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S 655 Session 123 (2019-2020) S 0655 General Bill, By Peeler, Malloy, Climer, Fanning, Gregory and Leatherman
Indicates New Matter COMMITTEE REPORT March 21, 2019 S. 655 Introduced by Senators Peeler, Malloy, Climer, Fanning, Gregory and Leatherman S. Printed 3/21/19--S. Read the first time March 13, 2019.
To whom was referred a Bill (S. 655) to amend Section 12-6-3360, Code of Laws of South Carolina, 1976, relating to the job tax credit, so as to provide for a professional
That they have duly and carefully considered the same and recommend that the same do pass: HUGH K. LEATHERMAN, SR. for Committee.
Explanation of Fiscal Impact Updated for Revised Analysis and Fiscal Impact on March 21, 2019 Introduced on March 13, 2019 State Expenditure The Department of Revenue indicates that there will be no expenditure impact to the general fund, other funds, or federal funds from this bill. The Department can administer the legislative changes with existing resources. State Revenue The Enterprise Zone Act was adopted in 1995 to provide economic incentives to attract capital investment in the state's rural and economically distressed counties in the state. A system of awarding tax credits to companies that creates new full-time jobs was developed using a combination of unemployment rates and county per capita incomes. The more economically distressed the county the higher the job tax credit that could be claimed for each new job created. Tax credits range from $1,500 to $8,000 per year for each job created depending on the county designation. Since the passage of the Enterprise Zone Act, a total of 7,394 taxpayers have claimed $802,492,575 in nonrefundable tax credits. Section 1. The Carolina Panthers are interested in a new indoor practice facility to replace an outdoor practice facility currently located near Bank of America Stadium in downtown Charlotte, NC. The Panthers are considering moving their football operations to South Carolina. The team is interested in moving the team's headquarters and training facilities to either York or Lancaster County based on media reports. The move would involve 150 or more employees, coaches, players, team executives, offices, parking, and the team's other departments. This bill would make several changes to existing statutory law as follows:
Amends Section 12-6-3360(A) to add professional
Amends Section 12-6-3360(M) to amend the definition of a "new job" for a professional
Amends Section 12-6-3360(M)(4) to amend the definition of "full-time" job for a professional
Adds Section 12-6-3360(M)(17) to define a professional
Adds Section 12-6-3360(M)(18) to define a professional
Adds Section 12-6-3360(M)(19) to define members of a professional A qualifying business is permitted a tax credit against income (corporate and individual) tax, bank tax, or insurance premium tax for creating new, full-time jobs in the state. Generally, a business may hire at least ten employees at a single location to qualify for the credit. Tax credits range from $1,500 to $8,000 per year for each job created depending on the county designation. The county designations are determined by the average ranking of the county's unemployment rate and per capita income for the latest thirty-six month period as of November 1st of each year. Tax credits may be claimed beginning in tax Years 2 through 6 after job creation in Year 1 for a total of five years. Tax credits may be carried forward for fifteen years and are limited to fifty percent of tax liability of the company.
Since the possible relocation of the Carolina Panthers' practice facilities is still in the early stages of development and several potential sites are under consideration, this analysis assumes that the professional
The professional The Department of Commerce anticipates utilizing the job development credit as part of the incentive package for the Carolina Panthers. Under provisions in this bill and applying the standard formula for calculating the JDC, the maximum credits are estimated by multiplying the minimum qualifying payroll of $190,000,000 by the eighty percent of time the employee must be in South Carolina and by the five percent bracket which would result in a maximum credit of $7,600,000. (In discussions with the executive offices of the National Football League, allocation of income by place of earnings is a complicated formula.) The maximum credit allocated to a business may then be limited by a percentage based on the economic tier in which the county is ranked. In this estimate, York County is a Tier 1 county and the statute would limit the credit to a qualifying business to fifty-five percent of the maximum credit and remaining forty-five percent would be redirected to the state Rural Infrastructure Fund under Section 12-10-85. Of the maximum credit, this provision would allocate $4,180,000 to the Carolina Panthers and $3,420,000 to the Rural Infrastructure Fund. The statute further allows, however, an option for the Department of Commerce to grant a waiver of the fifty-five percent limit and allow a business to claim up to ninety-five percent of the maximum credit. Under this option, $7,220,000 of the maximum credit could be allocated to Carolina Panthers and $380,000 to the Rural Infrastructure Bank. Based on this analysis, we expect general fund Revenue for FY 2020-21 to be reduced by $7,600,000 due to the qualifying JDC. This estimate, however, could be impacted by the exact terms and conditions negotiated in the Revitalization Agreement. This section of the fiscal impact statement has been updated for a revised analysis. Section 5. This section includes a severability clause. Section 6. This act takes effect upon approval of the Governor. Local Revenue
Section 2. This section would amend Section 4-9-30(12) to state that no county license fees or taxes may be levied on a professional
Section 3. This section would amend Section 5-7-30 to state that a business engaged in operating a professional
Section 4. This section would add Section 5-3-20 to ensure that no municipality many annex any real property owned by a professional Introduced on March 13, 2019 State Expenditure The Department of Revenue indicates that there will be no expenditure impact to the general fund, other funds, or federal funds from this bill. The Department can administer the legislative changes with existing resources. State Revenue The Rural Development Act was adopted in 1996 to provide economic incentives to attract capital investment in the state's rural and economically distressed counties in the state. A system of awarding tax credits to companies that creates new full-time jobs was developed using a combination of unemployment rates and county per capita incomes. The more economically distressed the county the higher the job tax credit that could be claimed for each new job created. Tax credits range from $1,500 to $8,000 per year for each job created depending on the county designation. Since the passage of the Rural Development Act, a total of 7,394 taxpayers have claimed $802,492,575 in nonrefundable tax credits. Section 1. The Carolina Panthers are interested in a new indoor practice facility to replace an outdoor practice facility currently located near Bank of America Stadium in downtown Charlotte, NC. The Panthers are considering moving their football operations to South Carolina. The team is interested in moving the team's headquarters and training facilities to either York or Lancaster County based on media reports. The move would involve 150 or more employees, coaches, players, team executives, offices, parking, and the team's other departments. This bill would make several changes to existing statutory law as follows:
Amends Section 12-6-3360(A) to add professional
Amends Section 12-6-3360(M) to amend the definition of a "new job" for a professional
Amends Section 12-6-3360(M)(4) to amend the definition of "full-time" job for a professional
Adds Section 12-6-3360(M)(17) to define a professional
Adds Section 12-6-3360(M)(18) to define a professional
Adds Section 12-6-3360(M)(19) to define members of a professional A qualifying business is permitted a tax credit against income (corporate and individual) tax, bank tax, or insurance premium tax for creating new, full-time jobs in the state. Generally, a business may hire at least ten employees at a single location to qualify for the credit. Tax credits range from $1,500 to $8,000 per year for each job created depending on the county designation. The county designations are determined by the average ranking of the county's unemployment rate and per capita income for the latest thirty-six month period as of November 1st of each year. Tax credits may be claimed beginning in tax Years 2 through 6 after job creation in Year 1 for a total of five years. Tax credits may be carried forward for fifteen years and are limited to fifty percent of tax liability of the company.
Since the possible relocation of the Carolina Panthers' practice facilities is still in the early stages of development and several potential sites are under consideration, this analysis assumes that the professional Section 5. This section includes a severability clause. Section 6. This act takes effect upon approval of the Governor. Local Revenue
Section 2. This section would amend Section 4-9-30(12) to state that no county license fees or taxes may be levied on a professional
Section 3. This section would amend Section 5-7-30 to state that a business engaged in operating a professional
Section 4. This section would add Section 5-3-20 to ensure that no municipality many annex any real property owned by a professional Frank A. Rainwater, Executive Director Revenue and Fiscal Affairs Office
TO AMEND SECTION 12-6-3360, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE JOB TAX CREDIT, SO AS TO PROVIDE FOR A PROFESSIONAL Be it enacted by the General Assembly of the State of South Carolina: SECTION 1. Section 12-6-3360(A) and (M) of the 1976 Code is amended to read:
"(A) Taxpayers that operate manufacturing, tourism, processing, agricultural packaging, warehousing, distribution, research and development, corporate office, qualifying service-related facilities, agribusiness operations, extraordinary retail establishment, professional (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 that is subject to South Carolina taxes as contained in Section 12-6-510, Section 12-6-530, Chapter 11, Title 12, or Chapter 7, Title 38. (2) 'Appropriate agency' means the Department of Revenue, except that for taxpayers subject to the premium tax imposed by Chapter 7, Title 38, it means the Department of Insurance.
(3) 'New job' means a job created in this State at the time a new facility or an expansion is initially staffed. Except as otherwise provided in this item, 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. However, for a professional (a) its destruction by accidental fire, natural disaster, or act of God; (b) involuntary conversion as a result of condemnation or exercise of eminent domain by the State or any of its political subdivisions or by the federal government. Destruction for purposes of this provision means that more than fifty percent of the facility was destroyed. For purposes of this section, involuntary conversion as a result of condemnation or exercise of eminent domain includes a legally binding agreement for the purchase of a facility of an employer entered into between an employer and the State of South Carolina or a political subdivision of the State under threat of exercise of eminent domain by the State or its political subdivision. The year of reinstatement is the year of creation of the job. All reinstated jobs qualify for the credit pursuant to this section, and a comparison is not 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 members of a professional (5) 'Manufacturing facility' means an establishment where tangible personal property is produced or assembled. (6) 'Processing facility' means an establishment that prepares, treats, or converts tangible personal property into finished goods or another form of tangible personal property. The term includes a business engaged in processing agricultural, aquacultural, or maricultural products and specifically includes meat, poultry, and any other variety of food processing operations. It does not include an establishment in which retail sales of tangible personal property are made to retail customers. (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. Retail sales made inside the facility to employees working at the facility are not considered for purposes of the twelve-day and seventy-five percent limitation. For purposes of this definition, 'retail sale' and 'tangible personal property' have the meaning provided in Chapter 36 of this title. (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, banking, or research in connection with literary, historical, or similar projects. (10) 'Corporate office facility' means a corporate headquarters that meets the definition of a 'corporate headquarters' contained in Section 12-6-3410(J)(1). The corporate headquarters of a general contractor licensed by the South Carolina Department of Labor, Licensing and Regulation qualifies even if it is not a regional or national headquarters as those terms are defined in Section 12-6-3410(J)(1). (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 (13) 'Qualifying service-related facility' means: (a) an establishment engaged in an activity or activities listed under the North American Industry Classification System Manual (NAICS) Section 62, subsectors 621, 622, and 623, or Sector 4881, subsector 488190; or (b) a business, other than a business engaged in legal, accounting, banking, or investment services (including a business identified under NAICS Section 55) or retail sales, which has a net increase of at least: (i) one hundred seventy-five jobs at a single location; (ii) one hundred fifty jobs at a single location comprised of a building or portion of building that has been vacant for at least twelve consecutive months prior to the taxpayer's investment; (iii) one hundred jobs at a single location and the jobs have an average cash compensation level of more than one and one-half times the lower of state per capita income or per capita income in the county where the jobs are located; (iv) fifty jobs at a single location and the jobs have an average cash compensation level of more than twice the lower of state per capita income or per capita income in the county where the jobs are located; or (v) twenty-five jobs at a single location and the jobs have an average cash compensation level of more than two and one-half times the lower of state per capita income or per capita income in the county where the jobs are located. A taxpayer shall use the most recent per capita income data available as of the end of the taxable year in which the jobs are filled. Determination of the required number of jobs is in accordance with the monthly average described in subsection (F). (14) 'Technology intensive facility' means: (a) a facility at which a firm engages in the design, development, and introduction of new products or innovative manufacturing processes, or both, through the systematic application of scientific and technical knowledge. Included in this definition are the following North American Industrial Classification Systems Codes, NAICS, published by the Office of the Management and Budget of the federal government: (i) 5114 database and directory publishers; (ii) 5112 software publishers; (iii) 54151 computer systems design and related services; (iv) 541511 custom computer programming services; (v) 541512 computer systems design services; (vi) 541711 research and development in biotechnology; 2007 NAICS; (vii) 541712 research and development in physical, engineering, and life sciences; 2007 NAICS; (viii) 518210 data processing, hosting, and related services; (ix) 9271 space research and technology; or (b) a facility primarily used for one or more activities listed under the 2002 version of the NAICS Codes 51811 (Internet Service Providers and Web Search Portals). (15) 'Extraordinary retail establishment' as defined in Sections 12-21-6520 and 12-21-6590. (16) 'Agricultural packaging' means the technology of enclosing or protecting or preserving agricultural products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages used for agricultural products. Packaging can be described as a coordinated system of preparing agricultural goods for transport, warehousing, logistics, sale, and end use.
(17) 'Professional
(18) 'Professional
(19) 'Members of a professional SECTION 2. Section 4-9-30(12) of the 1976 Code is amended to read:
"(12) to levy uniform license taxes upon persons and businesses engaged in or intending to engage in a business, occupation, or profession, in whole or in part, within the county but outside the corporate limits of a municipality except those persons who are engaged in the profession of teaching or who are ministers of the gospel and rabbis, except persons and businesses acting in the capacity of telephone, telegraph, gas and electric utilities, suppliers, or other utility regulated by the Public Service Commission and except an entity which is exempt from license tax under another law or a subsidiary or affiliate of any such exempt entity. No county license fee or tax may be levied on insurance companies. No county license fee or tax may be levied on a professional SECTION 3. Section 5-7-30 of the 1976 Code is amended to read:
"Section 5-7-30. Each municipality of the State, in addition to the powers conferred to its specific form of government, may enact regulations, resolutions, and ordinances, not inconsistent with the Constitution and general law of this State, including the exercise of powers in relation to roads, streets, markets, law enforcement, health, and order in the municipality or respecting any subject which appears to it necessary and proper for the security, general welfare, and convenience of the municipality or for preserving health, peace, order, and good government in it, including the authority to levy and collect taxes on real and personal property and as otherwise authorized in this section, make assessments, and establish uniform service charges relating to them; the authority to abate nuisances; the authority to provide police protection in contiguous municipalities and in unincorporated areas located not more than three miles from the municipal limits upon the request and agreement of the governing body of such contiguous municipality or the county, including agreement as to the boundaries of such police jurisdictional areas, in which case the municipal law enforcement officers shall have the full jurisdiction, authority, rights, privileges, and immunities, including coverage under the workers' compensation law, which they have in the municipality, including the authority to make arrests, and to execute criminal process within the extended jurisdictional area; provided, however, that this shall not extend the effect of the laws of the municipality beyond its corporate boundaries; grant franchises for the use of public streets and make charges for them; grant franchises and make charges for the use of public beaches; engage in the recreation function; levy a business license tax on gross income, but a wholesaler delivering goods to retailers in a municipality is not subject to the business license tax unless he maintains within the corporate limits of the municipality a warehouse or mercantile establishment for the distribution of wholesale goods; and a business engaged in making loans secured by real estate is not subject to the business license tax unless it has premises located within the corporate limits of the municipality and no entity which is exempt from the license tax under another law nor a subsidiary or affiliate of an exempt entity is subject to the business license tax; and a business engaged in operating a professional For the purpose of providing and maintaining parking for the benefit of a downtown commercial area, a municipality may levy a surtax upon the business license of a person doing business in a designated area in an amount not to exceed fifty percent of the current yearly business license tax upon terms and conditions fixed by ordinance of the municipal council. The area must be designated by council only after a petition is submitted by not less than two-thirds of the persons paying a business license tax in the area and who paid not less than one-half of the total business license tax collected for the preceding calendar year requesting the designation of the area. The business within the designated area which is providing twenty-five or more parking spaces for customer use is required to pay not more than twenty-five percent of a surtax levied pursuant to the provisions of this paragraph." SECTION 4. Chapter 3, Title 5 of the 1976 Code is amended by adding:
"Section 5-3-20. No municipality may annex, under the provisions of this chapter, any real property owned by a professional SECTION 5. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective. SECTION 6. This act takes effect upon approval by the Governor.
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