H*3775 Session 111 (1995-1996)
H*3775(Rat #0055, Act #0032 of 1995) General Bill, By H. Brown, Dantzler, Law,
D. Williams and S.S. Wofford
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Section
12-7-1275 so as to allow credits against the corporate income tax, corporate
license tax, sales and use tax, local option sales and use tax, and similar
taxes for a taxpayer constructing or operating a qualified recycling facility
and to define "qualified recycling facility" and other terms associated with
this credit; to amend Section 4-29-67, as amended, relating to the fee in lieu
of taxes, so as to provide special provisions for a fee in lieu agreement for
a project that is a qualified recycling facility, including, among other
things, a term of not more than thirty-seven years, an assessment ratio of not
less than three percent, and a special calculation of net present value; to
amend Section 12-7-1200, relating to the accounting basis of income tax
returns, so as to authorize separate accounting for the business activities of
a taxpayer constructing or operating a qualified recycling facility with the
approval of the Department of Revenue and Taxation after the certification of
the Advisory Coordinating Council for Economic Development and to authorize
this special accounting method for the taxpayer's subsidiaries; and to amend
Section 12-36-2120, as amended, relating to sales tax exemptions, so as to
exempt property and fuels used by or for a qualified recycling facility; to
allow a taxpayer constructing or operating a qualified recycling facility
income, sales and use, and corporate license tax credits in the amount of job
development fees collected by the taxpayer; to amend Section 12-37-930, as
amended, relating to the valuation of property and the annual depreciation
allowed for manufacturer's machinery and equipment for purposes of the
property tax, so as to provide an annual depreciation allowance of thirty
percent for electronic interconnection component assembly devices for
computers and computer peripherals and to allow original cost of the custom
molds and dies used to manufacture such devices to be reduced by ninety
percent and to provide definitions; to amend Section 12-7-1220, as amended,
relating to the targeted jobs tax credit, so as to provide that two half-time
jobs are considered one full-time job and to define half-time job for purposes
of determining eligibility for the credit; and to amend the 1976 Code by
adding Sections 12-10-40 and 12-10-80 so as to provide the criteria for the
designation of Enterprise Zones and to allow a qualifying business in an
Enterprise Zone to collect a job development fee from the wages of the
employees and to provide the use of these fees.-amended title
03/09/95 House Introduced, read first time, placed on calendar
without reference HJ-3
03/15/95 House Debate adjourned until Thursday, March 16, 1995 HJ-16
03/16/95 House Debate adjourned until Tuesday, March 21, 1995 HJ-8
03/21/95 House Amended HJ-12
03/21/95 House Read second time HJ-14
03/22/95 House Read third time and sent to Senate HJ-17
03/23/95 Senate Introduced, read first time, placed on calendar
without reference SJ-6
03/29/95 Senate Amended SJ-16
03/29/95 Senate Read second time SJ-21
03/29/95 Senate Ordered to third reading with notice of
amendments SJ-21
03/30/95 Senate Read third time and returned to House with
amendments SJ-161
04/05/95 House Concurred in Senate amendment and enrolled HJ-30
04/05/95 Ratified R 55
04/06/95 Signed By Governor
04/06/95 Effective date 04/06/95
04/24/95 Copies available
04/24/95 Act No. 32
(A32, R55, H3775)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ADDING SECTION 12-7-1275 SO AS TO
ALLOW CREDITS AGAINST THE CORPORATE INCOME TAX,
CORPORATE LICENSE TAX, SALES AND USE TAX, LOCAL
OPTION SALES AND USE TAX, AND SIMILAR TAXES FOR A
TAXPAYER CONSTRUCTING OR OPERATING A QUALIFIED
RECYCLING FACILITY AND TO DEFINE "QUALIFIED
RECYCLING FACILITY" AND OTHER TERMS ASSOCIATED
WITH THIS CREDIT; TO AMEND SECTION 4-29-67, AS
AMENDED, RELATING TO THE FEE IN LIEU OF TAXES, SO AS
TO PROVIDE SPECIAL PROVISIONS FOR A FEE IN LIEU
AGREEMENT FOR A PROJECT THAT IS A QUALIFIED
RECYCLING FACILITY, INCLUDING, AMONG OTHER THINGS, A
TERM OF NOT MORE THAN THIRTY-SEVEN YEARS, AN
ASSESSMENT RATIO OF NOT LESS THAN THREE PERCENT,
AND A SPECIAL CALCULATION OF NET PRESENT VALUE; TO
AMEND SECTION 12-7-1200, RELATING TO THE ACCOUNTING
BASIS OF INCOME TAX RETURNS, SO AS TO AUTHORIZE
SEPARATE ACCOUNTING FOR THE BUSINESS ACTIVITIES OF A
TAXPAYER CONSTRUCTING OR OPERATING A QUALIFIED
RECYCLING FACILITY WITH THE APPROVAL OF THE
DEPARTMENT OF REVENUE AND TAXATION AFTER THE
CERTIFICATION OF THE ADVISORY COORDINATING COUNCIL
FOR ECONOMIC DEVELOPMENT AND TO AUTHORIZE THIS
SPECIAL ACCOUNTING METHOD FOR THE TAXPAYER'S
SUBSIDIARIES; TO AMEND SECTION 12-36-2120, AS AMENDED,
RELATING TO SALES TAX EXEMPTIONS, SO AS TO EXEMPT
PROPERTY AND FUELS USED BY OR FOR A QUALIFIED
RECYCLING FACILITY; TO ALLOW A TAXPAYER
CONSTRUCTING OR OPERATING A QUALIFIED RECYCLING
FACILITY INCOME, SALES AND USE, AND CORPORATE
LICENSE TAX CREDITS IN THE AMOUNT OF JOB
DEVELOPMENT FEES COLLECTED BY THE TAXPAYER; TO
AMEND SECTION 12-37-930, AS AMENDED, RELATING TO THE
VALUATION OF PROPERTY AND THE ANNUAL DEPRECIATION
ALLOWED FOR MANUFACTURER'S MACHINERY AND
EQUIPMENT FOR PURPOSES OF THE PROPERTY TAX, SO AS TO
PROVIDE AN ANNUAL DEPRECIATION ALLOWANCE OF
THIRTY PERCENT FOR ELECTRONIC INTERCONNECTION
COMPONENT ASSEMBLY DEVICES FOR COMPUTERS AND
COMPUTER PERIPHERALS AND TO ALLOW ORIGINAL COST OF
THE CUSTOM MOLDS AND DIES USED TO MANUFACTURE
SUCH DEVICES TO BE REDUCED BY NINETY PERCENT AND TO
PROVIDE DEFINITIONS; TO AMEND SECTION 12-7-1220, AS
AMENDED, RELATING TO THE TARGETED JOBS TAX CREDIT,
SO AS TO PROVIDE THAT TWO HALF-TIME JOBS ARE
CONSIDERED ONE FULL-TIME JOB AND TO DEFINE HALF-TIME
JOB FOR PURPOSES OF DETERMINING ELIGIBILITY FOR THE
CREDIT; AND TO AMEND THE 1976 CODE BY ADDING
SECTIONS 12-10-40 AND 12-10-80 SO AS TO PROVIDE THE
CRITERIA FOR THE DESIGNATION OF ENTERPRISE ZONES AND
TO ALLOW A QUALIFYING BUSINESS IN AN ENTERPRISE ZONE
TO COLLECT A JOB DEVELOPMENT FEE FROM THE WAGES OF
EMPLOYEES AND TO PROVIDE THE USE OF THESE
FEES.
Be it enacted by the General Assembly of the State of South
Carolina:
Tax credits
SECTION 1. Article 10, Chapter 7, Title 12 of the 1976 Code is
amended by adding:
"Section 12-7-1275. (A) As used in this section:
(1) `Investment' means the total cost of acquisition, construction,
erection, and installation of all real and personal property, whether owned
or leased including, but not limited to, all realty, improvements, leasehold
improvements, buildings, machinery, and office equipment, which is at
any time incorporated into or associated with a qualified recycling
facility.
(2) `Recycling property' means all real and personal property,
whether owned or leased including, but not limited to, all realty,
improvements, leasehold improvements, buildings, machinery, and office
equipment, incorporated into or associated with a qualified recycling
facility.
(3) `Qualified recycling facility' means a facility certified as a
qualified recycling facility by a duly authorized representative of the
department which includes all real and personal property incorporated
into or associated with the facility located or to be located within this
State that will be used by the taxpayer to manufacture products for sale
composed of at least fifty percent postconsumer waste material by weight
or by volume. The minimum level of investment for a qualified
recycling facility must be at least three hundred million dollars incurred
by the end of the fifth calendar year after the year in which the taxpayer
begins construction or operation of the facility.
(4) `Postconsumer waste material' means any product generated by a
business or consumer which has served its intended end use and which
has been separated from the solid waste stream for the purpose of
recycling and includes, but is not limited to, scrap metal and iron, and
used plastics, paper, glass, and rubber.
(B) A taxpayer who is constructing or operating a qualified recycling
facility is allowed a credit in the amount of thirty percent of the
taxpayer's investment in recycling property during the taxable year. This
credit may be used to reduce any corporate income tax imposed by
Section 12-7-230, sales or use tax imposed by the State or any political
subdivision of the State, or corporate license fees imposed by Section
12-19-70 or any tax similar to these taxes. Any unused credit for a
taxable year may be carried forward to subsequent taxable years until the
credit is exhausted. If the recycling facility fails to meet the minimum
investment within the time required by subsection (A)(3) of this section,
the taxpayer shall increase its tax liability for the current taxable year by
an amount equal to the amount of credit which was used to reduce any
tax liability in earlier years."
Fee in lieu of taxes
SECTION 2. Section 4-29-67 of the 1976 Code, as last amended by Act
497 of 1994, is further amended by adding at the end:
"(AA) (1) Notwithstanding any other provision of this section,
in the case of a qualified recycling facility the annual fee is available for
no more than thirty years, and for those projects constructed or placed in
service during more than one year, the annual fee is available for a
maximum of thirty-seven years.
(2) Notwithstanding any other provision of this section, for a
qualified recycling facility, the assessment ratio may not be less than
three percent.
(3) Any machinery and equipment foundations, port facilities, or
railroad track systems used, or to be used, for a qualified recycling
facility is considered tangible personal property.
(4) Notwithstanding subsections (F) and (I) of this section, the total
costs of all investments made for a qualified recycling facility are eligible
for fee payments as provided in this section.
(5) For purposes of any fees that may be due on undeveloped
property for which title has been transferred to the county by or for the
owner or operator of a qualified recycling facility, the assessment ratio is
three percent.
(6) Notwithstanding subsection (D)(2)(b) of this section, in the case
of a qualified recycling facility, net present value calculations performed
under the subsection must use a discount rate equivalent to the yield in
effect for new or existing United States Treasury bonds of similar
maturity as published on any day selected by the investor during the year
in which assets are placed into service or in which the inducement
agreement is executed.
(7) As used in this subsection, `qualified recycling facility' and
`investment' have the meaning provided in Section
12-7-1275(A)."
Accounting method
SECTION 3. Section 12-7-1200 of the 1976 Code is amended by adding
at the end:
"Notwithstanding the provisions of this section, a taxpayer who
is constructing or operating a qualified recycling facility as defined in
Section 12-7-1275(A) may petition the department for the use of separate
accounting with respect to all or any part of the taxpayer's or taxpayer's
subsidiaries' business activities or for the use of any other method to
determine the taxpayer's or taxpayer's subsidiaries' taxable income. The
department shall forward the petition with its comments concerning the
economic impact of the suggested method to the Advisory Coordinating
Council for Economic Development. The department may approve the
petition upon certification of the Advisory Coordinating Council for
Economic Development that the benefits to the public exceed the costs to
the public."
Sales tax exemption
SECTION 4. Section 12-36-2120 of the 1976 Code is amended by
adding an appropriately numbered item at the end to read:
"( ) (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 12-7-1275(A);"
Tax credits
SECTION 5. A taxpayer who is constructing or operating a qualified
recycling facility as defined in Section 12-7-1275 shall be entitled to
credits in the amount of all funds collected as permitted in Section
12-10-80, which credits can be used to reduce the taxpayer's corporate
income tax imposed by Section 12-7-230, sales or use tax imposed by the
State or any political subdivision of the State, corporate license fees
imposed by Section 12-19-70 or any tax similar to these taxes. Any
unused credits may be carried forward to subsequent taxable years until
such credits are exhausted.
Depreciation allowed
SECTION 6. A. Item 6 of the schedule contained in the first paragraph
of Section 12-37-930 of the 1976 Code is amended by adding at the
end:
"(c) Electronic Interconnection Component Assembly Devices
for Computers and Computer Peripherals........30%
Includes the manufacture of interconnection component assemblies and
devices which are incorporated in computers or computer peripherals.
Computer peripherals include tape drives, compact disk read-only
memory systems, hard disks, drivers, tape streamers, monitors, printers,
and power supplies."
B. The penultimate paragraph of Section 12-37-930 of the 1976 Code,
as last amended by Act 516 of 1994, is further amended to read:
"In no event may the original cost be reduced more than eighty
percent, except this limit is ninety percent for custom molds and dies
used in the conduct of manufacturing electronic interconnection
component assembly devices for computers and computer peripherals. In
the year of acquisition, depreciation is allowed as if the property were
owned for the full year. The term `original cost' means gross capitalized
cost, including property on which the taxpayer made the election allowed
pursuant to Section 179 of the Internal Revenue Code of 1986, as shown
by the taxpayer's records for income tax purposes. For purposes of this
paragraph, custom molds and dies used in the conduct of manufacturing
electronic interconnection component assembly devices for computers and
computer peripherals are molds and dies designed, produced, and
conditioned to the special order of a manufacturer."
Tax credits
SECTION 7. Section 12-7-1220(H)(2) of the 1976 Code, as last
amended by Section 48, Part II, Act 171 of 1991, is further amended to
read:
"(2) `Full-time' means a job requiring a minimum of thirty-five
hours of an employee's time a week for the entire normal year of
company operations or a job requiring a minimum of thirty-five hours of
an employee's time for a week for a year in which the employee was
hired initially for or transferred to the South Carolina facility. For the
purposes of this section, two half-time jobs are considered one full-time
job. A `half-time job' is a job requiring a minimum of twenty hours of
an employee's time a week for the entire normal year of the company's
operations or a job requiring a minimum of twenty hours of an
employee's time a week for a year in which the employee was hired
initially for or transferred to the South Carolina facility."
Job development fee
SECTION 8. A. The 1976 Code is amended by adding:
"Section 12-10-80. (A) Upon certification by the council to the
department of the council's determination that a business is a qualifying
business, a qualifying business may collect a job development fee by
retaining an amount of employee withholding permitted by subsection
(C) or (D), but not both, for the purposes permitted by subsection (B) or
(D), respectively. The amount withheld must be maintained in an escrow
account with a bank which is insured by the Federal Deposit Insurance
Corporation. To the extent the money is not used as permitted by
subsection (B) or (D), it must be treated as misappropriated employee
withholding. Employee withholding may not be retained from an
employee whose job was created in this State before the entry of the
qualifying business into a revitalization agreement. If a qualifying
business retains employee withholding under this section, it shall make its
payroll books and records available for inspection by the council and the
department at the times the council and the department request. Each
qualifying business retaining employee withholding under this section
shall file with the council and the department the information and
documentation respecting the retention and use of the employee
withholding according to the revitalization agreement. Each qualifying
business which retains in excess of ten thousand dollars in any calendar
year shall furnish an audited report prepared by an independent certified
public accountant which itemizes the sources and uses of the funds. The
audited report must be filed with the council and the department no later
than April fifteenth following the calendar year of the retention. Each
qualifying business retaining employee withholding under this section is
allowed a credit against the withholding tax liability provided in Chapter
9 of this title otherwise owed to the State, the credit not to exceed the
lesser of the amount of such tax or the aggregate amount of employee
withholding retained. No employer may withhold an amount that results
in any employee ever receiving a smaller amount of wages on either a
weekly or on an annual basis than the employee would otherwise receive
in the absence of this chapter.
(B) A qualifying business may collect a job development fee under
the revitalization agreement for a period not to exceed fifteen years. A
qualifying business must create at least ten new, full-time jobs at the
South Carolina facility described in the revitalization agreement. Capital
expenditures from the escrow account must be expended at the
above-described facility or for utility or transportation improvements that
serve this facility. The qualifying business may expend funds from the
escrow account if (a) the expenditures are incurred during the term of the
revitalization agreement, (b) the expenditures from the escrow account
are authorized by the revitalization agreement, (c) the expenditures are
approved in writing by the council and the department prior to
expenditure, and (d) the expenditures are for any of the following
purposes:
(1) training costs and facilities;
(2) acquiring and improving real estate whether acquired by lease,
purchase, installment payment, or otherwise, the escrow account can be
spent only for capital improvements made after entering a revitalization
agreement;
(3) improvements to both public and private utility systems
including water, sewer, electricity, natural gas, and
telecommunications;
(4) fixed transportation facilities including highway, rail, water, and
air; and
(5) construction or improvements of any real property and fixtures
constructed or improved primarily for the purpose of complying with
local, state, or federal environmental laws or regulations.
(C) The total amount retained from employee withholding by the
qualifying business may not exceed the sum of the following
amounts:
(1) two percent of the gross wages of each new employee who earns
six dollars or more an hour but less than eight dollars an hour;
(2) three percent of the gross wages of each new employee who
earns eight dollars or more an hour but less than ten dollars an hour;
(3) four percent of the gross wages of each new employee who
earns ten dollars or more an hour but less than fifteen dollars an hour;
and
(4) five percent of the gross wages of each new employee who earns
fifteen dollars or more an hour.
The hourly gross wage figures set forth in this section must be
adjusted annually by an inflation factor determined by the State Budget
and Control Board.
(D) Subject to the conditions in this section, any qualifying business
in an enterprise zone may negotiate with the council to retain from
employee withholding an amount equal to five hundred dollars a year for
each production employee being retrained, where this retraining is
necessary for the qualifying business to remain competitive or to
introduce new technologies. This retraining must be approved by and
performed by the technical college under the jurisdiction of the State
Board for Technical and Comprehensive Education serving the designated
enterprise zone. In addition to the yearly limits, the amount retained
from employee withholding may not exceed two thousand dollars over
five years for each production employee being retrained. Additionally,
the qualifying business must match on a dollar-for-dollar basis the
amount retained from employee withholding. The total amount retained
from withholding and all of the qualifying business@ matching funds
must be paid to the technical college that provides the training to defray
the cost of the training program. Any training cost in excess of the job
development fees and matching funds is the responsibility of the
qualifying business based on negotiations with the technical college.
(E) Each qualified business which has retained employee withholding
under this section, shall report each employee@s state withholding to the
United States, this State, and the employee as if the retained withholding
had been paid over to the State pursuant to Chapter 9 of this title.
(F) Any job development fee of a qualifying business permanently
lapses upon expiration or termination of the revitalization agreement. In
the event of termination, the qualifying business shall immediately cease
to retain employee withholding and immediately cease spending funds
from the escrow account. Within thirty days of the expiration or
termination of the revitalization agreement, the qualifying business shall
pay over all the funds remaining in the escrow account to the department
as withholding taxes.
(G) For purposes of the job development fee allowed by this section,
an employee is a person whose job was created in this State."
B. The provisions of Section 12-10-80 of the 1976 Code as added by
this section supersede the provisions of Section 12-10-80 of the 1976
Code as added by the enactment of H. 3534 of 1995.
Enterprise zone
SECTION 9. A. The 1976 Code is amended by adding:
"Section 12-10-40. Annually, by December thirty-first, using the
most current data available, the State Budget and Control Board shall
designate the enterprise zones within this State as provided in this
section. Each enterprise zone must be located in this State and meet one
of the following criteria:
(1) consist of a census tract in which either the median household
income is eighty percent or less of the state average, or at least twenty
percent of households are below the poverty level according to the most
recent United States census;
(2) consist of a county classified as less developed pursuant to Section
12-7-1220;
(3) be located in a federal military base or installation which was
closed, or designated to be closed, or in a federal facility in which the
permanent employment was reduced by three thousand or more jobs after
December 31, 1990;
(4) consist of a census tract with at least one hundred manufacturing
jobs, at least fifty percent of which are textile and apparel jobs;
(5) consist of a census tract where a manufacturing facility has closed
or experienced permanent layoffs and notified the Employment Security
Commission under the federal Worker Adjustment and Retaining
Notification (WARN) Act of 1988. The enterprise zone designation
applies only for five years after the date of closure or layoff, and the
number of jobs permanently lost must equal twenty-five percent or more
of the total manufacturing workforce in the tract at the time the layoff
occurred. The job loss shall have occurred no more than five years prior
to the effective date of this chapter, except in any census tract where a
catastrophic loss of one thousand or more jobs from a single employer
has occurred since 1980 and fewer than half the job losses have been
replaced. Any such tract will remain an enterprise zone until at least half
the catastrophic job losses have been replaced. Where a municipality in
which the catastrophic job loss occurred is split by census tracts, each
tract containing any part of the municipality meets the catastrophic job
loss criteria;
(6) consist of a census tract, any part of which is within twenty miles
of a federal facility that has reduced its permanent civilian employment
by three thousand or more jobs after December 31, 1990, for ten years
after the effective date of this chapter; or
(7) consist of a census tract in which a penal institution operated by
the South Carolina Department of Corrections has closed."
B. The provisions of Section 12-10-40 of the 1976 Code as added by
this act are intended to supersede the provisions of Section 12-10-40 of
the 1976 Code as added by the enactment of H. 3534 of 1995.
Time effective
SECTION 10. This act takes effect upon approval by the Governor.
Approved the 6th day of April, 1995. |