was a qualified zone asset in the hands of any prior holder.

(10) If any property ceases to be a qualified zone asset by reason of item (2)(a), (5)(b), or (8)(c) after the ten-year period beginning on the date the taxpayer acquired such property, such property shall continue to be treated as meeting the requirements of such item, except that the amount of gain which is qualified capital gain on any sale or exchange of such property shall not exceed the amount which would be qualified capital gain had such property been sold on the date of such cessation.

(11) The termination of any designation of an area as an economic impact zone must be disregarded for purposes of determining whether any property is a qualified zone asset.

(B) For purposes of this section:

(1) Except as otherwise provided in this subsection, the term `qualified capital gain' means any long-term capital gain.

(2) The term `qualified capital gain' does not include any gain which would be treated as ordinary income under Section 1250 of the Internal Revenue Code of 1986 if Section 1250 of the Internal Revenue Code of 1986 applied to all depreciation rather than the additional depreciation.

(3) The term `qualified capital gain' does not include any gain attributable to periods after the termination of any designation of an area as an economic impact enterprise zone.

(C)(1) Gain on the sale or exchange of an interest in a pass-thru entity held by the taxpayer (other than an interest in an entity which was an economic impact zone business during substantially all of the period the taxpayer held such interest) for more than five years shall be treated as qualified capital gain to the extent such gain is attributable to amounts which would be qualified capital gain on qualified zone assets (determined as if such assets had been sold on the date of the sale or exchange) held by such entity for more than five years and throughout the period the taxpayer held such interest. A rule similar to the rule of subsection (A)(2)(c) shall apply for purposes of the preceding sentence.

(2)(a) Any amount included in income by reason of holding an interest in a pass-thru entity (other than an entity which was an economic impact zone business during substantially all of the period the taxpayer held the interest to which such inclusion relates) shall be treated as qualified capital gain if such amount meets the requirements of subitem (b).

(b) An amount meets the requirements of this subitem if:

(i) such amount is attributable to qualified capital gain recognized on the sale or exchange by the pass-thru entity of property which is a qualified zone asset in the hands of such entity and which was held by such entity for the period required under subsection (A); and

(ii) such amount is includable in the gross income of the taxpayer by reason of the holding of an interest in such entity which was held by the taxpayer on the date on which such pass-thru entity acquired such asset and at all times thereafter before the disposition of such asset by such pass-thru entity.

(c) Subitem (2)(a) does not apply to any amount to the extent such amount exceeds the amount to which subitem (2)(a) would have applied if such amount were determined by reference to the interest the taxpayer held in the pass-thru entity on the date the qualified zone asset was acquired.

(3) For purposes of this section, `pass-thru entity' means any:

(a) partnership;

(b) `S' corporation;

(c) regulated investment company;

(d) limited liability company;

(e) limited liability partnership;

(f) common trust fund.

(D) In the case of the sale or exchange of an interest in a partnership, or of stock in an `S' corporation, which was an economic impact zone business during substantially all of the period the taxpayer held such interest or stock, the amount of qualified capital gain must be determined without regard to:

(1) any intangible, and any land, which is not an integral part of any qualified business (as defined in Section 12-12-60); and

(2) gain attributable to periods before the designation of an area as an economic impact zone.

(E) For purposes of this chapter:

(1) In the case of a transfer of a qualified zone asset to which this subsection applies, the transferee shall be treated as:

(a) having acquired such asset in the same manner as the transferor; and

(b) having held such asset during any continuous period immediately preceding the transfer during which it was held (or treated as held under this subsection) by the transferor.

(2) This subsection shall apply to any transfer:

(a) by gift;

(b) at death; or

(c) from a partnership to a partner thereof of a qualified zone asset with respect to which the requirements of subsection (D)(2) are met at the time of the transfer (without regard to the five-year holding requirement).

(3) Rules similar to the rules of Section 1244(d)(2) of the Internal Revenue Code of 1986 shall apply for purposes of this section.

Section 12-12-110. The South Carolina Department of Revenue and Taxation shall prescribe procedures and promulgate regulations as may be necessary or appropriate to carry out the purposes of this chapter."

SECTION 2. "Business that is heavily dependent on defense contracts or subcontracts" means any individual, sole proprietorship, partnership, joint stock company, joint venture, corporation, or legal entity which:

(a) is authorized to do business in this State;

(b) has its principal place of business in this State; and

(c) had fifty percent or more of its income in its last fiscal year preceding the effective date of this act generated by operations within this State from defense contracts or subcontracts entered into with United States Navy installations located in Charleston.

SECTION 3. In determining the lowest responsive and responsible bidder pursuant to Section 11-35-1520, the chief procurement officer or other appropriate official shall, subject to the requirements of this act, make the award to a business that is heavily dependent on defense contracts or subcontracts if a bid is received from such a business which does not exceed the lowest responsive and responsible bidder that does not qualify for the preference provided in this act by more than five percent.

To be eligible for this preference, a vendor must otherwise qualify as a responsive and responsible bidder. To qualify for consideration under this provision, a business must have filed documents and affidavits which reasonably prove such status with the chief procurement officer or the procuring agency at least two weeks prior to the date by which bids must be submitted. The burden of qualification is on the business seeking the preference. The chief procurement officer or other appropriate official may request supplemental information and his determination that a business does or does not qualify is final and is not subject to appeal.

If there is a tie between a bidder who qualifies for the preference provided in this act and another bidder who does not qualify for this preference, the award must be resolved in favor of the qualifying bidder. Tie bids involving two bidders who qualify for the five percent preference must be resolved as provided in Section 11-35-1520(9), items (c) or (d) as appropriate.

Bidders utilizing the preference provided in this act may not receive the preference provided in Section 11-35-1520(9)(e).

SECTION 4. Section 1 takes effect January 1, 1996. Sections 2 and 3 take effect upon approval by the Governor but are only applicable to invitation for bids or solicitations issued after the effective date. The provisions of this act expire five years after the effective date.