S 960 Session 112 (1997-1998)
S 0960 General Bill, By Passailaigue, Branton, Grooms, McConnell and Ravenel
A BILL TO AMEND SECTION 12-6-3360 OF THE CODE OF SOUTH CAROLINA, 1976,
RELATING TO THE JOBS TAX CREDIT, SO AS TO EXTEND THE BENEFITS APPLICABLE TO A
LEAST DEVELOPED COUNTY TO AN ECONOMIC IMPACT ZONE AND TO MAKE THE CREDIT
APPLICABLE TO ADDITIONAL FACILITIES, INCLUDING COMPUTER SOFTWARE DEVELOPMENT,
MOTION PICTURE PRODUCTION, AND WATER TRANSPORTATION FACILITIES; TO AMEND
SECTION 12-6-3410, RELATING TO THE INCOME TAX CREDIT FOR CORPORATE
HEADQUARTERS, SO AS TO ADD FURTHER QUALIFYING CRITERIA; AND TO AMEND SECTION
12-37-220(B)(32), RELATING TO THE PROPERTY TAX EXEMPTION FOR CORPORATE
HEADQUARTERS, SO AS TO ADD FURTHER QUALIFYING CRITERIA.
01/28/98 Senate Introduced and read first time SJ-5
01/28/98 Senate Referred to Committee on Finance SJ-5
A BILL
TO AMEND SECTION 12-6-3360 OF THE CODE OF SOUTH
CAROLINA, 1976, RELATING TO THE JOBS TAX CREDIT, SO
AS TO EXTEND THE BENEFITS APPLICABLE TO A LEAST
DEVELOPED COUNTY TO AN ECONOMIC IMPACT ZONE
AND TO MAKE THE CREDIT APPLICABLE TO ADDITIONAL
FACILITIES, INCLUDING COMPUTER SOFTWARE
DEVELOPMENT, MOTION PICTURE PRODUCTION, AND
WATER TRANSPORTATION FACILITIES; TO AMEND
SECTION 12-6-3410, RELATING TO THE INCOME TAX
CREDIT FOR CORPORATE HEADQUARTERS, SO AS TO ADD
FURTHER QUALIFYING CRITERIA; AND TO AMEND
SECTION 12-37-220(B)(32), RELATING TO THE PROPERTY
TAX EXEMPTION FOR CORPORATE HEADQUARTERS, SO
AS TO ADD FURTHER QUALIFYING CRITERIA.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Section 12-6-3360 of the 1976 Code is amended to
read:
"Section 12-6-3360. (A) Taxpayers that operate manufacturing,
tourism, processing, warehousing, distribution, research and
development, corporate office, and qualifying
service-related, computer software development, motion picture
production and allied services, and water transportation
facilities are allowed an annual job tax credit as provided in this
section. In addition, taxpayers that operate retail facilities and
service related industries qualify for an annual jobs tax credit in
counties designated as least developed or as economic impact
zones. Credits under this section may be claimed against income
taxes imposed by Section 12-6-510 or 12-6-530, and insurance
premium taxes imposed pursuant to Chapter 7 of Title 38, and are
limited in use to fifty percent of the taxpayer's South Carolina income
tax, insurance premium tax liability. In computing any tax payable
by a taxpayer under Section 38-7-90, the credit allowable under this
section must be treated as a premium tax paid under Section 38-7-20.
(B) The department shall rank and designate the state's counties by
December thirty-first each year using data from the South Carolina
Employment Security Commission and the United States Department
of Commerce. The counties are ranked using data from the most
recent thirty-six month period with equal weight given to
unemployment rate and per capita income as follows:
(1) The twelve counties with a combination of the highest
unemployment rate and lowest per capita income are designated least
developed counties.
(2) The twelve counties with a combination of the next highest
unemployment rate and next lowest per capita income are designated
under developed counties.
(3) The eleven counties with a combination of the next highest
unemployment rate and the next lowest per capita income are
designated moderately developed counties.
(4) The eleven counties with a combination of the lowest
unemployment rate and the highest per capita income are designated
developed counties. The designation by the department is effective
for corporate taxable years which begin after the date of designation.
(5)(a) A county, any portion of which is located within
twenty-five miles of the boundaries of an applicable military
installation or applicable federal facility as defined in Section
12-6-3450(1), shall receive the benefits of the next increased credit
designation for five years beginning with the year in which the
military installation or federal facility became an applicable military
installation or applicable federal facility as defined in Section
12-6-3450(1), with the additional requirement that the military
installation must have reduced employment on the installation of at
least three thousand employees.
(b) For a county in which is located an applicable military
installation or applicable federal facility meeting the requirements for
the increased credit provided in subitem (a) of this item, the credit
allowed is two tiers higher than the credit for which the county would
otherwise qualify for five years beginning with the year the
installation or facility meets the requirements.
(c) Notwithstanding the designations in Section 12-6-3360,
Laurens, Cherokee, and Union Counties shall qualify for the next
increased credit designation.
(d) In a county where less than five percent of the work force
is in manufacturing, the credit allowed is one tier higher than the
credit for which the county would otherwise qualify.
(C) Subject to the conditions provided in subsection (N) of this
section, a job tax credit is allowed for five years beginning in year
two after the creation of the job for each new full-time job created if
the minimum level of new jobs is maintained. The credit is only
available to taxpayers that increase employment by ten or more
full-time jobs, and no credit is allowed for the year or any subsequent
year in which the net employment increase falls below the minimum
level of ten. The amount of the initial job credit is as follows:
(1) Four thousand five hundred dollars for each new full-time
job created in least developed counties and in economic impact
zones.
(2) Three thousand five hundred dollars for each new full-time
job created in under developed counties.
(3) Two thousand five hundred dollars for each new full-time
job created in moderately developed counties.
(4) One thousand five hundred dollars for each new full-time
job created in developed counties.
(D) If the taxpayer qualifying for the new jobs credit under
subsection (C) creates additional new full-time jobs in years two
through six, the taxpayer may obtain a credit for those new jobs for
five years following the year in which the job is created. The amount
of the credit for each new full-time job is the same as provided in
subsection (C).
(E) Taxpayers which qualify for the job tax credit provided in
subsection (C) and which are located in a business or industrial park
jointly established and developed by a group of counties pursuant to
Section 13 of Article VIII of the Constitution of this State are allowed
an additional one thousand dollar credit for each new full-time job
created. This additional credit is permitted for five years beginning
in the taxable year following the creation of the job.
(F)(1) The number of new and additional new full-time jobs is
determined by comparing the monthly average number of full-time
employees subject to South Carolina income tax withholding in the
applicable county for the taxable year with the monthly average in
the prior taxable year. For purposes of calculating the monthly
average number of full-time employees in the first year of operation
in this State, a taxpayer may use the actual months in operation or a
full twelve-month period. If a taxpayer's business is in operation for
less than twelve months a year, the number of new and additional
new full-time jobs is determined using the monthly average for the
months the business is in operation.
(2)(a) A taxpayer who makes a capital investment of at least
fifty million dollars at a single site within a three-year period may
elect to have the number of new and additional new full-time jobs
determined by comparing the monthly average number of full-time
jobs subject to South Carolina income tax withholding at the site for
the taxable year with the monthly average for the prior taxable year.
(b) For purposes of this item, 'single site' means a
stand-alone building whether or not several stand-alone buildings are
located in one geographical location.
(c) The calculation of new and additional jobs provided for
in this item is allowed for only a five-year period commencing in the
year in which the fifty million dollars of capital investment is
completed.
(d) For purposes of this subsection a 'new job' does not
include a job transferred from one site to another site by the taxpayer
or a related person. A related person includes any entity or person
that bears a relationship to the taxpayer as set forth in Section 267 of
the Internal Revenue Code. However, this exclusion of a new job
created by a job transferred from one site to another site does not
extend to a job created at a new or expanded facility located in a
county in which is located an 'applicable federal facility' as defined
in Section 12-6-3450(A)(1)(b).
(G) Except for credits carried forward under subsection (H), the
credits available under this section are only allowed for the job level
that is maintained in the taxable year that the credit is claimed. If the
job level for which a credit was claimed decreases, the five-year
period for eligibility for the credit continues to run.
(H) A credit claimed under this section but not used in a taxable
year may be carried forward for fifteen years from the taxable year
in which the credit is earned by the taxpayer. Credits which are
carried forward must be used in the order earned and before jobs
credits claimed in the current year.
(I) The merger, consolidation, or reorganization of a taxpayer
where tax attributes survive does not create new eligibility in a
succeeding taxpayer, but unused job tax credits may be transferred
and continued by the succeeding taxpayer subject to the limitations
of Section 12-6-3320. In addition, a taxpayer may assign its rights to
its jobs tax credit to another taxpayer if it transfers all, or
substantially all, of the assets of the taxpayer or all, or substantially
all, of the assets of a trade or business or operating division of a
taxpayer related to the generation of the jobs tax credits to that
taxpayer if the required number of new jobs is maintained for that
amount of credit. No taxpayer is allowed a jobs tax credit if the net
employment increase for that taxpayer falls below ten. The
appropriate agency shall determine whether or not qualifying net
increases or decreases have occurred and may require reports,
promulgate rules or regulations, and hold hearings needed for
substantiation and qualification.
(J) For a taxpayer which plans a significant expansion in its labor
forces at a location in this State, the appropriate agency shall
prescribe certification procedures to ensure that the taxpayer can
claim credits in future years even if a particular county is removed
from the list of least developed, under developed, or moderately
developed counties, or if a particular county is removed from the
list of economic impact zones.
(K)(1) In addition to those credits allowed under subsection (C) of
this section a corporation, partnership, or limited liability company
that qualifies for a credit under this section as an S corporation,
partnership, or limited liability company, entitles each shareholder of
the S corporation, partner of the partnership, or member of the
limited liability company to a nonrefundable credit against taxes
imposed pursuant to Section 12-6-510.
(2) The amount of the credit allowed a shareholder, partner, or
owner of a limited liability company by this subsection is equal to the
shareholder's percentage of stock ownership, partner's interest in the
partnership, or member's interest in the limited liability company for
the taxable year multiplied by the amount of the credit the taxpayer
would have been entitled to if it were taxed as a corporation.
(3) A credit claimed under this subsection but not used in a
taxable year may be carried forward for fifteen years from the close
of the tax year in which the credit is earned by the S corporation,
partnership, or limited liability company. However, the credit
established by this section taken in one tax year may not exceed fifty
percent of the taxpayer's tax liability under Section 12-6-510.
(L) Notwithstanding any other provision of this section, a county
with a population under twenty-five thousand as determined by the
most recent United States Census shall receive the next increased
credit designation for purposes of the credit allowed by this section.
(M) As used in this section:
(1) 'Taxpayer' means a sole proprietor, partnership, corporation
of any classification, limited liability company, or association taxable
as a business entity which is subject to South Carolina taxes as
contained in Sections 12-6-510 and 12-6-530 and Chapter 7 of Title
38.
(2) 'Appropriate agency' means the Department of Revenue for
corporations subject to tax under Section 12-6-530 and the
Department of Insurance for corporations subject to the premium tax
under Chapter 7 of Title 38.
(3) 'New job' means a job created in this State at the time a new
facility or an expansion is initially staffed. The term does not include
a job created when an employee is shifted from an existing location
in this State to a new or expanded facility whether the transferred job
is from, or to, a facility of the taxpayer or a related person. A related
person shall include any entity or person that bears a relationship to
the taxpayer as set forth in Section 267 of the Internal Revenue Code.
However, this exclusion of a new job created by employee shifting
does not extend to a job created at a new or expanded facility located
in a county in which is located an 'applicable federal facility' as
defined in Section 12-6-3450(A)(1)(b). The term 'new job' also
includes existing jobs at a facility of an employer which are reinstated
after the employer has rebuilt the facility due to its destruction by
accidental fire, natural disaster, or act of God. Destruction for
purposes of this provision means that more than fifty percent of the
facility was destroyed. The year of reinstatement is considered to be
the year of creation of the job. All such jobs so reinstated qualify for
the credit under this section, and no comparison is required to be
made between the number of full-time jobs of the employer in the
taxable year and the number of full-time jobs of the employer with
the corresponding period of the prior taxable year.
(4) '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.
(5) 'Manufacturing facility' means an establishment where
tangible personal property is produced or assembled.
(6) 'Processing facility' means an establishment engaged in
services such as manufacturing-related, computer-related,
communication-related, energy-related, or transportation-related
services, but the term 'processing facility' does not include an
establishment where retail sales of tangible personal property or
services are made to retail customers. The term also includes a
business entity engaged in processing agricultural, aquacultural, or
maricultural products.
(7) 'Warehousing facility' means an establishment where
tangible personal property is stored but does not include any
establishment where retail sales of tangible personal property are
made to retail customers.
(8) 'Distribution facility' means an establishment where
shipments of tangible personal property are processed for delivery
to customers. The term does not include an establishment where
retail sales of tangible personal property are made to retail customers
on more than twelve days a year except for a facility which processes
customer sales orders by mail, telephone, or electronic means, if the
facility also processes shipments of tangible personal property to
customers and if at least seventy-five percent of the dollar amount of
goods sold through the facility are sold to customers outside of South
Carolina.
(9) 'Research and development facility' means an establishment
engaged in laboratory, scientific, or experimental testing and
development related to new products, new uses for existing products,
or improving existing products. The term does not include an
establishment engaged in efficiency surveys, management studies,
consumer surveys, economic surveys, advertising, promotion, or
research in connection with literary, historical, or similar projects.
(10) 'Corporate office facility' means the location where
corporate managerial, professional, technical, and administrative
personnel are domiciled and employed, and where corporate
financial, personnel, legal, technical, support services, and other
business functions are handled. Support services include, but are not
limited to, claims processing, data entry, word processing, sales order
processing, and telemarketing. The term does not include an
establishment where retail sales of tangible personal property or retail
services are made to retail customers except for a facility which
processes customer sales orders by mail, telephone, or electronic
means, if the facility also processes shipments of tangible personal
property to customers and if at least seventy-five percent of the dollar
amount of goods sold through the facility are sold to customers
outside of this State.
(11) The terms 'retail sales' and 'tangible personal property' for
purposes of this section are defined in Chapter 36 of this title.
(12) 'Tourism facility' means an establishment used for a theme
park; amusement park; historical, educational, or trade museum;
botanical garden; cultural center; theater; motion picture production
studio; convention center; arena; auditorium; or a spectator or
participatory sports facility; and similar establishments where
entertainment, education, or recreation is provided to the general
public. Tourism facility also includes new hotel and motel
construction, except that to qualify for the credits allowed by this
section and regardless of the county in which the facility is located,
the number of new jobs that must be created by the new hotel or
motel is twenty or more. It does not include that portion of an
establishment where retail merchandise or retail services are sold
directly to retail customers.
(13) 'Qualifying service-related facility' means (a) an
establishment engaged in an activity or activities listed under the
Standard Industrial Classification (SIC) Code 80 according to the
Federal Office of Management and Budget Standard Industrial
Classification Manual, 1987 edition; or, (b) a business for which over
fifty percent of the gross receipts are from providing services, as
opposed to manufacturing or selling or dealing in tangible personal
property and which creates at least two hundred fifty jobs at a single
location.
(14) 'Computer software development facility' includes
establishments primarily engaged in the design, development, and
production of prepackaged computer software. Important products
of this industry include operating, utility, and applications programs.
'Computer software development facility' also includes
establishments providing services such as preparation of software
documentation for the user, installation of software for the user, and
training the user in the use of the software.
(15) 'Motion picture and video tape production facility' includes
establishments primarily engaged in the production of theatrical and
nontheatrical motion pictures and video tapes for exhibition or sale,
including education, industrial, and religious films. 'Motion picture
and video tape production facility' also includes establishments
engaged in both production and distribution.
(16) 'Water transportation' includes establishments engaged in
freight and passenger transportation on the open seas or inland
waters, and establishments furnishing such incidental services as
lighterage, towing, and canal operation. 'Water transportation
facility' also includes excursion boats, sightseeing boats, and water
taxis. 'Water transportation facility' also includes the following:
(a) 'deep sea foreign transportation of freight', which
includes establishments engaged primarily in operating vessels for
the transportation of freight on the deep seas between the United
States and foreign ports. 'Deep sea transportation of freight' also
includes establishments operating vessels for the transportation of
freight which travel to foreign ports and also to noncontiguous
territories;
(b) 'deep sea domestic transportation of freight', which
includes establishments primarily engaged in operating vessels for
the transportation of freight on the deep seas between ports of the
United States, the Panama Canal Zone, Puerto Rico, and United
States island possessions or protectorates. Also included are
operations limited to the coasts of Alaska, Hawaii, or Puerto Rico;
(c) 'water transportation of freight, not elsewhere classified',
which includes establishments primarily engaged in the
transportation of freight on all inland waterways, including the
intracoastal waterways on the Atlantic and Gulf Coasts;
(d) 'deep sea transportation of passengers, except by ferry',
which includes establishments primarily engaged in operating vessels
for the transportation of passengers on the deep sea;
(e) 'ferries', which includes establishments primarily engaged
in operating ferries for the transportation of passengers or vehicles;
(f) 'water transportation of passengers, not elsewhere
classified', which includes establishments primarily engaged in
furnishing water transportation of passengers, not elsewhere
classified;
(g) 'marine cargo handling', which includes establishments
primarily engaged in activities directly related to marine cargo
handling from the time cargo, for or from a vessel, arrives at shipside,
dock, pier, terminal, staging area, or in-transit area until cargo
loading or unloading operations are completed. Included in this
industry are establishments primarily engaged in the transits of cargo
between ships and barges, trucks, trains, pipelines, and wharfs.
Cargo handling operations carried on by transportation companies
and separately reported are also included here. 'Marine cargo
handling' also includes the operation and maintenance of piers,
docks, and associated buildings and facilities;
(h) 'towing and tugboat services', which includes
establishments primarily engaged in furnishing marine towing and
tugboat services in the performance of auxiliary or terminal services
in harbor areas. The vessels used in performing these services do not
carry cargo or passengers;
(i) 'marinas', which includes establishments primarily
engaged in operating marinas. These establishments rent boat slips
and store boats, and generally perform a range of other services
including cleaning and incidental boat repair. They frequently sell
food, fuel, and fishing supplies, and may sell boats; and
(j) 'water transportation services, not elsewhere classified',
which includes establishments primarily engaged in furnishing
miscellaneous services incidental to water transportation, not
elsewhere classified, such as lighterage, boat hiring, except for
pleasure; chartering of vessels; canal operations; ship cleaning,
except hold cleaning; and steamship leasing.
(N) The maximum aggregate credit that may be claimed in
any tax year for a single employee under this section and Section
12-6-3470(A)(1) is five thousand five hundred dollars."
SECTION 2. Section 12-6-3410 of the 1976 Code is amended to
read:
"Section 12-6-3410(A). A corporation establishing a corporate
headquarters in this State, or expanding or adding to an existing
corporate headquarters, is allowed a credit against any tax due
pursuant to Section 12-6-530 or Section 12-20-50 as set forth in this
section.
(B) In order to qualify for this credit, each of the following criteria
must be satisfied:
(1) The qualifying real property costs of the corporate
headquarters establishment, expansion, or addition must be at least
fifty thousand dollars. Qualifying real property costs are:
(a) costs incurred in the design, preparation, and development
of establishing, expanding, or adding to a corporate headquarters, and
(b)(i) direct construction costs, or
(ii) with respect to leased facilities, direct lease costs during
the first five years of operations for the corporate headquarters.
(2) The headquarters establishment, expansion, or addition must
result in the creation of:
(a)(i) at least forty new jobs performing headquarters
related functions and services or research and development related
functions and services. These jobs must be permanent, full-time
positions located in this State, and
(b)(ii) at least twenty of the above referenced
new jobs must be classified as headquarters staff
employees.; or
(b)(i) at least fifteen new jobs performing headquarters
related functions and services or research and development related
functions and services. These jobs must be permanent, full-time
positions located in this State;
(ii) at least eight of the above referenced new jobs must be
classified as headquarters staff employees; and
(iii) annual gross income earned outside of South Carolina
of at least five million dollars for the year in which the credit is
claimed.
(C) The amount of the credit is equal to twenty percent of the
qualifying real property costs listed in subsection (B)(1).
(D) A headquarters establishment, expansion, or addition which
meets the criteria of subsection (B) of this section is entitled to an
additional credit equal to twenty percent of cost for tangible personal
property if the following conditions are met:
(1) the personal property is:
(a) capitalized as personal property for income tax purposes
under the Internal Revenue Code; and
(b) purchased for the establishment, expansion, or addition of
a corporate headquarters, or for the establishment, expansion, or
addition of a research and development facility which is part of the
same corporate project as the headquarters establishment, addition,
or expansion; and
(c) used for corporate headquarters related functions and
services or research and development related functions and services
in South Carolina.
(2) The establishment, expansion, or addition of a corporate
headquarters or research and development facility must result in:
(a) the creation of at least seventy-five new full-time jobs
performing headquarters related functions and services or research
and development related functions and services which have an
average cash compensation level of more than one and one-half times
the per capita income of this State at the time the jobs are filled; and
(b) an average South Carolina employee cash compensation
level for all employees in this State of more than twice the per capita
income in the State at the time the newly created jobs are filled.
(E)(1)(a) For facilities which are constructed, the credit can only be
claimed for the taxable year when the headquarters establishment,
expansion, or addition, and the research and development facility
establishment, expansion, or addition, in the case of corporations
qualifying under subsection (D), is placed in service for federal
income tax purposes. For construction projects completed in phases
and placed in service for federal income tax purposes in more than
one taxable year, the corporation can claim the credit on the South
Carolina income tax return for the taxable year in which property,
which qualifies for the credit, is placed in service. Credits cannot be
obtained for costs incurred more than three taxable years after the
taxable year in which the first property for which the credit is claimed
is placed in service. Notwithstanding any other provisions of this
subsection, if the entire project is not completed by the end of the
three taxable years, the corporation may claim the credit for all
property placed in service within the time limitation set forth in the
preceding sentence. The credit may not be claimed for personal
property which is replacing personal property for which the credit can
be claimed. The department may for good cause extend the time for
incurring additional costs and for claiming the credit if the project is
not completed within the time period allowed by this subsection. For
purposes of this subsection the term 'property' includes qualifying
real property and, where the conditions of subsection (D) are met,
personal property.
(b) for leased real property the credit must be claimed in the
taxable year in which the first direct lease costs are incurred.
(2) The corporation must meet the staffing requirements of
subsections (B)(2) and, if applicable, (D)(2), by the end of the second
taxable year following the last taxable year for which the credit is
claimed. The corporation must have documented plans to meet the
initial staffing requirements at the time the credit is claimed. If the
corporation fails to meet the staffing requirements within the time
required by this subsection, the corporation must increase its tax
liability for the current taxable year by an amount equal to the
amount of credit, or any portion of the credit for which the
corporation would not qualify, which was used to reduce tax in the
earlier years.
(F) The credit provided in this section is nonrefundable, but an
unused credit may be carried forward for ten years. An unused credit
may be carried forward fifteen years if the criteria set forth in
subsection (D)(2) are met. No credit may be claimed for a taxable
year during which the corporation fails to meet the qualifying
employment requirements provided in this section and the carry
forward period is not extended for any year in which the credit may
not be claimed for failure to meet the employment requirements. The
credit may be claimed for a taxable year in the unextended carry
forward period if the corporation requalifies for the credit by meeting
the employment requirements during that taxable year.
(G) If a fee-in-lieu arrangement under Section 4-29-67 is entered
into with respect to all or part of property involving a corporate
headquarters, and the corporation claiming the credit provided under
this section is treated as the owner of the property for federal income
tax purposes, then the corporation must be treated as the owner of the
property for purposes of the credit provided by this section.
(H) To the extent that this credit applies to the cost of certain
property, the basis of the property for South Carolina income tax
purposes must be reduced by the amount of the credit claimed with
respect to the property. This basis reduction does not reduce the
basis or limit or disallow any depreciation allowable under the law of
this State for other than income tax purposes, even if the depreciation
is based upon or otherwise relates to income tax depreciation
including, without limitation, basis or depreciation which is allowable
under this title for property tax purposes. If the corporation fails to
meet the staffing requirements of subsection (E)(2), the corporation
may increase the basis of the property by the amount of the original
basis reduction with regard to that property in the year in which the
credit is recaptured.
(I) The amount of a credit allowed under this section must be
reduced by the amount of any past-due debt owed this State by the
taxpayer.
(J) As used in this section:
(1) 'Corporate headquarters' means the facility or portion of a
facility where corporate staff employees are physically employed,
and where the majority of the company's financial, personnel, legal,
planning, or other headquarters related functions are handled either
on a regional or national basis. A corporate headquarters must be a
regional corporate headquarters or a national corporate headquarters
as defined below:
(a) National corporate headquarters must be the sole
corporate headquarters in the nation and handle headquarters related
functions on a national basis. A national headquarters shall be
deemed to handle headquarters related functions on a national basis
from this State if the corporation has a facility in this State from
which the corporation engages in interstate commerce by providing
goods or services for customers outside of this State in return for
compensation.
(b) Regional corporate headquarters must be the sole
corporate headquarters within the region and must handle
headquarters related functions on a regional basis. For purposes of
this section, 'region' or 'regional' means a geographic area comprised
of either:
(i) at least five states, including this State, or
(ii) two or more states, including this State, if the entire
business operations of the corporation are performed within fewer
than five states.
(2) 'New job' means a job created by an employer in this State
at the time a new facility, expansion, or addition is initially staffed,
but does not include a job created when an employee is shifted from
an existing location in this State to work in a new or expanded
facility. An employee may be employed at a temporary location in
this State pending completion of the new facility, expansion, or
addition.
(3) '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
corporate 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 initially hired for or transferred to the corporate
headquarters or research and development facility in this State.
(4) 'Headquarters related functions and services' are those
functions involving financial, personnel, administrative, legal,
planning, or similar business functions.
(5) 'Headquarters staff employees' means executive,
administrative, or professional workers performing headquarters
related functions and services.
(a) An executive employee is a full-time employee in which
at least eighty percent of his business functions involve the
management of the enterprise and directing the work of at least two
employees. An executive employee has the authority to hire and fire
or has the authority to make recommendations related to hiring,
firing, advancement, and promotion decisions, and an executive
employee must customarily exercise discretionary powers.
(b) An administrative employee is a full-time employee who
is not involved in manual work and whose work is directly related to
management policies or general headquarters operations. An
administrative employee must customarily exercise discretion and
independent judgment.
(c) A professional employee is an employee whose primary
duty is work requiring knowledge of an advanced type in a field of
science or learning. This knowledge is characterized by a prolonged
course of specialized study. The work must be original and creative
in nature, and the work cannot be standardized over a specific period
of time. The work must require consistent exercise of discretion and
the employee must spend at least eighty percent of the time
performing headquarters related functions and services.
(6) 'Research and development' means laboratory, scientific, or
experimental testing and development related to new products, new
uses for existing products, or improving existing products, but
'research and development' does not include efficiency surveys,
management studies, consumer surveys, economic surveys,
advertising, promotion, or research in connection with literary,
historical, or similar projects.
(7) 'Research and development facility' means the building or
buildings or portion of a building where research and development
functions and services are physically located.
(8) 'Direct lease costs' are cash lease payments. The term does
not include any accrued, but unpaid, costs."
SECTION 3. Section 12-37-220(B)(32) of the 1976 Code is
amended to read:
"Section 12-37-220(B)(32). All new corporate headquarters,
corporate office facilities, distribution facilities, and all additions to
existing corporate headquarters, corporate office facilities, or
distribution facilities located in South Carolina, established or
constructed, or placed in service, after June 27, 1988, are exempt
from nonschool county ad valorem taxes for a period of five years
from the time of establishment, construction, or being placed in
service if the cost of the new construction or additions is fifty
thousand dollars or more and either:
(i) seventy-five or more new jobs which are
full-time or one hundred fifty or more substantially equivalent jobs
are created in South Carolina.; or
(ii) fifteen or more new jobs which are full-time or
thirty or more substantially equivalent jobs are created in South
Carolina and the corporation has gross income earned outside of
South Carolina of at least five million dollars for each year in which
the credit is claimed.
For the purpose of this exemption, the term:
(1) 'new job' means any job created by an employer in South
Carolina at the time a new facility or an expansion is initially staffed,
but does not include a job created when an employee is shifted from
an existing South Carolina location to work in a new or expanded
facility;
(2)(a) '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 initially hired for or transferred to the South Carolina corporate
headquarters, corporate office facility, or distribution facility and
worked at a rented facility pending construction of a corporate
headquarters, corporate office facility, or distribution facility;
(b) 'substantially equivalent' means a job requiring a
minimum of twenty hours of an employee's time a week for the entire
normal year of company's operations or a job requiring a minimum
of twenty hours of an employee's time for a week for a year in which
the employee was initially hired for or transferred to the South
Carolina corporate headquarters, corporate office facility, or
distribution facility and worked at a rented facility pending
construction of a corporate headquarters, corporate office facility, or
distribution facility;
(3) 'corporate headquarters' means the location where corporate
staff members or employees are domiciled and employed, and where
the majority of the company's financial, personnel, legal, planning,
or other business functions are handled either on a regional or
national basis and must be the sole such corporate headquarters
within the region or nation;
(4) 'staff employee' or 'staff member' means executive,
administrative, or professional worker. At least eighty percent of an
executive employee's business functions must involve the
management of the enterprise and directing the work of at least two
employees. An executive employee has the authority to hire and fire
or has the authority to make recommendations related to hiring,
firing, advancement, and promotion decisions, and an executive
employee must customarily exercise discretionary powers. An
administrative employee is an employee who is not involved in
manual work and whose work is directly related to management
policies or general business operations. An administrative employee
must customarily exercise discretion and independent judgment. A
professional employee is an employee whose primary duty is work
requiring knowledge of an advanced type in a field of science or
learning. This knowledge is characterized by a prolonged course of
specialized study. The work must be original and creative in nature,
and the work cannot be standardized over a specific period of time.
The work must require consistent exercise of discretion;
(5) 'region' or 'regional' means a geographic area comprised of
either:
(a) at least five states, including South Carolina, or
(b) two or more states, including South Carolina, if the entire
business operations of the corporation are performed within fewer
than five states;
(6) 'corporate office facility' means the location where
corporate managerial, professional, technical, and administrative
personnel are domiciled and employed, and where corporate
financial, personnel, legal, technical, support services, and other
business functions are handled. Support services include, but are not
limited to, claims processing, data entry, word processing, sales order
processing, and telemarketing;
(7) 'distribution facility' means an establishment where
shipments of tangible personal property are processed for delivery to
customers, but the term 'distribution facility' does not include an
establishment which operates as a location where retail sales of
tangible personal property are made to customers. A distribution
facility includes establishments which process customer sales orders
by mail, telephone, or electronic means, if the establishment also
processes shipments of tangible personal property to customers. The
terms 'retail sale', and 'tangible personal property', for purposes of
this definition, have those meanings as contained in Chapter 36 of
Title 12.
Certification of the required investment and the number of new jobs
which are full-time or substantially equivalent and which are created
must be provided by the South Carolina Department of Revenue to
the appropriate local tax officials."
SECTION 4. This act takes effect upon approval by the Governor.
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