Current Status Bill Number:3299 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19950118 Primary Sponsor:D. Smith All Sponsors:D. Smith and Wilkes Drafted Document Number:jic\5266htc.95 Residing Body:House Current Committee:Ways and Means Committee 30 HWM Subject:Jobs tax credit
Body Date Action Description Com Leg Involved
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House 19950118 Introduced, read first time, 30 HWM
referred to Committee
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TO AMEND SECTION 12-7-1220, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE STATE TARGETED JOBS TAX CREDIT, SO AS TO EXTEND THE CREDIT TO A SOLE PROPRIETOR, PARTNERSHIP, LIMITED LIABILITY COMPANY, CORPORATION OF ANY CLASSIFICATION, OR ASSOCIATION, ALLOW THE CREDIT TO BE CLAIMED AGAINST THE INDIVIDUAL INCOME TAX LIABILITY OF THE SOLE PROPRIETOR, PARTNER, SUB S CORPORATION SHAREHOLDER, AND LIMITED LIABILITY COMPANY OWNER AND PROVIDE FOR THE MANNER OF CLAIMING THE CREDIT AND TO DELETE PROVISIONS PREVIOUSLY LIMITING THE ELIGIBILITY FOR THE CREDIT FOR SHAREHOLDERS OF A SUB S CORPORATION TO SUCH A CORPORATION ELIGIBLE TO USE THE FEE IN LIEU OF TAX.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. A. Subsections (A) through (G) of Section 12-7-1220 of the 1976 Code, as last amended by Section 136A, Part II, Act 497 of 1994, are further amended to read:
"(A) Annually by December thirty-first, using the most current data available from the South Carolina Employment Security Commission and the United States Department of Commerce, the Department of Revenue and Taxation shall rank and designate the state's counties as provided in this section. The sixteen counties in this State having a combination of the highest unemployment rate and lowest per capita income for the most recent thirty-six month period with equal weight being given to each category are designated less developed counties. The fifteen counties in the State with a combination of the next highest unemployment rate and next lowest per capita income for the most recent thirty-six month period with equal weight being given to each category are designated moderately developed counties. The fifteen counties in the State with a combination of the lowest unemployment rate and the highest per capita income for the most recent thirty-six month period with equal weight being given to each category are designated developed counties. Corporations Taxpayers which create new full-time jobs qualify for the appropriate tax credit as provided in subsections (B), (C), and (D). The designation by the Department of Revenue and Taxation is effective for corporate tax years which begin after the date of designation. For corporations taxpayers which plan a significant expansion in their labor forces at a South Carolina location, the appropriate commission agency shall prescribe certification procedures to ensure that the corporations taxpayers can claim credits in future years without regard to whether or not a particular county is removed from the list of less developed or moderately developed counties.
(B) Corporations Taxpayers operating manufacturing, tourism, processing, warehousing, distribution, research and development, and corporate office facilities in counties designated by the commission department as less developed are allowed a job tax credit for taxes imposed by Section 12-7-230 and for insurance premium taxes imposed pursuant to Chapter 7, Title 38 equal to one thousand dollars annually for each new full-time employee job for five years beginning with years two through six after the creation of the job. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees subject to South Carolina income tax withholding in the applicable county for the taxable year with the corresponding period of the prior taxable year. Only those corporations taxpayers that increase employment by ten or more in a less developed county are eligible for the credit. Credit is not allowed during the five years if the net employment increase falls below ten. The appropriate commission agency shall adjust the credit allowed each year for net new employment fluctuations above the minimum level of ten.
(C) Corporations Taxpayers operating manufacturing, tourism, processing, warehousing, distribution, research and development, and corporate office facilities in counties that have been designated by the commission department as moderately developed are allowed a job tax credit for taxes imposed by Section 12-7-230 and for insurance premium taxes imposed pursuant to Chapter 7, Title 38 equal to six hundred dollars annually for each new full-time employee job for five years beginning with years two through six after the creation of the job. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees in the applicable county subject to South Carolina income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those corporations taxpayers that increase employment by eighteen or more in a county that has been designated moderately developed are eligible for the credit. The credit is not allowed during the five years if the net employment increase falls below eighteen. The appropriate commission agency shall adjust the credit allowed each year for net new employment fluctuations above the minimum level of eighteen.
(D) Corporations Taxpayers operating manufacturing, tourism, processing, warehousing, distribution, research and development, and corporate office facilities in counties designated by the commission department as developed are allowed a job tax credit for taxes imposed by Section 12-7-230 and for insurance premium taxes imposed pursuant to Chapter 7, Title 38 equal to three hundred dollars annually for each new full-time employee job for five years beginning with years two through six after the creation of the job. The number of new full-time jobs must be determined by comparing the monthly average number of full-time employees in the applicable county subject to South Carolina income tax withholding for the taxable year with the corresponding period of the prior taxable year. Only those corporations taxpayers that increase employment by fifty or more in a county that has been designated developed are eligible for the credit. The credit is not allowed during the five years if the net employment increase falls below fifty. The appropriate commission agency shall adjust the credit allowed each year for net new employment fluctuations above the minimum level of fifty.
(E) Tax credits for five years for the taxes imposed by Section 12-7-230 and for insurance premium taxes imposed pursuant to Chapter 7, Title 38 must be awarded for additional new full-time jobs created by corporations taxpayers qualified under subsections (B), (C), (D), and (I). Additional new full-time jobs must be determined by subtracting highest total employment of the corporation taxpayer during years two through six, or whatever portion of year two through six completed, from the total increased employment. The appropriate commission agency shall adjust the credit allowed for employment fluctuations during the additional five years of credit.
(F) The merger, consolidation, or reorganization of a corporation taxpayer where tax attributes survive does not create new eligibility in a succeeding corporation taxpayer, but unused job tax credits may be transferred and continued by the succeeding corporation taxpayer. In addition, a corporation taxpayer may assign its rights to its jobs tax credit to another corporation taxpayer if it transfers all, or substantially all, of the assets of the corporation taxpayer or all, or substantially all, of the assets of a trade or business or operating division of a corporation taxpayer related to the generation of the jobs tax credits to that corporation taxpayer if the required number of new jobs is maintained for that amount of credit. No corporation taxpayer is allowed a jobs tax credit if the net employment increase for that corporation taxpayer falls below ten for a less developed county, eighteen for a moderately developed county, or fifty for a developed county. The Department of Revenue and Taxation or Department of Insurance, as appropriate, shall determine whether or not qualifying net increases or decreases have occurred and may require reports, promulgate regulations, and hold hearings needed for substantiation and qualification."
(G) A credit claimed under this section but not used in a taxable year may be carried forward for ten years from the close of the tax year in which the credit is earned by the corporation taxpayer. However, the credit established by this section taken in one tax year must be limited to an amount not greater than fifty percent of the taxpayer's state corporate income tax or premium tax liability which is attributable to income or premiums derived from operations in the State for that year."
B. Section 12-7-1220(H)(3) of the 1976 Code, as added by Act 175 of 1989, is amended to read:
"(3) `Corporation Taxpayer' means a sole proprietor, partnership, corporation of any classification, limited liability company, or association taxable as a business entity which is subject to South Carolina taxes as contained in Section Sections 12-7-210 and 12-7-230 and Chapter 7, Title 38."
C. Section 12-7-1220(J) of the 1976 Code, as added by Section 97A, Part II, Act 164 of 1993 is amended to read:
"(J) (1) If a corporation qualifies to use the fee in lieu of property taxes provided in Section 4-29-67 and fails to qualify for a credit under this section solely because it is an S corporation, then each of the shareholders of the S corporation qualifies for a nonrefundable credit against taxes imposed pursuant to Section 12-7-210.
(2) The amount of the credit allowed a shareholder by this subsection is equal to the shareholder's percentage of stock ownership for the taxable year multiplied by the amount of the credit the corporation would have been entitled to if it were not an S corporation.
(3) A credit claimed under this subsection but not used in a taxable year may be carried forward for ten years from the close of the tax year in which the credit is earned by the S corporation. However, the credit established by this section taken in one tax year may not exceed fifty percent of the taxpayer's tax liability under Section 12-7-210.
In addition to those credits allowed under subsections (B), (C), and (D) of this section:
(1) A corporation, partnership, or limited liability company that qualifies for a credit under this section as an S corporation, partnership, or limited liability company, entitles each shareholder of the S corporation, partner of the partnership, or member of the limited liability company to a nonrefundable credit against taxes imposed pursuant to Section 12-7-210.
(2) The amount of the credit allowed a shareholder, partner, or owner of a limited liability company by this subsection is equal to the shareholder's percentage of stock ownership, partner's interest in the partnership, or member's interest in the limited liability company for the taxable year multiplied by the amount of the credit the taxpayer would have been entitled to if it were taxed as a corporation.
(3) A credit claimed under this subsection but not used in a taxable year may be carried forward for ten years from the close of the tax year in which the credit is earned by the S corporation, partnership, or limited liability company. However, the credit established by this section taken in one tax year may not exceed fifty percent of the taxpayer's tax liability under Section 12-7-210."
SECTION 2. This act takes effect upon approval by the Governor and applies with respect to taxable years beginning after 1994.