Current Status Introducing Body:House Bill Number:4903 Primary Sponsor:Corning Committee Number:30 Type of Legislation:GB Subject:Income tax withholding requirements revised Residing Body:House Current Committee:Ways and Means Computer Document Number:JIC/5495HC.94 Introduced Date:19940310 Last History Body:House Last History Date:19940310 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Corning Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
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4903 House 19940310 Introduced, read first time, 30
referred to Committee
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TO AMEND SECTION 12-9-310, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INCOME AND AMOUNTS SUBJECT TO WITHHOLDING FOR PURPOSES OF THE STATE INCOME TAX, SO AS TO REVISE THE WITHHOLDING REQUIREMENTS FOR PAYMENTS OF RENTALS AND ROYALTIES TO NONRESIDENTS, PRIZES AND AWARDS TO RESIDENTS AND NONRESIDENTS, AND CONTRACTUAL PAYMENTS TO NONRESIDENTS FOR CONDUCTING BUSINESS OR PERFORMING PERSONAL SERVICES TEMPORARILY IN THIS STATE, REVISE THRESHOLD WITHHOLDING REQUIREMENTS AND ALLOW EXEMPTION FROM WITHHOLDING BY ENTITIES REGISTERING WITH THE SECRETARY OF STATE OR DEPARTMENT OF REVENUE AND TAXATION AGREEING TO THE JURISDICTION OF THE DEPARTMENT AND THE COURTS OF THIS STATE TO DETERMINE TAX LIABILITY, TO RELIEVE THE PAYOR OF THE REQUIREMENT TO WITHHOLD WHEN THE PAYEE PROVIDES AN AFFIDAVIT STATING THAT THE PAYEE IS REGISTERED, AND TO PROVIDE FOR THE REVOCATION OF THE REGISTRATION EXEMPTION; AND TO AMEND SECTIONS 33-15-105 AND 33-42-1620, RELATING TO THE CERTIFICATE OF AUTHORITY OF A FOREIGN CORPORATION TO TRANSACT BUSINESS IN THIS STATE AND THE REGISTRATION OF A FOREIGN LIMITED PARTNERSHIP TO TRANSACT BUSINESS IN THIS STATE, SO AS TO CONFORM THESE PROVISIONS TO THE REVISED WITHHOLDING PROVISIONS OF THIS ACT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Items (2) and (3) of Section 12-9-310(A) of the 1976 Code, as last amended by Section 121, Act 181 of 1993, are further amended to read:
"(2) making payments to a nonresident of rentals or royalties at the rate of eight hundred dollars or more a year for the use of or for the privilege of using property in this State, or making payments of prizes or winnings to a resident or nonresident, shall withhold seven percent of the total amount of each payment. The rental of residential housing units, when four or fewer units are owned by a nonresident, is not subject to withholding under this section. For payments to a corporation the withholding must be at the rate of six percent. In regard to bingo prizes or winnings paid to residents or nonresidents of this State, seven percent of the total amount of each payment of five hundred dollars or more must be withheld. The provisions of this item do not apply to spectator sporting events for which an admission is charged;
(3) hiring or contracting or having a contract with a nonresident taxpayer conducting a business or performing personal services of a temporary nature carried on within this State, where the contract exceeds ten thousand dollars or reasonably could be expected to exceed ten thousand dollars, must withhold two percent of each and every payment made to these nonresidents. This item does not apply to a utility hiring or contracting or having a contract with any nonresident utility or to a county hiring or contracting with a person not in its regular employ to perform services of a temporary nature relating to damage caused by natural forces. For purposes of this item:
(a) "natural forces" means conflagration, flood, storm, earthquake, hurricane, or other public calamity;
(b) "utility" means a person, public utility, electric cooperative, special purpose district, authority, or political subdivision producing, storing, conveying, transmitting, or distributing communication, electricity, gas, water, steam, or sewerage; and
(c) "county" means a county of this State.
This item also does not apply to amounts paid to:
a nonresident contractor performing work under a contract with the South Carolina Department of Highways and Public Transportation; and
a nonresident subcontractor performing work for a contractor who is operating under a contract with the South Carolina Department of Highways and Public Transportation.
For purposes of this item, the term nonresident does not include motion picture companies as defined in Section 12-36-2120 nor does it include entities performing personal services for motion picture companies when the motion picture companies and the personal service companies obtain a certificate of authority from the Secretary of State pursuant to Title 33.
(2) (a) making payments of prizes or winnings of five hundred dollars or more to a resident or nonresident, shall withhold seven percent of the total amount of each payment. The provisions of this subitem do not apply to participants in spectator sporting events for which an admission is charged.
(b) making payments to a nonresident of rentals or royalties at the rate of twelve hundred dollars or more a year for the use of or for the privilege of using property in this State, shall withhold seven percent of the total amount of each payment to a person who is not a corporation, and five percent to each corporation. The rental of residential housing units, when four or fewer units are owned by a nonresident, is not subject to withholding under this section. An individual who pays rent directly to a nonresident solely for an apartment which is his legal residence is not required to withhold under this section. This subitem does not apply to a nonresident which has registered with the Secretary of State or the Department of Revenue and Taxation and by that registration has agreed to be subject to the jurisdiction of the department and the courts of this State to determine its South Carolina tax liability, including estimated taxes, together with any related interest and penalties, if any. Registering with the Secretary of State or the department is not an admission of tax liability. If the person renting from or having a royalty contract with a nonresident obtains an affidavit from the nonresident stating that the nonresident is registered with the department or with the Secretary of State, the person is not responsible for the withholding.
The department may revoke the exemption granted by the registration provided in this item if it determines that the nonresident taxpayer is not cooperating with the department in the determination of the nonresident taxpayer's correct South Carolina tax liability. The revocation does not revive the duty of a person renting from or having a royalty contract with a nonresident to withhold until the person receives notice of the revocation.
(3) hiring or contracting or having a contract with a nonresident taxpayer conducting a business or performing services of a temporary nature within this State, where payment under the contract exceeds ten thousand dollars or reasonably could be expected to exceed ten thousand dollars during any one calendar year, must withhold two percent of each payment made to these nonresidents. This item does not apply to a nonresident which has registered with the Secretary of State or the Department of Revenue and Taxation and by that registration has agreed to be subject to the jurisdiction of the department and the courts of this State to determine its South Carolina tax liability, including withholding and estimated taxes, together with any related interest and penalties, if any. Registering with the Secretary of State or the department is not an admission of tax liability nor must this act of registering be construed to require the filing of an income tax or franchise (license) tax return. If the person hiring, contracting, or having a contract with a nonresident obtains an affidavit from the nonresident stating that the nonresident is registered with the department or with the Secretary of State, the person is not responsible for the withholding.
The department may revoke the exemption granted by registering with the Secretary of State or the department if it determines that the nonresident taxpayer is not cooperating with the department in the determination of the nonresident taxpayer's correct South Carolina tax liability. This revocation does not revive the duty of a person hiring, contracting, or having a contract with a nonresident to withhold, until the person receives notice of the revocation.
The department may partially or totally exempt classes of transactions from the provisions of this section and may exempt the portion of any transaction which is not taxable in this State."
SECTION 2. Section 33-15-105 of the 1976 Code is amended by adding at the end:
"(d) By obtaining a certificate of authority, the foreign corporation agrees to be subject to the jurisdiction of the Department of Revenue and Taxation and the courts of this State to determine its South Carolina tax liability, including withholding and estimated taxes, together with related interest and penalties, if any. Obtaining a certificate of authority is not an admission of tax liability."
SECTION 3. Section 33-42-1620 of the 1976 Code is amended by adding at the end:
"By registering, the foreign limited partnership agrees to be subject to the jurisdiction of the Department of Revenue and Taxation and the courts of this State to determine its South Carolina tax liability, including withholding and estimated taxes, together with related interest and penalties, if any. Registering is not an admission of tax liability."
SECTION 4. This act takes effect upon approval by the Governor.