H*4851(Rat #0540, Act #0432 of 1998)  General Bill, By Boan
 A BILL TO AMEND ARTICLE 3, CHAPTER 4, TITLE 12, CODE OF LAWS OF SOUTH
 CAROLINA, 1976, RELATING TO GENERAL POWERS AND DUTIES OF THE STATE TAX
 COMMISSION BY ADDING SECTION 12-4-325 SO AS TO REQUIRE THE STATE TO DEFEND
 EMPLOYEES AND OFFICERS OF THE DEPARTMENT OF REVENUE AGAINST LIABILITY ARISING
 OUT OF THEIR EMPLOYMENT AND INDEMNIFY THEM FROM RESULTING LOSS; TO AMEND
 SECTION 12-4-330, AS AMENDED, RELATING TO A WITNESS APPEARING BEFORE THE
 DEPARTMENT OF REVENUE, SO AS TO PROVIDE THAT THE COMPENSATION OR FEE OF THE
 WITNESS, OR THAT OF AN OFFICER SERVING PROCESS, BE PAID FROM INCOME TAX
 REVENUES.-AMENDED TITLE

   03/19/98  House  Introduced and read first time HJ-58
   03/19/98  House  Referred to Committee on Ways and Means HJ-59
   04/08/98  House  Committee report: Favorable with amendment Ways
                     and Means HJ-16
   04/14/98  House  Amended HJ-45
   04/14/98  House  Read second time HJ-46
   04/15/98  House  Read third time and sent to Senate HJ-22
   04/21/98  Senate Introduced and read first time SJ-25
   04/21/98  Senate Referred to Committee on Finance SJ-25
   05/20/98  Senate Recalled from Committee on Finance SJ-18
   05/26/98  Senate Amended SJ-63
   05/26/98  Senate Read second time SJ-63
   05/26/98  Senate Ordered to third reading with notice of
                     amendments SJ-63
   06/04/98  Senate Amended SJ-32
   06/04/98  Senate Read third time and returned to House with
                     amendments SJ-32
   06/04/98  House  Concurred in Senate amendment and enrolled HJ-108
   06/04/98  House   Reconsider vote whereby concurred in Senate
                     amendment and enrolled HJ-208
   06/04/98  House  Non-concurrence in Senate amendment HJ-208
   06/04/98  Senate Senate insists upon amendment and conference
                     committee appointed Sens. Drummond, Land,
                     McConnell SJ-223
   06/04/98  House  Conference committee appointed Reps. H. Brown,
                     Boan & Young-Brickell HJ-211
   06/16/98  House  Conference report received and adopted HJ-66
   06/16/98  Senate Conference report received and adopted
   06/16/98  House  Ordered enrolled for ratification HJ-154
   06/17/98         Ratified R 540
   06/23/98         Signed By Governor
   06/23/98         Effective date 06/23/98
   07/07/98         Copies available
   07/07/98         Act No. 432

AN ACT TO AMEND ARTICLE 3, CHAPTER 4, TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO GENERAL POWERS AND DUTIES OF THE STATE TAX COMMISSION BY ADDING SECTION 12-4-325 SO AS TO REQUIRE THE STATE TO DEFEND EMPLOYEES AND OFFICERS OF THE DEPARTMENT OF REVENUE AGAINST LIABILITY ARISING OUT OF THEIR EMPLOYMENT AND INDEMNIFY THEM FROM RESULTING LOSS; TO AMEND SECTION 12-4-330, AS AMENDED, RELATING TO A WITNESS APPEARING BEFORE THE DEPARTMENT OF REVENUE, SO AS TO PROVIDE THAT THE COMPENSATION OR FEE OF THE WITNESS, OR THAT OF AN OFFICER SERVING PROCESS, BE PAID FROM INCOME TAX REVENUES; TO AMEND SECTION 12-6-3360, AS AMENDED, RELATING TO JOB TAX CREDIT, SO AS TO REDEFINE CORPORATE OFFICE FACILITY AND "QUALIFYING SERVICE-RELATED FACILITY", EFFECTIVE FOR PROPERTY TAX YEARS BEGINNING AFTER 1998; TO AMEND SECTION 12-6-3370, RELATING TO A STATE INCOME TAX CREDIT IN CONNECTION WITH A WATER CONTROL SYSTEM, SO AS TO FURTHER PROVIDE FOR THE REQUIREMENTS IN ORDER TO QUALIFY FOR THE CREDIT; TO AMEND SECTION 12-6-4970, RELATING TO TIME FOR FILING OF TAX RETURN, SO AS TO ESTABLISH TIMES FOR FILING BY A FOREIGN CORPORATION WITHOUT A PLACE OF BUSINESS IN THE UNITED STATES AND BY ELECTRONIC FILING; TO AMEND SECTION 12-6-5550, RELATING TO INCOME TAX REFUNDS, SO AS TO PROVIDE THAT FEDERAL AND STATE REFUNDS ARE PAYABLE TO THE SURVIVING SPOUSE OF A DECEASED TAXPAYER; TO AMEND SECTION 12-11-30, RELATING TO THE INCOME TAX REPLACING MOST OTHER TAXES AGAINST BANKS, SO AS TO CHANGE REFERENCES IN THE SECTION FROM "DOCUMENTARY STAMP TAX" TO "DEED RECORDING FEE"; TO ADD SECTION 12-20-175 SO AS TO ALLOW CORPORATION LICENSE FEES TO BE REDUCED BY CERTAIN INCOME TAX CREDITS; TO AMEND SECTION 12-21-2550, RELATING TO STAMP AND BUSINESS LICENSE TAXES, SO AS TO DELETE THE TEN PERCENT PENALTIES FOR FAILURE TO MAKE A RETURN OR TO TIMELY PAY THE TAX DUE; TO AMEND SECTION 12-21-6580, RELATING TO CALCULATION OF ADMISSIONS TAX ON EXPANDED FACILITIES, SO AS TO UPDATE CROSS REFERENCES; TO AMEND SECTION 12-36-1340, RELATING TO COLLECTION OF SALES AND USE TAX BY A RETAIL SELLER, SO AS TO REVISE THE CIRCUMSTANCES WHEN A SELLER MUST COLLECT AND REMIT TAX AND OBTAIN A RETAIL LICENSE FROM THE DEPARTMENT; TO AMEND SECTION 12-37-2860, AS AMENDED, RELATING TO ONE-TIME FEES ON SEMITRAILERS AND TRAILERS OF MOTOR CARRIERS, SO AS TO ALLOW THE DEPARTMENT TO KEEP AND SPEND THE FEE REVENUE FOR ADMINISTRATION OF THE FEE AND PROVIDE THAT THE DEPARTMENT OF PUBLIC SAFETY DESIGN A PERMANENT TAG FOR DISPLAY ON THE REAR EXTERIOR OF THE TRAILER OR SEMITRAILER; TO AMEND SECTION 12-54-25, AS AMENDED, RELATING TO INTEREST DUE ON REFUNDED OR CREDITED TAX, SO AS TO PROVIDE THE INTEREST BE PAID FROM REVENUE RAISED BY THE SAME TYPE TAX AS THAT BEING REFUNDED OR CREDITED; TO AMEND SECTION 12-54-55, AS AMENDED, RELATING TO PENALTIES FOR THE UNDERPAYMENT OF DECLARATION OF INCOME TAX, SO AS TO FURTHER PROVIDE FOR APPLICATION OF THE PENALTY; TO AMEND SECTION 12-54-160, RELATING TO WAIVER BY THE DEPARTMENT OF REVENUE OF PENALTIES ON PAST DUE TAXES, SO AS TO ALLOW THE WAIVER, DISMISSAL, OR REDUCTION OF PENALTIES UNLESS SPECIFICALLY PROHIBITED OTHERWISE; TO AMEND SECTION 12-56-90, RELATING TO SET-OFF DEBT COLLECTION, SO AS TO PROVIDE THAT THE EXCHANGE OF INFORMATION AMONG THE DEPARTMENT OF REVENUE, THE DEBTOR, AND THE CLAIMANT AGENCY IS LAWFUL; TO AMEND SECTION 44-96-170, AS AMENDED, RELATING TO SOLID WASTE REGULATION AND DISPOSAL, SO AS TO PROVIDE FOR A REFUND OF THE NEW TIRE FEE FOR EACH WASTE TIRE TAKEN TO A WASTE TIRE DISPOSAL FACILITY AND DELETE REQUIREMENTS THAT CERTAIN REFUNDS MUST BE CHARGED AGAINST A COUNTY'S DISTRIBUTION; TO AMEND SECTION 4-10-90, AS AMENDED, RELATING TO ALLOCATIONS TO LOCAL GOVERNING BODIES FROM THE PROPERTY TAX CREDIT FUND AND COUNTY/MUNICIPAL REVENUE FUND, SO AS TO REQUIRE PROSPECTIVE CORRECTION OF MISALLOCATIONS DUE TO CITY OR COUNTY CODE ERRORS, FOR TAX YEARS AFTER 1998; AND TO AMEND SECTION 4-12-20, RELATING TO LEASE PROVISIONS FOR FEES IN LIEU OF PROPERTY TAXES, SO AS TO ALLOW THE PARTIES TO THE LEASE AGREEMENTS TO BE OTHER THAN A COUNTY AND OTHER THAN AN INDUSTRY.

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

Defense and indemnification of department employees

SECTION 1. Article 3, Chapter 4, Title 12 of the 1976 Code is amended by adding:

"Section 12-4-325. (A) The State shall defend employees and officers of the Department of Revenue against liability arising out of their actions within the scope of their employment and indemnify them from resulting loss when they are sued in their official or individual capacities, or both.

(B) Department of Revenue employees and officers are acting within the scope of their employment when administering any South Carolina statute which has not been held to be unconstitutional or unlawful by a final decision of a court of competent jurisdiction. For purposes of this section, a final decision is the decision of a court declaring the South Carolina statute unconstitutional or otherwise unlawful and from which the appropriate officials of this State may not or do not take an appeal or request a rehearing."

Witness and service fees

SECTION 2. Section 12-4-330(D) of the 1976 Code is amended to read:

"(D) An officer who serves summons or subpoenas and a witness appearing before the Department of Revenue receive the same compensation as an officer and a witness in the circuit court. The department may incur and pay the expense of obtaining expert witnesses or of other evidence for use by the department in a judicial or administrative proceeding. This compensation and expert witness expense must be paid upon certificate of the department by the State Treasurer, by drawing upon funds from the tax on income as provided by Section 12-6-510."

Job tax credit

SECTION 3. A. Section 12-6-3360(M)(2), (10), and (13) of the 1976 Code, as last amended by Act 143 of 1997, is further amended to read:

"(2) 'Appropriate agency' means the Department of Revenue, except that for taxpayers subject to the premium tax imposed by Chapter 7 of Title 38, it means the Department of Insurance.

(10) 'Corporate office facility' means a corporate headquarters that meets the definition of a 'corporate headquarters' contained in Section 12-6-3410(J)(1).

(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, other than a business engaged in legal, accounting, or investment services or retail sales, which has a net increase of at least:

(i) two hundred fifty jobs at a single location;

(ii) one hundred twenty-five jobs at a single location and the jobs have an average cash compensation level of more than one and one-half times the per capita income in the county where the jobs are located at the time the jobs are filled;

(iii) seventy-five jobs at a single location and the jobs have an average cash compensation level of more than twice the per capita income in the county where the jobs are located at the time the jobs are filled; or

(iv) thirty jobs at a single location and the jobs have an average cash compensation level of more than two and one-half times the per capita income in the county where the jobs are located at the time the jobs are filled.

The per capita income for each county is determined by using the most recent data available from the Board of Economic Advisors. Determination of the required number of jobs is in accordance with the monthly average described in subsection (F)."

B. Notwithstanding any general effective date provided in this act, this section is effective for property tax years beginning after 1998.

Tax credits for water control systems

SECTION 4. Section 12-6-3370(D) of the 1976 Code, as added by Act 76 of 1995, is amended to read:

"(D) To qualify for the credit the taxpayer must obtain a construction permit issued by the Department of Health and Environmental Control or proof of exemption from permit requirements issued by the department, the Natural Resources Conservation Service, or a local Soil and Water Conservation District."

Time to file returns

SECTION 5. Section 12-6-4970 of the 1976 Code, as added by Act 76 of 1995, is amended to read:

"Section 12-6-4970. (A) Returns of taxpayers, except as otherwise provided, must be filed on or before the fifteenth day of the fourth month following the taxable year.

(B) Returns of corporations must be filed on or before the fifteenth day of the third month following the taxable year. Returns for foreign corporations that do not maintain an office or place of business in the United States must be filed on or before the fifteenth day of the sixth month following the taxable year.

(C) Returns of organizations exempt under Internal Revenue Code Section 501 reporting unrelated business income pursuant to Section 12-6-4910(8), must be filed on or before the fifteenth day of the fifth month following the taxable year.

(D) Information returns provided in Section 12-6-4950 must be filed on or before March 15 of each year.

(E) Returns filed electronically have the same due dates as provided in this section."

Income tax refunds belonging to surviving spouse

SECTION 6. Section 12-6-5550 of the 1976 Code, as added by Act 76 of 1995, is amended to read:

"Section 12-6-5550. (A) A federal or state income tax overpayment due to a person who is deceased at the time of the refund is the sole and separate property of the surviving spouse irrespective of the deceased's filing status on the return.

(B) A refund by the United States or any state directly to the surviving spouse operates as a complete acquittal and discharge of liability from suit, claim, or demand of any nature by any heir, distributee, or creditor of the decedent, or by any other person."

Tax on income of banks replaces other taxes

SECTION 7. Section 12-11-30 of the 1976 Code is amended to read:

"Section 12-11-30. The income tax provided for in this chapter is instead of all other taxes on banks, except the use tax, the deed recording fee, and taxes on real property. The real property of a bank is taxed in the place where it is located."

Reduction of license fees

SECTION 8. The 1976 Code is amended by adding:

"Section 12-20-175. License fees may be reduced by credits provided in Section 12-6-3410 or Section 12-6-3480, or both of them."

Stamp and business license tax payable monthly

SECTION 9. Section 12-21-2550 of the 1976 Code is amended to read:

"Section 12-21-2550. (A) The license tax imposed by this article is due and payable in monthly installments on or before the twentieth day of each month. A person liable to the tax shall make a true and correct return to the department, in such form as it prescribes, showing the number and prices of admissions during the previous month, and remit the tax with the return.

(B) If a person fails to make a true and correct return or fails to file the return, the department shall make a return upon the information it is able to obtain."

Calculation of admissions tax on expanded facilities

SECTION 10. Section 12-21-6580 of the 1976 Code, as added by Act 109 of 1997, is amended to read:

"Section 12-21-6580. If a major tourism or recreation facility or a major tourism and recreation area is expanded or improved with an additional twenty million dollar investment being made within an investment period, the amount of admissions tax revenues subject to Sections 12-21-6530 and 12-21-6540 for the benefit period is the amount in excess of the annual admissions tax revenues previously generated by the major tourism or recreation facility, or by all of the tourism or recreation facilities within the major tourism or recreation area, as appropriate. This amount is determined by using the average of the admissions tax revenues generated during the twenty-four months preceding the date of the filing of the certification application."

Collection of tax by retail sellers

SECTION 11. Section 12-36-1340 of the 1976 Code, as added by Act 612 of 1990, is amended to read:

"Section 12-36-1340. Each seller making retail sales of tangible personal property for storage, use, or other consumption in this State shall collect and remit the tax in accordance with this chapter and shall obtain from the department a retail license as provided in this chapter, if the retail seller:

(1) maintains a place of business;

(2) qualifies to do business;

(3) solicits and receives purchases or orders by an agent or salesman; or

(4) distributes catalogs, or other advertising matter, and by reason of that distribution receives and accepts orders from residents within the State."

One-time fees

SECTION 12. Section 12-37-2860 of the 1976 Code, as last amended by Act 125 of 1997, is further amended to read:

"Section 12-37-2860. (A) Instead of the property taxes and registration requirements contained in Sections 56-3-110 and 56-3-700 on semitrailers and trailers of motor carriers as defined in Section 12-37-2810, a one-time fee payable to the Department of Public Safety in the amount of eighty-seven dollars is due on all semitrailers and trailers currently registered and subsequently on each semitrailer and trailer before being placed in service.

(B) Twelve dollars of the one-time fee must be distributed to the Department of Revenue and may be retained by the Department of Revenue and expended in budgeted operations to record and administer the fee. The remaining seventy-five dollars of the fee must be distributed based on the distribution formula contained in Section 12-37-2870 and must occur by the fifteenth day of the month following the month in which the fees are collected.

(C) The fee required by this section is due on or before March 31, 1998, for the initial registration.

(D) The Department of Public Safety shall design a permanent tag for display on the exterior of the rear of the trailer or semitrailer in a conspicuous place."

Interest due on late taxes

SECTION 13. Section 12-54-25(C) of the 1976 Code is amended to read:

"(C)(1) Any tax refunded or credited must include interest on the amount of the credit or refund from the later of either the date the tax was paid or the original due date of the return to either the date the refund was sent or delivered to the taxpayer or the credit made.

(2) This interest must be paid by drawing upon funds from the type of tax being refunded or credited. The funds withdrawn may be expended by the department in the payment of interest on refunds.

(3) Interest is not allowed pursuant to this subsection on an overpayment if it is refunded:

(a) within seventy-five days after the last day prescribed for filing the tax return, without regard to an extension of time for filing;

(b) within seventy-five days after the return is filed, in the case of a return filed after the last date; or

(c) within seventy-five days after the taxpayer files a claim for a credit or refund for the overpayment of tax for the period between the filing of the claim to the payment of the refund."

Interest on underpayment of declaration of estimated tax

SECTION 14. Section 12-54-55 of the 1976 Code, as last amended by Act 76 of 1995, is further amended to read:

"Section 12-54-55. In the case of an underpayment of declaration of estimated tax by an individual, estate, trust, or corporate taxpayer, instead of all other penalties provided by law, there must be added to the tax for the taxable year a penalty to be determined as follows:

(1) In the case of an individual taxpayer, estate, or trust in the same manner as prescribed by the provisions of Internal Revenue Code Section 6654. No interest or penalty is due under this item for underpayments attributable to personal service income earned in another state on which income tax due the other state was withheld.

(2) In the case of a corporate taxpayer, in the same manner as prescribed by the provisions of Internal Revenue Code Section 6655 and applicable regulations, except that:

(a) the small amount provisions are one hundred dollars rather than five hundred dollars;

(b) the first installment payment for corporations is due on March 15, or in the case of a taxable year beginning on any date other than January 1, there is substituted the month which corresponds to that date; and

(c) for the annualized installment method, income for the first installment is annualized using the first two months of the taxable year."

Waiver, dismissal, or reduction of penalties

SECTION 15. Section 12-54-160 of the 1976 Code is amended to read:

"Section 12-54-160. Unless otherwise specifically prohibited, the department may waive, dismiss, or reduce penalties provided for in this chapter."

Disclosure of information from department

SECTION 16. Section 12-56-90 of the 1976 Code, as added by Act 76 of 1995, is amended to read:

"Section 12-56-90. (A) The exchange of information among the department, claimant agency, and the debtor pursuant to this chapter is lawful.

(B) The information obtained by a claimant agency from the department in accordance with the exemption allowed by subsection (A) may be used by the agency only in the pursuit of its debt collection duties and practices. A person employed by or formerly employed by the agency who discloses the information for another purpose is subject to the penalties provided in Section 12-54-240."

Waste tires

SECTION 17. Section 44-96-170(L) and (M) of the 1976 Code, as last amended by Act 181 of 1993, is further amended to read:

"(L)(1) For sales made on or after November 1, 1991, there is imposed a fee of two dollars for each new tire sold to the ultimate consumer, whether or not the tire is mounted by the seller. The wholesaler or retailer receiving new tires from unlicensed wholesalers is responsible for paying the fee imposed by this subsection.

(2) The Department of Revenue shall administer, collect, and enforce the tire disposal fee in the same manner that the sales and use taxes are collected pursuant to Chapter 36 of Title 12. The fee imposed by this subsection must be remitted on a monthly basis. Instead of the discount allowed pursuant to Section 12-36-2610, the taxpayer may retain three percent of the total fees collected as an administrative collection allowance. This allowance applies whether or not the return is timely filed.

(3) The department shall deposit all fees collected to the credit of the State Treasurer who shall establish a separate and distinct account from the state general fund.

(a) The State Treasurer shall distribute one and one-half dollars for each tire sold, less applicable credit, refund, and discount, to each county based upon the population in each county according to the most recent United States Census. The county shall use these funds for collection and disposal of waste tires generated within that county.

(b) The remaining portion of the tire disposal fee is to be credited to the Solid Waste Management Trust Fund by the State Treasurer for the Waste Tire Grant Trust Fund, established under the administration of the South Carolina Department of Health and Environmental Control.

(c) The General Assembly shall review the waste tire disposal fee every five years.

(M) A wholesaler or retailer required to submit a fee pursuant to subsection (L) who delivers or arranges delivery of waste tires to a permitted waste tire disposal facility may apply for a refund of one dollar for each tire delivered. A refund may not be approved for a number of tires delivered in excess of the number of new tires sold by the individual wholesaler or retailer. Verification must be provided as required by the South Carolina State Department of Revenue."

Department administers and collects local sales and use tax

SECTION 18. A. Section 4-10-90(C) of the 1976 Code, as last amended by Act 181 of 1993, is further amended to read:

"(C) The Department of Revenue shall furnish data to the State Treasurer and to the governing bodies of the counties and municipalities receiving revenues for the purpose of calculating distributions and estimating revenues. The information which may be supplied to counties and municipalities includes, but is not limited to, gross receipts, net taxable sales, and tax liability by taxpayers. Information by taxpayer received by appropriate county or municipal officials is considered confidential and is governed by the provisions of Section 12-54-240. A person violating this section is subject to the penalties provided in Section 12-54-240. The State Treasurer may correct misallocations from the Property Tax Credit Fund and County/Municipal Revenue Fund by adjusting subsequent allocations, but these adjustments may be made only in allocations made in the same fiscal year as the misallocation. However, allocations made as a result of city or county code errors must be corrected prospectively."

B. This section is effective for tax years beginning after December 31, 1998.

Lease agreements for fees in lieu of taxes

SECTION 19. A. Section 4-12-20 of the 1976 Code, as added by Act 125 of 1995, is amended to read:

"Section 4-12-20. Every agreement between a county, municipality, school district, water and sewer authority, or other political subdivision and another party in the form of a lease must contain a provision requiring the other party to make payments to the county, municipality, school district, water and sewer authority, and other political subdivisions in which the project is located in lieu of taxes, in the amounts that would result from taxes levied on the project by a county, municipality, school district, water and sewer authority, and other political subdivisions, if the project were owned by the other party, but with appropriate reductions similar to the tax exemptions, if any, which would be afforded to the other party if it were owner of the project."

B. This section is effective for leases entered into after the approval by the Governor.

Time effective

SECTION 20. This act takes effect upon approval by the Governor.

Approved the 23rd day of June, 1998.