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Current Status Bill Number:View additional legislative information at the LPITS web site.4901 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:20000412 Primary Sponsor:Robinson All Sponsors:Robinson Drafted Document Number:l:\council\bills\dka\3825mm00.doc Residing Body:House Current Committee:Ways and Means Committee 30 HWM Subject:Enterprise zones, revitalization agreement, job development credit; Taxation, Businesses, Commerce, Economic Development History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ House 20000412 Introduced, read first time, 30 HWM referred to Committee Versions of This Bill
TO AMEND SECTIONS 12-10-20, 12-10-30, AS AMENDED, 12-10-50, AS AMENDED, 12-10-60, AS AMENDED, 12-10-80, AS AMENDED, 12-10-81, AND 12-10-100, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, ALL RELATING TO THE ENTERPRISE ZONE ACT OF 1995, SO AS TO DEFINE "JOB DEVELOPMENT CREDIT", "PRELIMINARY REVITALIZATION AGREEMENT", "REVITALIZATION AGREEMENT", AND "QUALIFYING EXPENDITURES", TO PROVIDE FOR DETERMINATION OF CREDITS WHEN A REVITALIZATION AGREEMENT IS AMENDED, TO REQUIRE CERTIFICATION BY THE ADVISORY COORDINATING COUNCIL FOR ECONOMIC DEVELOPMENT THAT THE MINIMUM EMPLOYMENT AND CAPITAL INVESTMENT LEVELS ARE MET, TO REQUIRE TEN NEW FULL-TIME JOBS WITHIN FIVE YEARS OF THE AGREEMENT, TO PROVIDE FOR A CLAIM OF LESS THAN TEN THOUSAND DOLLARS IN A CALENDAR YEAR, TO PROVIDE FOR THE DESIGNATION OF THE COUNTY IN WHICH THE PROJECT IS LOCATED, TO TOLL THE STATUTE OF LIMITATIONS AS TO WITHHOLDING TAXES DURING THE FIVE-YEAR PERIOD, TO PROVIDE THAT THE QUALIFYING JOB MUST BE CREATED IN THIS STATE, TO PROVIDE FOR AN EXTENSION OF THE AUDIT REPORT FILING FOR GOOD CAUSE, TO INCREASE THE GROSS WAGES AMOUNT USED TO DETERMINE THE MAXIMUM CREDIT CLAIMED, AND TO CHANGE THE DATE FOR SELECTION OF QUALIFYING BUSINESSES AND APPROVAL OF REVITALIZATION AGREEMENTS FROM MARCH 1 TO MAY 15 OF EACH YEAR; AND TO AMEND SECTION 12-36-2120, AS AMENDED, RELATING TO EXEMPTIONS FROM SALES TAX, SO AS TO INCLUDE CERTAIN MACHINES NECESSARY TO COMPLY WITH FEDERAL REGULATIONS FOR PREVENTION OR ABATEMENT OF POLLUTION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. 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 interests of the State to induce the location or expansion of manufacturing, processing, services, distribution, warehousing, research and development, corporate offices, and certain tourism facilities projects within the State in order to promote the public purpose of creating new jobs within the State;"
SECTION 2. 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 at the project.
(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. 'Job development credit' means the amount a qualifying business may claim as a credit against employee withholding pursuant to Sections 12-10-80 and 12-10-81 and a revitalization agreement.
(5) 'New job' means a job created or reinstated as defined in Section 12-6-3360(M)(3).
(6) 'Qualifying business' means an employer a business that meets the requirements of Section 12-10-50 and other applicable requirements of this chapter and, where required under pursuant to Section 12-10-50, enters into a revitalization agreement with the council to undertake a project under pursuant to the provisions of this chapter.
(7) 'Project' means an investment for one or more purposes in Section 12-10-80(B) identified in a revitalization agreement, including a preliminary revitalization agreement, and needed for a qualifying business to locate, remain, or expand in an enterprise zone this State and otherwise fulfill the requirements of this chapter.
(8) Reserved. 'Preliminary revitalization agreement' means the application by the qualifying business for benefits pursuant to Section 12-10-80 if the council approves the application and agrees in writing at the time of approval to allow the approved application to serve as the preliminary revitalization agreement. The date of the preliminary revitalization agreement is the date of the council approval.
(9) 'Revitalization agreement' means an executed agreement entered into between the council and a qualifying business that describes the project and the negotiated terms and conditions for a business to qualify for a job development credit pursuant to Section 12-10-80 or 12-10-81.
(10) 'Qualifying expenditures' means those expenditures that meet the requirements of Section 12-10-80(C) or 12-10-81(D).
(9)(11) 'Withholding' means employee withholding under pursuant to Chapter 9 8 of this title."
SECTION 3. Section 12-10-50 of the 1976 Code, as last amended by Act 114 of 1999, is further amended to read:
"Section 12-10-50. To qualify for the benefits provided in this chapter, a business must be located within this State and satisfy the following criteria must:
(1) it must be engaged primarily engaged in a business of the type identified in Section 12-6-3360;
(2) the business shall provide a benefits package, including health care, to full-time employees which includes health care at the project;
(3) the business shall enter into a revitalization agreement which that is approved by the council and that describes a minimum job requirement and minimum capital investment requirement for the project as provided in Section 12-10-90, except that no a revitalization agreement is not required for a qualifying business with respect to Section 12-10-80(D)(E); and,
(4) the council shall determine that the have negotiated incentives that council has determined are appropriate for the project, and the council shall certify that:
(a) the total benefits of the project exceed the costs to the public; and that
(b) the business otherwise fulfills the requirements of this chapter. No provision of this chapter must be construed to allow the council to negotiate a fee-in-lieu of property taxes agreement or approve job training or retraining."
SECTION 4. Section 12-10-60 of the 1976 Code, as last amended by Act 114 of 1999, is further amended to read:
"Section 12-10-60. (A) The council may enter into a revitalization agreement with each qualifying business with respect to the project. The terms and provisions of each revitalization agreement must be determined by negotiations between the council and the qualifying business. The decision to enter into a revitalization agreement with a qualifying business is solely within the discretion of the council and a qualifying business does not have a right of appeal from the council's decision based on the appropriateness of the negotiated incentives to the project and the determination that approval of the project is in the best interests of the State. The revitalization agreement must set a date by which the qualifying business shall have completed the project. Within three months of the completion date, the qualifying business shall document the actual costs of the project in a manner acceptable to the council.
(B) If a qualifying business that entered into a revitalization agreement before January 1, 1997, receives council approval to amend its revitalization agreement to increase its minimum job requirement, the law in effect on the date of the amendment determines the amount of job development credit a qualifying business may claim pursuant to Section 12-10-80 for additional jobs created after the date of the amendment."
SECTION 5. Section 12-10-80 of the 1976 Code, as last amended by Act 151 of 1997, is further amended to read:
"Section 12-10-80. (A) A business that qualifies under pursuant to Section 12-10-50 and which has met the minimum job requirement and minimum capital investment provided for in the final revitalization agreement may claim a job development credit credits as determined by this section.
(1) A business may claim its job development credit credits against its withholding on its quarterly state withholding tax return for the amount of job development credit credits allowable under pursuant to this section. The credit must be claimed on a quarterly basis. In order to claim a job development credit, the business must be current with respect to its withholding tax as well as any other tax due and owing the State, and must have maintained its minimum employment requirement for the entire quarter.
(2) A business that is current with respect to its withholding tax and other tax due and owing the State and that has maintained its minimum employment and investment levels identified in the revitalization agreement may claim the credit on a quarterly basis beginning with the first quarter after the council's certification to the department that the minimum employment and capital investment levels were met for the entire quarter.
(3) A qualifying business may receive its initial job development credit only after the council has certified to the department that the qualifying business has met the required minimum employment and capital investment levels.
(4) To be eligible to apply to the council to claim a job development credit, a qualifying business shall create at least ten new, full-time jobs, as defined in Section 12-6-3360(M), at the South Carolina facility project described in the revitalization agreement within five years of the effective date of the agreement.
(5) A qualifying business is eligible to claim a job development credit under pursuant to the revitalization agreement for not more than fifteen years.
(6) To the extent any return of an overpayment of withholding that results from claiming job development credits is not used as permitted by subsection (C) or (D)(E), it must be treated as misappropriated employee withholding.
(7) Job development credits may not be claimed for purposes of (B) and (C) this section with regard to any an employee whose job was created in this State before the taxable year of the qualifying business in which it enters into a preliminary revitalization agreement.
(8) If a qualifying business claims job development credits under pursuant to this section, it shall make its payroll books and records available for inspection by the council and the department at the times the council and the department request. Each qualifying business claiming job development credits under pursuant to this section shall file with the council and the department the information and documentation requested by the council or department respecting employee withholding, the job development credit, and the use of any overpayment of withholding resulting from the claiming of a job development credit according to the revitalization agreement that the council or department requests.
(9) Each qualifying business which claims claiming in excess of ten thousand dollars in any a calendar year shall must furnish an audited report prepared by an independent certified public accountant which that itemizes the sources and uses of the funds. The audited report must be filed with the council and the department no later than June thirtieth following the calendar year in which the job development credits are claimed, except when a qualifying business obtains the written approval by the council for an extension of that date. Extensions may be granted only for good cause shown.
(10) Each qualifying business claiming ten thousand dollars or less in any calendar year must furnish a report prepared by the company that itemizes the sources and uses of the funds. This report must be filed with the council and the department no later than June thirtieth following the calendar year in which the job development credits are claimed, except when a qualifying business obtains the written approval by the council for an extension of that date. Extensions may be granted only for good cause shown.
(11) No An employer may not claim an amount that results in any employee ever an employee's receiving a smaller amount of wages on either a weekly or on an annual basis than the employee would receive otherwise receive in the absence of this chapter.
(B)(1) The maximum job development credit a qualifying business may claim for new employees is determined by limited to the lesser of withholding tax paid to the State on a quarterly basis or the sum of the following amounts:
(1)(a) two percent of the gross wages of each new employee who earns 6.34 6.74 dollars or more an hour but less than 8.45 8.99 dollars an hour;
(2)(b) three percent of the gross wages of each new employee who earns 8.45 8.99 dollars or more an hour but less than 10.57 11.23 dollars an hour;
(3)(c) four percent of the gross wages of each new employee who earns 10.57 11.23 dollars or more an hour but less than 15.85 16.85 dollars an hour; and
(4)(d) five percent of the gross wages of each new employee who earns 15.85 16.85 dollars or more an hour.
(2) The hourly gross wage figures set forth in this section item (1) must be adjusted annually by an inflation factor determined by the State Budget and Control Board. The amount which that may be claimed by a qualifying business is limited by subsection (C)(6) (D)(1) and the revitalization agreement. The council may approve a waiver of ninety-five percent of the limits under pursuant to subsection (C)(6) (D)(1) for qualifying businesses making a significant capital investment as defined in Section 4-12-30(D)(4) or Section 4-29-67(D)(4). The maximum job development credit that can be claimed is limited to the lesser of withholding paid to the State on a quarterly basis or the amount allowed by this subsection.
(C) In order To claim a job development credit, the qualifying business must incur qualified expenditures at the above-described facility project or for utility or transportation improvements that serve this facility the project. To be qualified expenditures (a) the expenditures are must be:
(1) incurred 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) authorized by the revitalization agreement,; and (c) the expenditures are
(3) used to reimburse the business 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;.
(6)(D)(1) 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(B) as follows:
(a) one hundred percent of the maximum job development credits may be claimed by businesses located in counties designated as 'least developed';
(b) eighty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'underdeveloped';
(c) seventy percent of the maximum job development credits may be claimed by businesses located in counties designated as 'moderately developed'; or
(d) fifty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'developed'.
(2) The county designation of the county in which the project is located at the time the qualifying business enters into a preliminary revitalization agreement with the council remains in effect for the entire period of the revitalization agreement, except as to additional jobs created pursuant to an amendment to a revitalization agreement entered into before June 1, 1997, as provided in Section 12-10-60. In that case the county designation on the date of the amendment remains in effect for the remaining period of the revitalization agreement as to any additional jobs created after the effective date of the amendment.
(3) 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)(E) 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 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 a 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 qualifying 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.
(E)(F) Any job development credit of a qualifying business permanently lapses upon expiration or termination of the revitalization agreement. If an employee is terminated, the qualifying business immediately shall must cease to claim job development credits.
(G) The statute of limitations provided by Section 12-54-85 is suspended until the end of the five-year period described in item (4) of subsection (A) with respect to state withholding taxes pursuant to this section for a business subject to this section.
(F)(H) For purposes of the job development credit allowed by this section, an employee is a person whose job was created in this State.
(G)(I) Job development credits may not be claimed by a governmental employer who employs persons at a closed or realigned military installation as defined in Section 12-10-88(E)."
SECTION 6. Section 12-10-81 of the 1976 Code, as added by Act 93 of 1999, is amended to read:
"Section 12-10-81. (A) A business may claim a job development credit as determined by this section if the:
(1) council approves the use of this section for the business;
(2) business qualifies pursuant to Section 12-10-50; and
(3) business is a tire manufacturer which that has more than four hundred twenty-five million dollars in capital invested in this State and employs more than one thousand employees in this State and which that commits within a period of five years from the date of a revitalization agreement, to invest an additional three hundred fifty million dollars and create an additional three hundred fifty jobs in this State qualifying for job development fees or credits pursuant to current or future revitalization agreements. The council, in its discretion, may extend the five-year period for two additional years if the business has made a commitment to the additional three hundred fifty million dollars and makes substantial progress toward satisfying the goal before the end of the initial five-year period. A business that represents to the council its intent to qualify pursuant to this section and is approved by the council may put job development fees computed pursuant to this section into an escrow account until the date the business satisfies the capital and job requirements of this section.
(B)(1) A business qualifying pursuant to this section may claim its job development credit against its withholding on its quarterly state withholding tax return for the amount of job development credit allowable pursuant to this section for not more than fifteen years. Job development credits allowed under pursuant to subsection (C)(1)(a) through (d) of this section apply only to withholding on jobs created pursuant to a revitalization agreement adopted under pursuant to this section and to the amounts withheld on wages and salaries on those jobs. The credit must be claimed on a quarterly basis. To claim a job development credit, the business must be current with respect to its withholding tax and other tax due and owing the State, and must have maintained its minimum employment requirement for the entire quarter.
(2) A business that is current with respect to its withholding tax as well as any other tax due and owing the State and that has maintained its minimum employment and investment levels identified in the revitalization agreement may claim the credit on a quarterly basis beginning with the quarter subsequent to the council's certification to the department that the minimum employment and capital investment levels have been met for the entire quarter.
(3) To be eligible to apply to the council to claim a job development credit pursuant to this section, a qualifying business must create at least ten new, full-time jobs as defined in Section 12-6-3360(M) at the South Carolina facility or facilities project or projects described in the revitalization agreement.
(3)(4) To the extent a return of an overpayment of withholding that results from claiming job development credits is not used as permitted by subsection (D), it must be treated as misappropriated employee withholding.
(5) Job development credits may not be claimed for purposes of this section with regard to an employee whose job was created in this State before the taxable year the qualifying business enters into a preliminary revitalization agreement.
(4)(6) If a qualifying business claims job development credits pursuant to this section, it must make its payroll books and records available for inspection by the council and the department at the times the council and the department request. Each qualifying business claiming job development credits pursuant to this section must file with the council and the department the information and documentation they request respecting employee withholding, the job development credit, and the use of any overpayment of withholding resulting from the claiming of a job development credit according to the revitalization agreement that the council or department requests.
(7) Each qualifying business must furnish an audited report prepared by an independent certified public accountant which that itemizes the sources and uses of the funds. The audited report must be filed with the council and the department no later than June thirtieth following the calendar year in which the job development credits are claimed, except when a qualifying business obtains written approval of council for an extension of that date. Extensions may be granted for good cause shown.
(8) An employer may not claim an amount that results in an employee employee's receiving a smaller amount of wages on either a weekly or on an annual basis than the employee would otherwise receive in the absence of this chapter.
(C)(1) The maximum job development credit a qualifying business may claim for new employees is determined by the sum of the following amounts:
(a) two percent of the gross wages of each new employee who earns $6.34 $6.74 or more an hour but less than $8.45 $8.99 an hour;
(b) three percent of the gross wages of each new employee who earns $8.45 $8.99 or more an hour but less than $10.57 $11.23 an hour;
(c) four percent of the gross wages of each new employee who earns $10.57 $11.23 or more an hour but less than $15.85 $16.85 an hour;
(d) five percent of the gross wages of each new employee who earns $15.85 $16.85 or more an hour; and
(e) the increase in the state sales and use tax of the business from the year of the effective date of its revitalization agreement pursuant to this section and subsequent years, over its state sales and use tax for the first of the three years preceding the effective date of this revitalization agreement.
(2) The hourly gross base wages in item (1) must be adjusted annually by the inflation factor determined by the State Budget and Control Board for the purposes of Section 12-10-80(3). The amount which that may be claimed by a qualifying business is limited by subsection (E) and the negotiated terms of the revitalization agreement. The business may proceed by using either the job development fee escrow procedure available pursuant to revitalization agreements with effective dates before 1997, or the job development credit, or a combination of the two. For a business qualifying pursuant to this section, the council also may approve or waive sections of a revitalization agreement and the council's rules as needed, in the council's discretion, to assist the business.
(D) To claim a job development credit, the qualifying business must incur expenditures at the facility project or for utility or transportation improvements that serve the facility project. To be qualified, the expenditures must be:
(1) incurred during the term of the revitalization agreement, including a preliminary revitalization agreement, or within sixty days before the execution of a revitalization agreement including a preliminary revitalization agreement council's receipt of an application for benefits pursuant to this section;
(2) authorized by the revitalization agreement,; and
(3) used to reimburse the business for:
(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 telecommunication;
(4)(d) fixed transportation facilities including highway, rail, water, and air; or
(5)(e) construction or improvements of real property and fixtures constructed or improved primarily for the purpose of complying with local, state, or federal environmental laws or regulations.
(E)(1) 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(B) as follows:
(a) one hundred percent of the maximum job development credits may be claimed by businesses located in counties designated as 'least developed';
(b) eighty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'underdeveloped';
(c) seventy percent of the maximum job development credits may be claimed by businesses located in counties designated as 'moderately developed'; or
(d) fifty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as 'developed'.
(2) The county designation of the county in which the project is located at the time the qualifying business enters into a preliminary revitalization agreement with the council remains in effect for the entire period of the revitalization agreement.
(3) 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.
(F) A job development credit of a qualifying business permanently lapses upon expiration or termination of the revitalization agreement. If an employee is terminated, the qualifying business immediately must cease to claim job development credits.
(F)(G) The statute of limitations provided by Section 12-54-85 is suspended until the end of the five-year or seven-year period described in item (3) of subsection (A) with respect to state withholding taxes under pursuant to this section for a business subject to this section.
(H) For purposes of the job development credit allowed by this section, an employee is a person whose job was created in this State."
SECTION 7. Section 12-10-100(C) of the 1976 Code, as added by Act 25 of 1995, is amended to read:
"(C) By March first May fifteenth of each year, the council shall prepare a public document that itemizes each revitalization agreement concluded during the prior previous calendar year. The report shall must list each revitalization agreement, the results of each cost/benefits analysis, and receipts and expenditures of application fees. This document must be forwarded to the State Budget and Control Board, Senate Finance Committee, and House Ways and Means Committee. This document may not contain any proprietary or confidential information that is otherwise exempt under pursuant to Chapter 4 of Title 30, the Freedom of Information Act, and nothing in this section must not be construed to require the release of such that exempt information."
SECTION 8. Section 12-36-2120(17) of the 1976 Code, as last amended by Act 346 of 1996, is further amended to read:
"(17) machines used in manufacturing, processing, 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 any a process by which materials which that otherwise would otherwise 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. However, 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;"
SECTION 9. This act takes effect upon approval by the Governor.
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