H 4532 Session 123 (2019-2020) H 4532 General Bill, By Pope, Clemmons, Daning, Taylor, Bailey, Jordan, Kirby, Allison, Bennett, Brown, Chellis and Norrell A BILL TO AMEND SECTIONS 12-36-60, 12-36-70, 12-36-90, 12-36-110, AND 12-36-130, CODE OF LAWS OF SOUTH CAROLINA, 1976, ALL RELATING TO DEFINITIONS FOR PURPOSES OF THE SALES TAX, SO AS TO INCLUDE THE SALES OF SERVICES; BY ADDING SECTION 12-36-160 SO AS TO DEFINE "SERVICES"; TO AMEND SECTION 12-36-910, RELATING TO THE FIVE PERCENT STATE SALES TAX RATE, SO AS TO REDUCE THE SALES TAX RATE TO THREE PERCENT; TO AMEND SECTION 12-36-920, RELATING TO THE STATE ACCOMMODATIONS TAX, SO AS TO MAKE A CONFORMING CHANGE BY REDUCING THE RATE; TO AMEND SECTION 12-36-940, RELATING TO AMOUNTS THAT MAY BE ADDED TO SALES PRICES TO ACCOUNT FOR TAX, SO AS AUTHORIZE THE DEPARTMENT TO MAKE ADJUSTMENTS; TO REPEAL ARTICLE 11 OF CHAPTER 36, TITLE 12, RELATING TO THE ADDITIONAL ONE PERCENT SALES AND USE TAX; TO AMEND SECTIONS 12-36-1310 AND 12-36-1320, BOTH RELATING TO THE USE TAX, SO AS TO MAKE A CONFORMING CHANGE BY REDUCING THE RATE; TO AMEND SECTION 12-36-1710, RELATING TO THE CASUAL EXCISE TAX, SO AS TO MAKE A CONFORMING CHANGE BY REDUCING THE RATE; TO AMEND SECTION 12-36-2120, RELATING TO SALES TAX EXEMPTIONS, SO AS TO REMOVE THE EXEMPTION ON CERTAIN ITEMS; TO AMEND SECTION 12-36-2530, RELATING TO TAXES ON ITEMS DELIVERED OUT OF STATE, SO AS TO MAKE A CONFORMING CHANGE; TO AMEND SECTIONS 12-36-2620, 12-36-2630, AND 12-36-2640, ALL RELATING TO THE CREDITING OF CERTAIN TAXES, SO AS TO CREDIT SUCH TAXES IN THE SAME PROPORTION AS THEY WERE CREDITED BEFORE THE RATE REDUCTION; TO REPEAL SECTION 12-36-2646 RELATING TO THE TAX EXCLUSION FOR INDIVIDUALS AT LEAST EIGHTY FIVE YEARS OF AGE; BY ADDING ARTICLE 11 TO CHAPTER 10, TITLE 4 SO AS TO CREATE THE "TAX REFORM RESERVE FUND" AND TO SPECIFY ITS PURPOSE; AND BY ADDING ARTICLE 11 TO CHAPTER 10, TITLE 4 SO AS TO PROPORTIONALLY REDUCE LOCAL SALES AND USE TAXES IN THE SAME MANNER AS THE STATE SALES AND USE TAX.
TO AMEND SECTIONS 12-36-60, 12-36-70, 12-36-90, 12-36-110, AND 12-36-130, CODE OF LAWS OF SOUTH CAROLINA, 1976, ALL RELATING TO DEFINITIONS FOR PURPOSES OF THE SALES TAX, SO AS TO INCLUDE THE SALES OF SERVICES; BY ADDING SECTION 12-36-160 SO AS TO DEFINE "SERVICES"; TO AMEND SECTION 12-36-910, RELATING TO THE FIVE PERCENT STATE SALES TAX RATE, SO AS TO REDUCE THE SALES TAX RATE TO THREE PERCENT; TO AMEND SECTION 12-36-920, RELATING TO THE STATE ACCOMMODATIONS TAX, SO AS TO MAKE A CONFORMING CHANGE BY REDUCING THE RATE; TO AMEND SECTION 12-36-940, RELATING TO AMOUNTS THAT MAY BE ADDED TO SALES PRICES TO ACCOUNT FOR TAX, SO AS AUTHORIZE THE DEPARTMENT TO MAKE ADJUSTMENTS; TO REPEAL ARTICLE 11 OF CHAPTER 36, TITLE 12, RELATING TO THE ADDITIONAL ONE PERCENT SALES AND USE TAX; TO AMEND SECTIONS 12-36-1310 AND 12-36-1320, BOTH RELATING TO THE USE TAX, SO AS TO MAKE A CONFORMING CHANGE BY REDUCING THE RATE; TO AMEND SECTION 12-36-1710, RELATING TO THE CASUAL EXCISE TAX, SO AS TO MAKE A CONFORMING CHANGE BY REDUCING THE RATE; TO AMEND SECTION 12-36-2120, RELATING TO SALES TAX EXEMPTIONS, SO AS TO REMOVE THE EXEMPTION ON CERTAIN ITEMS; TO AMEND SECTION 12-36-2530, RELATING TO TAXES ON ITEMS DELIVERED OUT OF STATE, SO AS TO MAKE A CONFORMING CHANGE; TO AMEND SECTIONS 12-36-2620, 12-36-2630, AND 12-36-2640, ALL RELATING TO THE CREDITING OF CERTAIN TAXES, SO AS TO CREDIT SUCH TAXES IN THE SAME PROPORTION AS THEY WERE CREDITED BEFORE THE RATE REDUCTION; TO REPEAL SECTION 12-36-2646 RELATING TO THE TAX EXCLUSION FOR INDIVIDUALS AT LEAST EIGHTY FIVE YEARS OF AGE; BY ADDING SECTION 11-11-270 SO AS TO CREATE THE "TAX REFORM RESERVE FUND" AND TO SPECIFY ITS PURPOSE; AND BY ADDING ARTICLE 11 TO CHAPTER 10, TITLE 4 SO AS TO PROPORTIONALLY REDUCE LOCAL SALES AND USE TAXES IN THE SAME MANNER AS THE STATE SALES AND USE TAX. Be it enacted by the General Assembly of the State of South Carolina: SECTION 1. Section 12-36-60 of the 1976 Code is amended to read: "Section 12-36-60. 'Tangible personal property' means personal property which may be seen, weighed, measured, felt, touched, or which is in any other manner perceptible to the senses. It also includes all services, and intangibles, including communications, laundry and related services, furnishing of accommodations and sales of electricity, the sale or use of which is subject to tax under this chapter and does not include stocks, notes, bonds, mortgages, or other evidences of debt. Tangible personal property does not include the transmission of computer database information by a cooperative service when the database information has been assembled by and for the exclusive use of the members of the cooperative service." SECTION 2. Section 12-36-70(1) of the 1976 Code is amended by adding an appropriately lettered subitem to read: "( ) selling services;" SECTION 3. Section 12-36-90(1) of the 1976 Code is amended by adding by adding an appropriately lettered subitem to read: "( ) the proceeds from the sale of services" SECTION 4. Section 12-36-110(1)(f) of the 1976 Code is amended to read:
"(f) SECTION 5. Section 12-36-130(1) of the 1976 Code is amended by adding an appropriately lettered subitem to read: "( ) any services that are the basis of the sale" SECTION 6. Article 1, Chapter 36, Title 12 of the 1976 Code is amended by adding: "Section 12-36-160. (A) 'Services' include the follow activities listed under the North American Industry Classification System Codes, NAICS, published by the Office of Management and Budget of the federal government: (1) 23-Construction: 236118 Residential remodelers; 237110 Water and sewer line and related structures construction; 237120 Oil and gas pipeline and related structures construction; 237130 Power and communication line and related structures construction; 237210 Land subdivision; 237310 Highway, street, and bridge construction; 237990 Other heavy and civil engineering construction; 238110 Poured concrete foundation and structure contractors; 238120 Structural steel and precast concrete contractors; 238140 Masonry contractors; 238150 Glass and glazing contractors; 238160 Roofing contractors; 238170 Siding contractors; 238210 Electrical contractors and other wiring installation contractors; 238220 Plumbing, heating, and air-conditioning contractors; 238290 Other building equipment contractors; 238310 Drywall and insulation contractors; 238320 Painting and wall covering contractors; 238340 Tile and terrazzo contractors; 238350 Finish carpentry contractors; 238390 Other building finishing contractors; 238910 Site preparation contractors; 238990 All other specialty trade contractors. (2) 48-49-Transportation and warehousing: 481211 Nonscheduled chartered passenger air transportation; 485310 Taxi service; 485320 Limousine service; 485510 Charter bus industry; 485999 All other transit and ground passenger transportation; 487210 Scenic and sightseeing transportation, water; 488190 Other support activities for air transportation; 488210 Support activities for rail transportation; 488320 Marine cargo handling; 488330 Navigational services to shipping; 488410 Motor vehicle towing; 488490 Other support activities for road transportation; 488510 Freight transportation arrangement; 492110 Couriers and express delivery services; 492210 Local messengers and local delivery; 493110 General warehousing and storage; 493120 Refrigerated warehousing and storage; 493130 Farm product warehousing and storage; 493190 Other warehousing and storage. (3) 51-Information: 511110 Newspaper publishers; 511120 Periodical publishers; 511130 Book publishers; 511140 Directory and mailing list publishers; 511199 All other publishers; 511210 Software publishers; 512191 Teleproduction and other postproduction services; 515112 Radio stations; 515120 Television broadcasting; 517410 Satellite telecommunications; 517911 Telecommunications resellers; 517919 All other telecommunications; 518210 Data processing, hosting, and related services; 519130 Internet publishing and broadcasting and web search portals. (4) 52-Finance and insurance: 522220 Sales financing; 522291 Consumer lending; 522292 Real estate credit; 522298 All other nondepository credit intermediation; 522310 Mortgage and nonmortgage loan brokers; 522320 Financial transactions processing, reserve, and clearinghouse activities; 522390 Other activities related to credit intermediation; 523110 Investment banking and securities dealing; 523120 Securities brokerage; 523920 Portfolio management; 523930 Investment advice; 523991 Trust, fiduciary, and custody activities. (5) 53-Real estate and rental and leasing: 531311 Residential property managers; 531312 Nonresidential property managers; 531320 Offices of real estate appraisers; 531390 Other activities related to real estate; 532111 Passenger car rental; 532112 Passenger car leasing; 532120 Truck, utility trailer, and RV (recreational vehicle) rental and leasing; 532210 Consumer electronics and appliances rental; 532220 Formal wear and costume rental; 532230 Video tape and disc rental; 532291 Home health equipment rental; 532292 Recreational goods rental; 532299 All other consumer goods rental; 532310 General rental centers; 532411 Commercial air, rail, and water transportation equipment rental and leasing; 532412 Construction, mining, and forestry machinery and equipment rental and leasing; 533110 Lessors of nonfinancial intangible assets (except copyrighted works). (6) 54-Professional, scientific, and technical services: 541110 Offices of lawyers; 541191 Title abstract and settlement offices; 541199 All other legal services; 541211 Offices of certified public accountants; 541213 Tax preparation services; 541214 Payroll services; 541219 Other accounting services; 541310 Architectural services; 541320 Landscape architectural services; 541330 Engineering services; 541340 Drafting services; 541370 Surveying and mapping (except geophysical) services; 541380 Testing laboratories; 541410 Interior design services; 541420 Industrial design services; 541430 Graphic design services; 541490 Other specialized design services; 541511 Custom computer programming services; 541512 Computer systems design services; 541513 Computer facilities management services; 541519 Other computer related services; 541611 Administrative management and general management consulting services; 541612 Human resources consulting services; 541613 Marketing consulting services; 541614 Process, physical distribution, and logistics consulting services; 541618 Other management consulting services; 541620 Environmental consulting services; 541690 Other scientific and technical consulting services; 541711 Research and development in biotechnology; 541712 Research and development in the physical, engineering, and life sciences (except biotechnology); 541720 Research and development in the social sciences and humanities; 541810 Advertising agencies; 541820 Public relations agencies; 541840 Media representatives; 541850 Outdoor advertising; 541860 Direct mail advertising; 541890 Other services related to advertising; 541910 Marketing research and public opinion polling; 541921 Photography studios, portrait; 541922 Commercial photography; 541930 Translation and interpretation services; 541940 Veterinary services; 541990 All other professional, scientific, and technical services. (7) 56-Administrative and support and waste management and remediation services: 561110 Office administrative services; 561210 Facilities support services; 561311 Employment placement agencies; 561312 Executive search services; 561320 Temporary help services; 561330 Professional employer organizations; 561410 Document preparation services; 561421 Telephone answering services; 561422 Telemarketing bureaus and other contact centers; 561431 Private mail centers; 561439 Other business service centers (including copy shops); 561440 Collection agencies; 561491 Repossession services; 561492 Court reporting and stenotype services; 561510 Travel agencies; 561520 Tour operators; 561591 Convention and visitors bureaus; 561599 All other travel arrangement and reservation services; 561611 Investigation services; 561612 Security guards and patrol services; 561613 Armored car services; 561621 Security systems services (except locksmiths); 561622 Locksmiths; 561710 Exterminating and pest control services; 561720 Janitorial services; 561730 Landscaping services; 561740 Carpet and upholstery cleaning services; 561790 Other services to buildings and dwellings; 561920 Convention and trade show organizers; 562111 Solid waste collection; 562112 Hazardous waste collection; 562119 Other waste collection. (8) 61-Educational services: 611420 Computer training; 611430 Professional and management development training; 611511 Cosmetology and barber schools; 611519 Other technical and trade schools; 611610 Fine arts schools; 611620 Sports and recreation instruction; 611630 Language schools; 611691 Exam preparation and tutoring; 611692 Automobile driving schools; 611699 All other miscellaneous schools and instruction; 611710 Educational support services. (9) 62-Health care and social assistance: 621111 Offices of physicians (except mental health specialists); 621112 Offices of physicians, mental health specialists; 621210 Offices of dentists; 621310 Offices of chiropractors; 621320 Offices of optometrists; 621330 Offices of mental health practitioners (except physicians); 621340 Offices of physical, occupational and speech therapists, and audiologists; 621391 Offices of podiatrists; 621399 Offices of all other miscellaneous health practitioners; 621410 Family planning centers; 621420 Outpatient mental health and substance abuse centers; 621493 Freestanding ambulatory surgical and emergency centers; 621498 All other outpatient care centers; 621511 Medical laboratories; 621512 Diagnostic imaging centers; 621610 Home health care services; 621910 Ambulance services; 622110 General medical and surgical hospitals; 622210 Psychiatric and substance abuse hospitals; 622310 Specialty (except psychiatric and substance abuse) hospitals; 623220 Residential mental health and substance abuse facilities; 623990 Other residential care facilities; 624110 Child and youth services; 624190 Other individual and family services; 624310 Vocational rehabilitation services; 624410 Child day care services. (10) 71-Arts, Entertainment, and Recreation: 711310 Promoters of performing arts, sports, and similar events with facilities; 711320 Promoters of performing arts, sports, and similar events without facilities; 711410 Agents and managers for artists, athletes, entertainers, and other public figures; 711510 Independent artists, writers, and performers. (11) 81-Other services (except public administration): 811111 General automotive repair; 811112 Automotive exhaust system repair; 811113 Automotive transmission repair; 811118 Other automotive mechanical and electrical repair and maintenance; 811121 Automotive body, paint, and interior repair and maintenance; 811122 Automotive glass replacement shops; 811191 Automotive oil change and lubrication shops; 811192 Car washes; 811198 All other automotive repair and maintenance; 811211 Consumer electronics repair and maintenance; 811212 Computer and office machine repair and maintenance; 811213 Communication equipment repair and maintenance; 811219 Other electronic and precision equipment repair and maintenance; 811310 Commercial and industrial machinery and equipment (except automotive and electronic) repair and maintenance; 811411 Home and garden equipment repair and maintenance; 811412 Appliance repair and maintenance; 811420 Reupholstery and furniture repair; 811430 Footwear and leather goods repair; 811490 Other personal and household goods repair and maintenance; 812111 Barber shops; 812112 Beauty salons; 812113 Nail salons; 812191 Diet and weight reducing centers; 812199 Other personal care services; 812210 Funeral homes and funeral services; 812220 Cemeteries and crematories; 812310 Coin-operated laundries and drycleaners; 812331 Linen supply; 812332 Industrial launderers; 812910 Pet care (except veterinary) services; 812930 Parking lots and garages; 812990 All other personal services; 813211 Grantmaking foundations; 813212 Voluntary health organizations; 813219 Other grantmaking and giving services; 813311 Human rights organizations; 813312 Environment, conservation and wildlife organizations; 813319 Other social advocacy organizations; 813410 Civic and social organizations; 813910 Business associations; 813920 Professional organizations; 813990 Other similar organizations (except business, professional, labor, and political organizations). (B) 'Services' do not include: (1) services rendered by an employee to his employer; and (2) the portion of services rendered for which Medicare reimburses the provider." SECTION 7. Section 12-36-910(A) and (B) of the 1976 Code are amended to read:
"(A) A sales tax, equal to (B) The sales tax imposed by this article also applies to the: (1) gross proceeds accruing or proceeding from the business of providing or furnishing any laundering, dry cleaning, dyeing, or pressing service, but does not apply to the gross proceeds derived from coin-operated laundromats and dry cleaning machines; (2) gross proceeds accruing or proceeding from the sale of electricity; (3)(a) gross proceeds accruing or proceeding from the charges for the ways or means for the transmission of the voice or messages, including the charges for use of equipment furnished by the seller or supplier of the ways or means for the transmission of the voice or messages. Gross proceeds from the sale of prepaid wireless calling arrangements subject to tax at retail pursuant to item (5) of this subsection are not subject to tax pursuant to this item. Effective for bills rendered after August 1, 2002, charges for mobile telecommunications services subject to the tax under this item must be sourced in accordance with the Mobile Telecommunications Sourcing Act as provided in Title 4 of the United States Code. The term 'charges for mobile telecommunications services' is defined for purposes of this section the same as it is defined in the Mobile Telecommunications Sourcing Act. All other definitions and provisions of the Mobile Telecommunications Sourcing Act as provided in Title 4 of the United States Code are adopted. Telecommunications services are sourced in accordance with Section 12-36-1920; (b)(i) for purposes of this item, a 'bundled transaction' means a transaction consisting of distinct and identifiable properties or services, which are sold for one nonitemized price but which are treated differently for tax purposes; (ii) for bills rendered on or after January 1, 2004, that include telecommunications services in a bundled transaction, if the nonitemized price is attributable to properties or services that are taxable and nontaxable, the portion of the price attributable to any nontaxable property or service is subject to tax unless the provider can reasonably identify that portion from its books and records kept in the regular course of business for purposes other than sales taxes; (4) fair market value of tangible personal property manufactured within this State, and used or consumed within this State by the manufacturer; (5) gross proceeds accruing or proceeding from the sale or recharge at retail for prepaid wireless calling arrangements; (a) 'Prepaid wireless calling arrangements' means communication services that: (i) are used exclusively to purchase wireless telecommunications; (ii) are purchased in advance; (iii) allow the purchaser to originate telephone calls by using an access number, authorization code, or other means entered manually or electronically; and (iv) are sold in units or dollars which decline with use in a known amount; (b) All charges for prepaid wireless calling arrangements must be sourced to the: (i) location in this State where the over-the-counter sale took place; (ii) shipping address if the sale did not take place at the seller's location and an item is shipped; or (iii) either the billing address or location associated with the mobile telephone number if the sale did not take place at the seller's location and no item is shipped; (6) gross proceeds accruing or proceeding from the sale of services." SECTION 8. A. Section 12-36-920(A) of the 1976 Code, before the first item, is amended to read:
"(A) A sales tax equal to B. Section 12-36-920(B) of the 1976 Code, before the first item, is amended to read:
"(B) A sales tax of SECTION 9. Section 12-36-940 of the 1976 Code is amended by adding an appropriately lettered subsection to read: "( ) Notwithstanding subsection (A), beginning after 2021, the department shall prescribe amounts that may be added to the sales prices to reflect the adjusted state sales tax rate, contained in Section 12-36-910 and former Section 12-36-1110." SECTION 10. Article 11, Chapter 36, Title 12 of the 1976 Code is repealed. SECTION 11. Section 12-36-1310 of the 1976 Code is amended to read:
"Section 12-36-1310. (A) A use tax is imposed on the storage, use, or other consumption in this State of tangible personal property purchased at retail for storage, use, or other consumption in this State, at the rate of (B) The use tax imposed by this article also applies to the: (1) gross proceeds accruing or proceeding from the business of providing or furnishing a laundering, dry cleaning, dyeing, or pressing service, but does not apply to the gross proceeds derived from coin operated laundromats and dry cleaning machines; (2) gross proceeds accruing or proceeding from the sale of electricity;
(3)(a) gross proceeds accruing or proceeding from the charges for the ways or means for the transmission of the voice or messages, including the charges for use of equipment furnished by the seller or supplier of the ways or means for the transmission of the voice or messages. Gross proceeds from the sale of prepaid wireless calling arrangements subject to tax at retail pursuant to item (5) (b)(i) For purposes of this item, a 'bundled transaction' means a transaction consisting of distinct and identifiable properties or services, which are sold for one nonitemized price but which are treated differently for tax purposes; (ii) For bills rendered on or after January 1, 2004, that include telecommunications services in a bundled transaction, if the nonitemized price is attributable to properties or services that are taxable and nontaxable, the portion of the price attributable to any nontaxable property or service is subject to tax unless the provider can reasonably identify that portion from its books and records kept in the regular course of business for purposes other than sales taxes; (4) fair market value of tangible personal property brought into this State, by the manufacturer thereof, for storage, use, or consumption in this State by the manufacturer; (5) gross proceeds accruing or proceeding from the sale or recharge at retail for prepaid wireless calling arrangements; (a) 'Prepaid wireless calling arrangements' means communication services that: (i) are used exclusively to purchase wireless telecommunications; (ii) are purchased in advance; (iii) allow the purchaser to originate telephone calls by using an access number, authorization code, or other means entered manually or electronically; and (iv) are sold in units or dollars which decline with use in a known amount. (b) All charges for prepaid wireless calling arrangements must be sourced to the: (i) location in this State where the over-the-counter sale took place; (ii) shipping address if the sale did not take place at the seller's location and an item is shipped; or (iii) either the billing address or location associated with the mobile telephone number if the sale did not take place at the seller's location and no item is shipped; (6) gross proceeds accruing or proceeding from the sale of services. (C) When a taxpayer is liable for the use tax imposed by this section on tangible personal property purchased in another state, upon which a sales or use tax was due and paid in the other state, the amount of the sales or use tax due and paid in the other state is allowed as a credit against the use tax due this State, upon proof that the sales or use tax was due and paid in the other state. If the amount of the sales or use tax paid in the other state is less than the amount of use tax imposed by this article, the user shall pay the difference to the department." SECTION 12. Section 12-36-1320 of the 1976 Code is amended to read:
"Section 12-36-1320. (A) A use tax at the rate of (B) The owner, or if the property is leased, the lessee, of transient construction property is liable for the use tax. (C) The tax is computed as follows: (1) divide the length of time the property will be used in this State by the total useful life of the property; (2) multiply the result from item (1) by the sales price of the property;
(3) multiply the amount in item (2) by The useful life of transient construction property must be determined by the department in accordance with the experience and practices of the building and construction trade. In the absence of satisfactory evidence as to the period of use intended in this State, it is presumed that the property will remain in this State for the remainder of its useful life. (D) A prorated amount of the sales and use tax legally due and paid to another state on transient construction property is allowed as a credit, but only if the other state grants substantially similar tax credits on the property purchased in South Carolina. The prorated tax credit is computed as follows: (1) divide the length of time the property was used in the other state by the total useful life of the property; (2) multiply the result from item (1) by the state sales tax legally due and paid the other state; (3) the lesser of the result from item (2) or the tax computed in subsection (C) is the prorated credit amount.
(E) If the state in which the property was previously used does not prorate its use tax on, or depreciate the value for use tax purposes of, transient construction property used by South Carolina contractors operating in that state, the use tax, at (F) Transient construction property purchased and substantially used in another state is not subject to the use tax if the owner of the property uses it to construct or repair his own buildings, structures, or other property located in this State. (G) The use, storage, or consumption of the property, when purchased for use in this State, is subject to the full amount of use tax provided in Section 12-36-1310(A), regardless of the period of intended use in this State. (H) The tax is due immediately upon transient construction property being brought into this State." SECTION 13. Section 12-36-1710(A) of the 1976 Code is amended to read:
"(A) In addition to all other fees prescribed by law there is imposed an excise tax for the issuance of every certificate of title, or other proof of ownership, for every boat, motor, or airplane, required to be registered, titled, or licensed. The tax is SECTION 14. Section 12-36-2120 of the 1976 Code is amended to read: "Section 12-36-2120. Exempted from the taxes imposed by this chapter are the gross proceeds of sales, or sales price of: (1) tangible personal property or receipts of any business which the State is prohibited from taxing by the Constitution or laws of the United States of America or by the Constitution or laws of this State; (2) tangible personal property sold to the federal government; (3)(a) textbooks, books, magazines, periodicals, newspapers, and access to on-line information systems used in a course of study in primary and secondary schools and institutions of higher learning or for students' use in the school library of these schools and institutions; (b) books, magazines, periodicals, newspapers, and access to on-line information systems sold to publicly supported state, county, or regional libraries; Items in this category may be in any form, including microfilm, microfiche, and CD ROM; however, transactions subject to tax under Sections 12-36-910(B)(3) and 12-36-1310(B)(3) do not fall within this exemption; (4) livestock. 'Livestock' is defined as domesticated animals customarily raised on South Carolina farms for use primarily as beasts of burden, or food, and certain mammals when raised for their pelts or fur. Animals such as dogs, cats, reptiles, fowls (except baby chicks and poults), and animals of a wild nature, are not considered livestock; (5) feed used for the production and maintenance of poultry and livestock; (6) insecticides, chemicals, fertilizers, soil conditioners, seeds, or seedlings, or nursery stock, used solely in the production for sale of farm, dairy, grove, vineyard, or garden products or in the cultivation of poultry or livestock feed;
(7)
(8) newsprint paper (9) coal, or coke or other fuel sold to manufacturers, electric power companies, and transportation companies for: (a) use or consumption in the production of by-products; (b) the generation of heat or power used in manufacturing tangible personal property for sale. For purposes of this item, 'manufacturer' or 'manufacturing' includes the activities of a processor; (c) the generation of electric power or energy for use in manufacturing tangible personal property for sale; (d) the generation of motive power for transportation. For the purposes of this exemption, 'manufacturer' or 'manufacturing' includes the activities of mining and quarrying; (e) the generation of motive power for test flights of aircraft by the manufacturer of the aircraft where: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at a single manufacturing facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the single manufacturing facility during that seven-year period; or (f) the transportation of an aircraft prior to its completion from one facility of the manufacturer of the aircraft to another facility of the manufacturer of the aircraft, not including the transportation of major component parts for construction or assembly, or the transportation of personnel. This exemption only applies when: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at a single manufacturing facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the single manufacturing facility during that seven-year period. To qualify for the exemptions provided for in subitems (e) and (f), the taxpayer shall notify the department before the first month it uses the exemption and shall make the required investment and create the required number of full-time new jobs over the seven-year period beginning on the date provided by the taxpayer to the department in its notices. The taxpayer shall notify the department in writing that it has met the seven hundred fifty million dollar investment requirement and has created the three thousand eight hundred full-time new jobs or, after the expiration of the seven-year period, that it has not met the seven hundred fifty million dollar investment requirement and created the three thousand eight hundred full-time new jobs. The department may assess any tax due on fuel purchased tax free pursuant to subitems (e) and (f) but due the State as a result of the taxpayer's failure to meet the seven hundred fifty million dollar investment requirement and create the three thousand eight hundred full-time new jobs. The running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for the time period beginning with notice to the department before the taxpayer uses the exemption and ending with notice to the department that the taxpayer either has met or has not met the seven hundred fifty million dollar investment requirement and created the three thousand eight hundred full-time new jobs. As used in subitems (e) and (f), 'taxpayer' includes a person who bears a relationship to the taxpayer as described in Section 267(b) of the Internal Revenue Code. (10)(a) meals or foodstuffs used in furnishing meals to school children, if the sales or use are within school buildings and are not for profit; (b) meals or foodstuffs provided to elderly or disabled persons at home by nonprofit organizations that receive only charitable contributions in addition to sale proceeds from the meals; (c) food stuffs, either prepared or packaged for the homeless or needy that are sold to nonprofit organizations, or food stuffs that are subsequently sold or donated by a nonprofit organization to another nonprofit organization. This subitem is only applicable to food stuffs which are eligible for purchase under the USDA food stamp program; (d) meals or foodstuffs prepared or packaged that are sold to public or nonprofit organizations for congregate or in-home service to the homeless or needy or disabled adults over eighteen years of age or individuals over sixty years of age. This subitem only applies to meals and foodstuffs eligible for purchase under the USDA food stamp program;
(11)
(12) seventy-five percent of the gross proceeds of sales of water sold by public utilities, if rates and charges are of the kind determined by the Public Service Commission, or water sold by nonprofit corporations organized pursuant to Chapter 36, Title 33; (13) fuel, lubricants, and supplies for use or consumption aboard ships in intercoastal trade or foreign commerce. This exemption does not exempt or exclude from the tax the sale of materials and supplies used in fulfilling a contract for the painting, repair, or reconditioning of ships and other watercraft; (14) wrapping paper, wrapping twine, paper bags, and containers, used incident to the sale and delivery of tangible personal property; (15)(a) motor fuel, blended fuel, and alternative fuel subject to tax under Chapter 28, Title 12; however, gasoline used in aircraft is not exempt from the sales and use tax; (b) if the fuel tax is subsequently refunded under Section 12-28-710, the sales or use tax is due unless otherwise exempt, and the person receiving the refund is liable for the sales or use tax; (c) fuels used in farm machinery and farm tractors; (d) fuels used in commercial fishing vessels; (e) natural gas sold to a person with a miscellaneous motor fuel user fee license pursuant to Section 12-28-1139, who will compress it to produce compressed natural gas, or cool it to produce liquefied natural gas, for use as a motor fuel and remit the motor fuel user fees as required by law; and (f) liquefied petroleum gas sold to a person with a miscellaneous motor fuel user fee license pursuant to Section 12-28-1139, who will use the liquefied petroleum gas as a motor fuel and remit the motor fuel user fees as required by law; (16) farm machinery and their replacement parts and attachments, used in planting, cultivating or harvesting farm crops, including bulk coolers (farm dairy tanks) used in the production and preservation of milk on dairy farms, and machines used in the production of poultry and poultry products on poultry farms, when such products are sold in the original state of production or preparation for sale. This exemption does not include automobiles or trucks; (17) machines used in manufacturing, processing, agricultural packaging, recycling, compounding, mining, or quarrying tangible personal property for sale. 'Machines' include the parts of machines, attachments, and replacements used, or manufactured for use, on or in the operation of the machines and which (a) are necessary to the operation of the machines and are customarily so used, or (b) are necessary to comply with the order of an agency of the United States or of this State for the prevention or abatement of pollution of air, water, or noise that is caused or threatened by any machine used as provided in this section. This exemption does not include automobiles or trucks. As used in this item 'recycling' means a process by which materials that otherwise would become solid waste are collected, separated, or processed and reused, or returned to use in the form of raw materials or products, including composting, for sale. In applying this exemption to machines used in recycling, the following percentage of the gross proceeds of sale, or sales price of, machines used in recycling are exempt from the taxes imposed by this chapter: Fiscal Year of Sale Percentage Fiscal year 1997-98 fifty percent After June 30, 1998 one hundred percent; (18) fuel used exclusively to cure agricultural products; (19) electricity used by cotton gins, manufacturers, miners, or quarriers to manufacture, mine, or quarry tangible personal property for sale. For purposes of this item, 'manufacture' or 'manufacture' includes the activities of processors; (20) railroad cars, locomotives, and their parts, monorail cars, and the engines or motors that propel them, and their parts; (21) vessels and barges of more than fifty tons burden; (22) materials necessary to assemble missiles to be used by the Armed Forces of the United States;
(23)
(24) (25) motor vehicles (excluding trucks) or motorcycles, which are required to be licensed to be used on the highways, sold to a resident of another state, but who is located in South Carolina by reason of orders of the United States Armed Forces. This exemption is allowed only if within ten days of the sale the vendor is furnished a statement from a commissioned officer of the Armed Forces of a higher rank than the purchaser certifying that the buyer is a member of the Armed Forces on active duty and a resident of another state or if the buyer furnishes a leave and earnings statement from the appropriate department of the armed services which designates the state of residence of the buyer;
(26)
(27)
(28)(a) seventy-five percent of the gross proceeds of the sales of medicine and prosthetic devices sold by prescription (b) seventy-five percent of the gross proceeds of the sales of hypodermic needles, insulin, alcohol swabs, blood sugar testing strips, monolet lancets, dextrometer supplies, blood glucose meters, and other similar diabetic supplies sold to diabetics under the authorization and direction of a physician. However, such sales made to a diabetic that is a Medicare or Medicaid beneficiary under the authorization and direction of a physician, are one hundred percent exempt; (c) seventy-five percent of the gross proceeds of the sales of disposable medical supplies such as bags, tubing, needles, and syringes, which are dispensed by a licensed pharmacist in accordance with an individual prescription written for the use of a human being by a licensed health care provider, which are used for the intravenous administration of a prescription drug or medicine, and which come into direct contact with the prescription drug or medicine. This exemption applies only to supplies used in the treatment of a patient outside of a hospital, skilled nursing facility, or ambulatory surgical treatment center; (d) medicine donated by its manufacturer to a public institution of higher education for research or for the treatment of indigent patients; (e) seventy-five percent of the gross proceeds of the sales of dental prosthetic devices; and (f) prescription drugs dispensed to Medicare Part A patients residing in a nursing home are not considered sales to the nursing home and are not subject to the sales tax; (29) tangible personal property purchased by persons under a written contract with the federal government when the contract necessitating the purchase provides that title and possession of the property is to transfer from the contractor to the federal government at the time of purchase or after the time of purchase. This exemption also applies to purchases of tangible personal property which becomes part of real or personal property owned by the federal government or, as provided in the written contract, is to transfer to the federal government. This exemption does not apply to purchases of tangible personal property used or consumed by the purchaser; (30) office supplies, or other commodities, and services resold by the Division of General Services of the Department of Administration to departments and agencies of the state government, if the tax was paid on the divisions original purchase;
(31) (32) natural and liquefied petroleum gas and electricity used exclusively in the production of poultry, livestock, swine, and milk; (33) seventy-five percent of the gross proceeds of the sales of electricity, natural gas, fuel oil, kerosene, LP gas, coal, or any other combustible heating material or substance used for residential purposes. Individual sales of kerosene or LP gas of twenty gallons or less by retailers are considered used for residential heating purposes;
(34)
(35)
(36)
(37)
(38)
(39)
(40)
(41)
(42)
(43) (44) electricity used to irrigate crops;
(45) (46) War memorials or monuments honoring units or contingents of the Armed Forces of the United States or of the National Guard, including United States military vessels, which memorials or monuments are affixed to public property; (47) tangible personal property sold to charitable hospitals predominantly serving children exempt under Section 12-37-220, where care is provided without charge to the patient.
(48)
(49) (50)(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 12-6-3460; (51) material handling systems and material handling equipment used in the operation of a distribution facility or a manufacturing facility including, but not limited to, racks used in the operation of a distribution facility or a manufacturing facility and either used or not used to support a facility structure or part of it. To qualify for this exemption, the taxpayer shall notify the department before the first month it uses the exemption and shall invest at least thirty-five million dollars in real or personal property in this State over the five-year period beginning on the date provided by the taxpayer to the department in its notices. The taxpayer shall notify the department in writing that it has met the thirty-five million dollar investment requirement or, after the expiration of the five years, that it has not met the thirty-five million dollar investment requirement. The department may assess any tax due on material handling systems and material handling equipment purchased tax-free pursuant to this item but due the State as a result of the taxpayer's failure to meet the thirty-five million dollar investment requirement. The running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for the time period beginning with notice to the department before the taxpayer uses the exemption and ending with notice to the department that the taxpayer either has met or has not met the thirty-five million dollar investment requirement;
(52)
(53)
(54)
(55)
(56) machines used in research and development. 'Machines' includes machines and parts of machines, attachments, and replacements which are used or manufactured for use on or in the operation of the machines, which are necessary to the operation of the machines, and which are customarily used in that way. 'Machines used in research and development' means machines used directly and primarily in research and development, in the experimental or laboratory sense, of new products, new uses for existing products, or improvement of existing products;
(57)
(58)
(59) (60) a lottery ticket sold pursuant to Chapter 150, Title 59;
(61)
(62) (63) prescription and over-the-counter medicines and medical supplies, including diabetic supplies, diabetic diagnostic equipment, and diabetic testing equipment, sold to a health care clinic that provides medical and dental care without charge to all of its patients;
(64) (65)(a) computer equipment, as defined in subitem (c) of this item, used in connection with a technology intensive facility as defined in Section 12-6-3360(M)(14)(b), where: (i) the taxpayer invests at least three hundred million dollars in real or personal property or both comprising or located at the facility over a five-year period; (ii) the taxpayer creates at least one hundred new full-time jobs at the facility during that five-year period, and the average cash compensation of at least one hundred of the new full-time jobs is one hundred fifty percent of the per capita income of the State according to the most recently published data available at the time the facility's construction starts; and (iii) at least sixty percent of the three hundred million dollars minimum investment consists of computer equipment; (b) computer equipment, as defined in subitem (c) of this item, used in connection with a manufacturing facility, where: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at the facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the facility during that seven-year period. As used in this subitem, 'taxpayer' includes a person who bears a relationship to the taxpayer as described in Section 267(b) of the Internal Revenue Code. (c) For the purposes of this item, 'computer equipment' means original or replacement servers, routers, switches, power units, network devices, hard drives, processors, memory modules, motherboards, racks, other computer hardware and components, cabling, cooling apparatus, and related or ancillary equipment, machinery, and components, the primary purpose of which is to store, retrieve, aggregate, search, organize, process, analyze, or transfer data or any combination of these, or to support related computer engineering or computer science research. (d) These exemptions apply from the start of the investment in or construction of the technology intensive facility or the manufacturing facility. The taxpayer shall notify the Department of Revenue of its use of the exemption provided in this item on or before the first sales tax return filed with the department after the first such use. Upon receipt of the notification, the department shall issue an appropriate exemption certificate to the taxpayer to be used for qualifying purposes under this item. Within six months after the fifth anniversary of the taxpayer's first use of this exemption, the taxpayer shall notify the department in writing that it has or has not met the investment and job requirements of this item by the end of that five-year period. Once the department certifies that the taxpayer has met the investment and job requirements, all subsequent purchases of or investments in computer equipment, including to replace originally deployed computer equipment or to implement future expansions, likewise shall qualify for the exemption described above, regardless of when the taxpayer makes the investments. (e) The department may assess any tax due on property purchased tax free pursuant to this item but due the State if the taxpayer subsequently fails timely to meet the investment and job requirements of this item after being granted the exemption; for purposes of determining whether the taxpayer has timely satisfied the investment requirement, replacement computer equipment counts toward the investment requirement to the extent that the value of the replacement computer equipment exceeds the cost of the computer equipment so replaced, but, provided the taxpayer otherwise qualifies for the exemption, the full value of the replacement computer equipment is exempt from sales and use tax. The running of the periods of limitation within which the department may assess taxes provided pursuant to Section 12-54-85 is suspended during the time period beginning with the taxpayer's first use of this exemption and ending with the later of the fifth anniversary of first use or notice to the department that the taxpayer either has met or has not met the investment and job requirements of this item; (66) electricity used by a technology intensive facility as defined in Section 12-6-3360(M)(14)(b) and qualifying for the sales tax exemption provided pursuant to item (65) of this section, and the equipment and raw materials including, without limitation, fuel used by such qualifying facility to generate, transform, transmit, distribute, or manage electricity for use in such a facility. The running of the periods of limitation within which the department may assess taxes pursuant to Section 12-54-85 is suspended during the same time period it is suspended in item (65)(d) of this section; (67) effective July 1, 2011, construction materials used in the construction of a new or expanded single manufacturing or distribution facility, or one that serves both purposes, with a capital investment of at least one hundred million dollars in real and personal property at a single site in the State over an eighteen-month period, or effective November 1, 2009, construction materials used in the construction of a new or expanded single manufacturing facility where: (i) the taxpayer invests at least seven hundred fifty million dollars in real or personal property or both comprising or located at the facility over a seven-year period; and (ii) the taxpayer creates at least three thousand eight hundred full-time new jobs at the facility during that seven-year period. To qualify for this exemption, the taxpayer shall notify the department before the first month it uses the exemption and shall make the required investment over the applicable time period beginning on the date provided by the taxpayer to the department in its notices. The taxpayer shall notify the department in writing that it has met the investment requirement or, after the expiration of the applicable time period, that it has not met the investment requirement. The department may assess any tax due on construction materials purchased tax free pursuant to this subitem but due the State as a result of the taxpayer's failure to meet the investment requirement. The running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for the time period beginning with notice to the department before the taxpayer uses the exemption and ending with notice to the department that the taxpayer either has met or has not met the investment requirement. As used in this subitem, 'taxpayer' includes a person who bears a relationship to the taxpayer as described in Section 267(b) of the Internal Revenue Code;
(68)
(69)
(70)
(71) any device, equipment, or machinery operated by hydrogen or fuel cells, any device, equipment, or machinery used to generate, produce, or distribute hydrogen and designated specifically for hydrogen applications or for fuel cell applications, and any device, equipment, or machinery used predominantly for the manufacturing of, or research and development involving hydrogen or fuel cell technologies. For purposes of this item: (a) 'fuel cells' means a device that directly or indirectly creates electricity using hydrogen (or hydrocarbon-rich fuel) and oxygen through an electro-chemical process; and (b) 'research and development' means laboratory, scientific, or experimental testing and development of hydrogen or fuel cell technologies. Research and development does not include efficiency surveys, management studies, consumer surveys, economic surveys, advertising, or promotion, or research in connection with literary, historical, or similar projects;
(72)
(73)
(74) durable medical equipment and related supplies: (a) as defined under federal and state Medicaid and Medicare laws; (b) which is paid directly by funds of this State or the United States under the Medicaid or Medicare programs, where state or federal law or regulation authorizing the payment prohibits the payment of the sale or use tax; and (c) sold by a provider who holds a South Carolina retail sales license and whose principal place of business is located in this State;
(75)
(76)
(77)
(78) (79)(A)(1) original or replacement computers, computer equipment, and computer hardware and software purchases used within a datacenter; and (2) electricity used by a datacenter and eligible business property to be located and used at the datacenter. This subsubitem does not apply to sales of electricity for any other purpose, and such sales are subject to the tax, including, but not limited to, electricity used in administrative offices, supervisory offices, parking lots, storage warehouses, maintenance shops, safety control, comfort air conditioning, elevators used in carrying personnel, cafeterias, canteens, first aid rooms, supply rooms, water coolers, drink boxes, unit heaters and waste house lights. (B) As used in this section: (1) 'Computer' means an electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions. (2) 'Computer equipment' means original or replacement servers, routers, switches, power units, network devices, hard drives, processors, memory modules, motherboards, racks, other computer hardware and components, cabling, cooling apparatus, and related or ancillary equipment, machinery, and components, the primary purpose of which is to store, retrieve, aggregate, search, organize, process, analyze, or transfer data or any combination of these, or to support related computer engineering or computer science research. This also includes equipment cooling systems for managing the performance of the datacenter property, including mechanical and electrical equipment, hardware for distributed and mainframe computers and servers, data storage devices, network connectivity equipment, and peripheral components and systems. (3) 'Computer software' means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task. (4) 'Concurrently maintainable' means capable of having any capacity component or distribution element serviced or repaired on a planned basis without interrupting or impeding the performance of the computer equipment. (5) 'Datacenter' means a new or existing facility at a single location in South Carolina: (i) that provides infrastructure for hosting or data processing services and that has power and cooling systems that are created and maintained to be concurrently maintainable and to include redundant capacity components and multiple distribution paths serving the computer equipment at the facility. Although the facility must have multiple distribution paths serving the computer equipment, a single distribution path may serve the computer equipment at any one time; (ii)(a) where a taxpayer invests at least fifty million dollars in real or personal property or both over a five year period; or (b) where one or more taxpayers invests a minimum aggregate capital investment of at least seventy-five million dollars in real or personal property or both over a five year period; (iii) where a taxpayer creates and maintains at least twenty-five full-time jobs at the facility with an average cash compensation level of one hundred fifty percent of the per capita income of the State or of the county in which the facility is located, whichever is lower, according to the most recently published data available at the time the facility is certified by the Department of Commerce; (iv) where the jobs created pursuant to subitem (B)(5)(iii) are maintained for three consecutive years after a facility with the minimum capital investment and number of jobs has been certified by the Department of Commerce; and (v) which is certified by the Department of Commerce pursuant to subitem (D)(1) under such policies and procedures as promulgated by the Department of Commerce. (6) 'Eligible business property' means property used for the generation, transformation, transmission, distribution, or management of electricity, including exterior substations and other business personal property used for these purposes. (7) 'Multiple distribution paths' means a series of distribution paths configured to ensure that failure on one distribution path does not interrupt or impede other distribution paths. (8) 'Redundant capacity components' means components beyond those required to support the computer equipment. (C)(1) To qualify for the exemption allowed by this item, a taxpayer, and the facility in the case of a seventy-five million dollar investment made by more than one taxpayer, shall notify the Department of Revenue and Department of Commerce, in writing, of its intention to claim the exemption. For purposes of meeting the requirements of subitems (B)(5)(ii) and (B)(5)(iii) , capital investment and job creation begin accruing once the taxpayer notifies each department. Also, the five-year period begins upon notification. (2) Once the taxpayer meets the requirements of subitem (B)(5), or at the end of the five-year period, the taxpayer shall notify the Department of Revenue, in writing, whether it has or has not met the requirements of subitem (B)(5). The taxpayer shall provide the proof the department determines necessary to determine that the requirements have been met. (D)(1) Upon notifying each department of its intention to claim the exemption pursuant to subitem (C)(1), and upon certification by the Department of Commerce, the taxpayer may claim the exemption on eligible purchases at any time during the period provided in Section 12-54-85(F), including the time period prior to subitem (B)(5)(iv) being satisfied. (2) For purposes of this section, the running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for: (i) the time period beginning with notice to each department pursuant to subitem (C)(1) and ending with notice to the Department of Revenue pursuant to subitem (C)(2); and (ii) during the three year job maintenance requirement pursuant to subitem (B)(5)(iv). (E) Any subsequent purchase of or investment in computer equipment, computer hardware and software, and computers, including to replace originally deployed computer equipment or to implement future expansions, likewise shall qualify for the exemption provided in this subitem, regardless of when the taxpayer makes the investments. (F)(1) If a taxpayer receives the exemption for purchases but fails to meet the requirements of subitem (B)(5) at the end of the five-year period, the department may assess any state or local sales or use tax due on items purchased. (2) If a taxpayer meets the requirements of subitem (B)(5), but subsequently fails to maintain the number of full-time jobs with the required compensation level at the facility, as previously required pursuant to subitem (B)(5)(iii), the taxpayer is: (i) not allowed the exemption for items described in subitem (A)(1) until the taxpayer meets the previous qualifying jobs requirements pursuant to subitem (B)(5)(iii); and (ii) allowed the exemption for electricity pursuant to subitem (A)(2), but the exemption only applies to a percentage of the sale price, calculated by dividing the number of qualifying jobs by twenty-five. (G) This subitem only applies to a datacenter that is certified by the Department of Commerce pursuant to subitem (D)(1) prior to January 1, 2032. However, this item shall continue to apply to a taxpayer that is certified by December 31, 2031, for an additional ten year period. Upon the end of the ten year period, this subitem is repealed;
(80)
(81) construction materials used by an entity organized under Section 501(c)(3) of the Internal Revenue Code as a nonprofit corporation to build, rehabilitate, or repair a home for the benefit of an individual or family in need. For purposes of this item, 'an individual or family in need' means an individual or family, as applicable, whose income is less than or equal to eighty percent of the county median income. (82) children's clothing sold to a private charitable organization exempt from federal and state income tax, except for private schools, for the sole purpose of distribution by that organization to needy children. For purposes of this item: (a) 'clothing' means those items exempt from sales and use tax pursuant to item (57)(a)(i) and (iii) of this section; and (b) 'needy children' means children eligible for free meals under the National School Lunch Program of the United States Department of Agriculture. (83) any item subject to the fee set forth in Section 56-3-627." SECTION 15. Section 12-36-2530 of the 1976 Code is amended to read:
"Section 12-36-2530. The department may require all retailers in this State making retail sales SECTION 16. Sections 12-36-2620 through 12-36-2640 of the 1976 Code are amended to read:
"Section 12-36-2620. The revenues from the taxes imposed by Sections 12-36-910, 12-36-920(B), 12-36-1310, and 12-36-1320
(1)
(2) (3) one-sixth must be credited to the Homestead Exemption Fund established pursuant to Section 11-11-155.
Section 12-36-2630. The revenues from the tax imposed by Section 12-36-920(A)
(1)
The tax imposed by Section 12-36-920 must be billed and paid in a single item listed as tax, without itemizing the taxes referred to in this section.
Section 12-36-2640. The revenues from the tax imposed by Section 12-36-1710
(1)
(2) (3) one-sixth must be credited to the Homestead Exemption Fund established pursuant to Section 11-11-155." SECTION 17. Section 12-36-2646 of the 1976 Code is repealed. SECTION 18. A. Article 1, Chapter 11, Title 11 of the 1976 Code is amended by adding: "Section 11-11-270. (A)(1) There is created in the State Treasury the Tax Reform Reserve Fund. This account is separate and distinct from the general fund of the State and all other funds. Earnings and interest on this fund must be credited to it and any balance in this fund at the end of a fiscal year carries forward in the fund in the succeeding fiscal year. Pursuant to subsection (B), the fund only may be appropriated to cover any loss of sales tax revenue resulting from a decreased sales tax rate or to provide a refundable individual income tax credit for tax year 2024. (2) Notwithstanding any other provision of law, in Fiscal Year 2021-2022, and the following two fiscal years, the fund must be credited any sales tax revenues attributable to the taxation of services. However, if the fund balance ever reaches five hundred million dollars, such revenues must be credited as otherwise provided by law. (B)(1) In addition to making its forecast of economic conditions, revenues, and recurring general fund revenue in this State pursuant to Section 11-9-1130, the Board of Economic Advisors shall make the same forecast except that the board shall assume that the reduction in the state sales tax and the elimination of sales tax exemptions that began on July 1, 2021, had not taken effect. This additional forecast must be made with each forecast required by Section 11-9-1130. If the April tenth final forecast for the upcoming fiscal year is less than the same additional forecast, then the General Assembly shall appropriate from the fund an amount up to the amount of shortage and the scheduled reduction in the state sales tax rate must be delayed by one year. The scheduled rate reduction must be implemented the next fiscal year if the provisions of this section are met, mutatis mutandis. (2) Any funds remaining in the fund on June 30, 2024, must be appropriated to provide a refundable individual income tax return for the 2024 tax year. This income tax credit for each individual taxpayer is the result produced when multiplying a fraction in which the individual's income tax liability, after applying all applicable credits, is the numerator and the denominator is the net state individual income tax revenues in the most recently completed tax year, multiplied by the amount of remaining funds." B. On July 1, 2024, Section 11-11-270 of the 1976 Code is repealed. SECTION 19. Chapter 10, Title 4 of the 1976 Code is amended by adding:
Section 4-10-1110. Notwithstanding any other provision of law, any tax imposed pursuant to the this chapter or any provision of law, or any local law enacted by the General Assembly, the rate of the imposition must be reduced by one-half. Further, any rate limitation on any such sales and use tax must be reduced by one-half." SECTION 20. A. The Revenue and Fiscal Affairs Office shall monitor the effects of the amendments made in this act on sales and use tax revenue collections. By February 15, 2022, and each February fifteenth thereafter, the Revenue and Fiscal Affairs Office shall issue a report detailing the effects of this act and any updates to previous reports and estimates. The report must be issued to the Senate Finance Committee and the House Ways and Means Committee. B. This SECTION takes effect upon approval by the Governor. SECTION 21. (A)(1) Notwithstanding any other provision of this act, the taxation of services, the elimination of exemptions, and the reduction of sales tax rates must be phased-in as provided in this section. (2) Notwithstanding the general effective date of this act, upon approval by the Governor, the Department of Revenue shall take steps necessary to begin the implementation of this act. (B) The taxation of services, as added by this act, must be taxed at a rate of one percent beginning July 1, 2021. Beginning July 1, 2022, the tax rate on services must be three percent and is considered to be fully phased-in. (C)(1) The elimination of the exemptions contained in Section 12-36-2120 must be phased-in in three equal installments of thirty-three and one-third percent, so that in the first year of implementation, beginning July 1, 2021, the exemption only applies to sixty-six and two-thirds percent of the gross proceeds of sales. The percentage of gross proceeds to which the exemption applies must be reduced by the same percent each July first thereafter, until the exemption is completely eliminated on July 1, 2023. (2) The reduction of the application of any exemption contained in Section 12-36-2120 must be phased-in in a similar manner as provided in item (1), mutatis mutandis. (D) The state sales tax rate must be reduced by one percent each July first, beginning in July 1, 2021, until the state sales tax rate equals three percent on July 1, 2023. (E)(1) The reduction of any local sales and use tax rate pursuant to Section 4-10-1110, must be reduced by three equal installments, beginning July 1, 2021, and every July first thereafter until July 1, 2023, when the rate is one-half of the June 30, 2022, rate. (2) The reduction of the rate limitation must be phased-in in a similar manner as provided in item (1), mutatis mutandis. SECTION 22. Except where provided otherwise, and subject to the provisions of SECTION 21, this act takes effect July 1, 2021.
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