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COMMITTEE REPORT
May 9, 2001
S. 558
Introduced by Senators Matthews, Patterson, Hutto, Saleeby, Land, O'Dell, Jackson, Ford and Glover
S. Printed 5/9/01--S.
Read the first time April 5, 2001.
To whom was referred a Bill (S. 558) to amend Article 25, Chapter 6, Title 12, Code of Laws of South Carolina, 1976, relating to income tax credits, by adding Section 12-6-3540, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
HUGH K. LEATHERMAN, SR. for Committee.
REVENUE IMPACT1
This bill is not expected to reduce general fund revenue in FY 2001-02. This bill is expected to reduce state general fund income, bank, and premium tax revenue by a maximum of $15 million in future years. The revenue loss, however, will be restricted to $7 million in FY 2002-03 and FY 2003-04.
Explanation
This bill would provide a credit against income, bank, and premium tax liability equal to fifty percent of all donations to four-year institutions of higher learning in which sixty percent or more of the student body is comprised of "low income students". A "low income student" is defined as a student who meets the criteria to qualify for the Pell grant program. Based upon data provided by the Commission on Higher Education on the number of Pell grant recipients at each of the four-year institutions of higher learning in the State, the following seven public and private institutions would be eligible for the proposed credit:
Public Four-Year Institutions: South Carolina State University
Private Four-Year Institutions: Allen University; Claflin College; Benedict College; Morris College; North Greenville College; Voorhees College
The total amounts of the credits allowed by the Department of Revenue may not exceed $7 million in both FY 2002-03 and FY 2003-04. Given that the credit is equal to fifty percent of the donation, it is expected that donations to these institutions will reach the restricted amount. This bill is expected to reduce state general fund income, bank, and premium tax revenue by $7 million in FY 2002-03 and FY 2003-04.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND ARTICLE 25, CHAPTER 6, TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO INCOME TAX CREDITS, BY ADDING SECTION 12-6-3540 SO AS TO PROVIDE STATE INCOME, BANK, OR PREMIUM TAX CREDITS FOR DONATIONS TO FOUR-YEAR COLLEGES AND UNIVERSITIES WHERE LOW INCOME STUDENTS COMPRISE SIXTY PERCENT OR MORE OF THE TOTAL STUDENT POPULATION AND TO DEFINE "LOW INCOME STUDENT".
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Article 25, Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-3540. (A) A taxpayer may claim as a credit against his state income tax, bank tax, or premium tax liability fifty percent of all amounts donated to four-year institutions of higher learning where sixty percent or more of the total student body population is made up of low income students.
(B) The total amount of credits allowed pursuant to this section may not exceed in the aggregate fifteen million dollars for all taxpayers and all taxable years. The credit must be allowed to taxpayers in the order of the time of making the donation to the institution meeting the criteria of subsection (A).
(C) If the amount of the credit determined under subsection (A) exceeds the taxpayer's state income tax liability for the applicable taxable year, the taxpayer may carry over the excess to the immediately succeeding taxable years. However, the credit carryover may not be used for a taxable year that begins on or after ten years from the date of the initial donation. The amount of the credit carryover from a taxable year must be reduced to the extent that the carryover is used by the taxpayer to obtain a credit under this section for a subsequent taxable year.
(D) Notwithstanding the provisions of subsections (A), (B), and (C), if on April 1, 2002, or as soon after that as the Department of Revenue determines, the total amount of tax credits which may be claimed by all taxpayers exceeds the total amount of tax credits authorized by this section, the credits must be determined on a pro rata basis. For purposes of this subsection, an institution of higher learning for which a donation may be claimed as a tax credit pursuant to this section must report all donations made before April 1, 2002, to the Department of Revenue, by April 1, 2002, and the department, as soon as reasonably possible, shall inform all institutions of higher learning of the total of all donations to all institutions as of April 1, 2002.
(E) To receive the credit provided by this section, a taxpayer shall:
(1) claim the credit on the taxpayer's annual state income or premium tax return in the manner prescribed by the Department of Revenue; and
(2) file with the Department of Revenue and with the taxpayer's annual state income or premium tax return a copy of the form issued by the institution of higher learning confirming the donation by the taxpayer, as provided in subsection (F).
(F) The institution must complete a form prescribed by the Department of Revenue showing for each donation to the institution:
(1) the name, address, and identification number of the taxpayer who made the donation; and
(2) the amount donated by the taxpayer.
(G) A taxpayer may not claim the tax credit provided in this section unless the four-year institution to which the donation is made qualifies as an institution of higher learning with a total student population of sixty percent or more low income students at the time the donation is made.
(H) A taxpayer may transfer or assign the tax credit provided in this section, except that for purposes of a time period within which an act must occur pursuant to this section, the transfer or assignment must relate back to the time of original investment made by the transferor or assignor.
(I) Notwithstanding any other provision of law, the total amount of credits which may be allowed by the Department of Revenue may not exceed seven million dollars, respectively, for the fiscal years 2002-2003 and 2003-2004. A credit which is disallowed because of this subsection may be carried forward as provided in this section.
(J) For the purpose of this section, 'low income student' means a student who meets the criteria to qualify for the Pell grant program."
SECTION 2. This act takes effect upon approval by the Governor.
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