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4851Type of Legislation: General Bill GBIntroducing Body: HouseIntroduced Date: 20000330Primary Sponsor: HarrellAll Sponsors: Harrell, Wilkins, Harrison, Knotts, Riser, Allison, G. Brown, Dantzler, Frye, Gilham, Haskins, Hawkins, Hinson, Keegan, Kelley, Klauber, Law, Littlejohn, McKay, Meacham-Richardson, Rice, Robinson, Rodgers, Sharpe, R. Smith, Taylor, Trotter, Woodrum and Young-BrickellDrafted Document Number: l:\council\bills\nbd\11599mm00.docCompanion Bill Number: 1327Residing Body: HouseCurrent Committee: Ways and Means Committee 30 HWMSubject: Income, job tax credit; technology facility, research and development; Taxation, Businesses, Political SubdivisionsHistory Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ ------ 20000418 Companion Bill No. 1327 House 20000330 Introduced, read first time, 30 HWM referred to Committee Versions of This Bill
TO AMEND SECTION 12-6-3360, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO JOBS TAX CREDIT, SO AS TO INCLUDE AND DEFINE A "TECHNOLOGY INTENSIVE FACILITY" AS A QUALIFYING FACILITY; TO ADD SECTION 12-6-3415 SO AS TO PROVIDE AN INCOME TAX CREDIT FOR RESEARCH AND DEVELOPMENT EXPENDITURES; TO AMEND SECTION 12-10-20, AS AMENDED, RELATING TO LEGISLATIVE INTENT FOR THE ENTERPRISE ZONE ACT OF 1995, SO AS TO INCLUDE TECHNOLOGY INTENSIVE FACILITIES; TO AMEND SECTION 12-10-30, AS AMENDED, RELATING TO DEFINITIONS FOR THE ENTERPRISE ZONE ACT, SO AS TO DEFINE "TECHNOLOGY EMPLOYEE"; TO AMEND SECTION 12-10-80, AS AMENDED, RELATING TO A JOB DEVELOPMENT CREDIT UNDER THE ENTERPRISE ZONE ACT, SO AS TO INCLUDE EMPLOYEE RELOCATION EXPENSES ASSOCIATED WITH NEW OR EXPANDED TECHNOLOGY INTENSIVE FACILITIES AND RETRAINING EXPENSES FOR TECHNOLOGY EMPLOYEES; TO AMEND SECTION 12-36-2110, AS AMENDED, RELATING TO MAXIMUM SALES AND USE TAX, SO AS TO DELETE THE CAP ON TAX FOR THE SALE OR USE OF MACHINERY FOR RESEARCH OR DEVELOPMENT; TO AMEND SECTION 12-36-2120, AS AMENDED, RELATING TO EXEMPTIONS FROM SALES TAX, SECTION 12-37-220, AS AMENDED, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO EXEMPT FROM THE SALES TAX AND PROPERTY TAX MACHINES USED DIRECTLY AND PRIMARILY FOR RESEARCH AND DEVELOPMENT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-6-3360(A) of the 1976 Code, as last amended by Act 462 of 1996, is further amended to read:
"(A) Taxpayers that operate manufacturing, tourism, processing, warehousing, distribution, research and development, corporate office,
and qualifying service-related facilities, and qualifying technology intensive facilities are allowed an annual job tax credit as provided in this section. In addition, taxpayers that operate retail facilities and service related industries qualify for an annual jobs tax credit in counties designated as least developed. Credits under this section may be claimed against income taxes imposed by Section 12-6-510 or 12-6-530, and insurance premium taxes imposed pursuant to Chapter 7 of Title 38, and are limited in use to fifty percent of the taxpayer's South Carolina income tax, insurance premium tax liability. In computing any tax payable by a taxpayer under Section 38-7-90, the credit allowable under this section must be treated as a premium tax paid under Section 38-7-20."
SECTION 2. Section 12-6-3360(M) of the 1976 Code, as last amended by Act 114 of 1999, is further amended by adding:
"(14) 'Technology intensive facility' means a firm engaged 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 System, NAICS, codes published by the Office of Management and Budget of the federal government:
(i) 51114 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) 541710 Scientific research and development services
(vii) 9271 Space research and technology."
SECTION 3. Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-3415. (A) A taxpayer that claims a federal income tax credit pursuant to Section 174 of the Internal Revenue Code for increasing research activities for the taxable year is allowed a credit against any tax due pursuant to Section 12-6-530 or Section 12-20-50 equal to five percent of the taxpayer's qualified expenditures for research and development made in South Carolina. For the purposes of this credit, qualified research and development expenditures have the same meaning as provided for in Section 174 of the Internal Revenue Code.
(B) The credit taken in any one taxable year pursuant to this section may not exceed fifty percent of the taxpayer's remaining tax liability after all other credits have been applied. Any unused credit may be carried over to the immediately succeeding taxable years, except that the credit carry-over may not be used for a taxable year that begins on or after ten years from the date of the qualified expenditure."
SECTION 4. Section 12-10-20(1) of the 1976 Code, as added by Act 25 of 1995, is amended to read:
"(1) that the economic well-being of the citizens of the State
will be is enhanced by the increased development and growth of industry within the State, and that it is in the best interest of the State to induce the location or expansion of manufacturing, processing, services, distribution, warehousing, research and development, corporate offices, technology intensive, and certain tourism facilities within the State in order to promote the public purpose of creating new jobs within the State;"
SECTION 5. Section 12-10-30 of the 1976 Code, as last amended by Act 93 of 1999, is further amended to read:
"Section 12-10-30. As used in this chapter:
(1) 'Council' means the Advisory Coordinating Council for Economic Development.
(2) 'Department' means the South Carolina Department of Revenue.
(3) 'Employee' means an employee of the qualifying business who works full time within the enterprise zone.
(4) 'Manufacturing' means engagement primarily in an activity or activities listed under the Standard Industrial Classification (SIC) Codes 20 through 39 as published in the Office of Management and Budget's Standard Industrial Classification Manual.
(5) 'New job' means a job created or reinstated as defined in Section 12-6-3360(M)(3).
(6) 'Qualifying business' means an employer that meets the requirements of Section 12-10-50 and other applicable requirements of this chapter and, where required under Section 12-10-50, enters into a revitalization agreement with the council to undertake a project under the provisions of this chapter.
(7) 'Project' means an investment for one or more purposes in Section 12-10-80(B) needed for a qualifying business to locate, remain, or expand in an enterprise zone and otherwise fulfill the requirements of this chapter.
(9) 'Withholding' means employee withholding under Chapter 9 of this title.
(10) 'Technology employee' means an employee whose job qualifies for jobs tax credit pursuant to Section 12-6-3360(M)(14)."
SECTION 6. Section 12-10-80(C) and (D) of the 1976 Code, as last amended by Act 151 of 1997, is further amended to read:
In order To claim a job development credit, the qualifying business must incur expenditures at the above-described facility or for utility or transportation improvements that serve this facility. To be qualified, the expenditures (a) the expenditures are must be incurred: (1) during the term of the revitalization agreement or within sixty days before the execution of a revitalization agreement, including a preliminary revitalization agreement, (b) the expenditures must be (2) by according to the revitalization agreement ,; and (c)(3) the expenditures are for any of the following purposes:
(1)(a) training costs and facilities;
(2)(b) acquiring and improving real estate whether constructed or acquired by purchase, or in cases approved by the council, acquired by lease or otherwise;
(3)(c) improvements to both public and private utility systems including water, sewer, electricity, natural gas, and telecommunications;
(4)(d) fixed transportation facilities including highway, rail, water, and air;
(5)(e) construction or improvements of any real property and fixtures constructed or improved primarily for the purpose of complying with local, state, or federal environmental laws or regulations;
(f) employee relocation expenses associated with new or expanded technology intensive facilities as defined in Section 12-6-3360(M)(14);
(6) The amount of job development credits a qualifying business may claim for its use for qualifying expenditures is limited according to the designation of the county as defined in Section 12-6-3360 as follows:
(a)(1) one hundred percent of the maximum job development credits may be claimed by businesses located in counties designated as 'least developed';
(b)(2) eighty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'under developed';
(c)(3) seventy percent of the maximum job development credits may be claimed by businesses located in counties designated as 'moderately developed'; or
(d)(4) fifty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'developed'.
The council shall certify to the department the maximum job development credit for each qualifying business. After receiving certification, the department shall remit an amount equal to the difference between the maximum job development credit and the job development credit actually claimed to the State Rural Infrastructure Fund as defined and provided in Section 12-10-85.
(D) Subject to the conditions in this section,
any a qualifying business in this State may negotiate with the council to claim a job development credit for retraining according to the procedure in subsection (A) in an amount equal to five hundred dollars a year for each production and technology employee being retrained, where this retraining is necessary for the qualifying business to remain competitive or to introduce new technologies. This retraining must be approved by and performed by the technical college under the jurisdiction of the State Board for Technical and Comprehensive Education serving the designated enterprise zone. The technical college may provide the retraining program delivery directly or contract with other training entities to accomplish the required training outcomes. In addition to the yearly limits, the amount claimed as a job development credit for retraining may not exceed two thousand dollars over five years for each production employee being retrained. Additionally, the qualifying business must match on a dollar-for-dollar basis the amount claimed as a job development credit for retraining. The total amount claimed as job development credits for retraining and all of the qualifying business' matching funds of the business must be paid to the technical college that provides the training to defray the cost of the training program. Any Training cost in excess of the job development credits for retraining and matching funds is the responsibility of the qualifying business based on negotiations with the technical college."
SECTION 7. A. Section 12-36-2110(D) of the 1976 Code is repealed.
B. Section 12-36-2120 of the 1976 Code, as last amended by Act 114 of 1999, is further amended by adding at the end:
"( ) 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."
SECTION 8. Section 12-37-220(B)(34) of the 1976 Code, as added by Act 110 of 1991, is amended to read:
"(34) The facilities of all new enterprises engaged in research and development activities located in any of the counties of this State, and all additions valued at fifty thousand dollars or more to existing facilities of enterprises engaged in research and development are exempt from ad valorem taxation in the same manner and to the same extent as the exemption allowed pursuant to item (7) of subsection A of Section 12-37-220. These additions include machinery and equipment installed in an existing manufacturing or research and development facility. For purposes of this section, facilities of enterprises engaged in research and development activities are facilities devoted directly and
exclusively primarily to research and development, in the experimental or laboratory sense, for of new products, new uses for existing products, or for improving improvement of existing products. To be eligible for the exemption allowed by this section, the facility or its addition must be a separate facility devoted exclusively primarily to research and development as defined in this section. The exemption does not include facilities used in connection with efficiency surveys, management studies, consumer surveys, economic surveys, advertising, promotion, or research in connection with literary, historical, or similar projects."
SECTION 9. Upon approval by the Governor, this act is effective for taxable years beginning after June 30, 2000.
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