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Sponsors: Senator Ryberg
Document Path: l:\council\bills\ggs\22475htc04.doc
Companion/Similar bill(s): 4847
Introduced in the Senate on February 25, 2004
Currently residing in the Senate
Summary: Carry-forward for unused tax credits
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 2/25/2004 Senate Introduced and read first time SJ-2 2/25/2004 Senate Referred to Committee on Finance SJ-2 4/6/2004 Senate Committee report: Favorable with amendment Finance SJ-9
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
Indicates Matter Stricken
Indicates New Matter
April 6, 2004
S. Printed 4/6/04--S.
Read the first time February 25, 2004.
To whom was referred a Bill (S. 1000) to amend Section 12-14-60, Code of Laws of South Carolina, 1976, relating to the investment tax credit against state income tax allowed for economic impact zone, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, page 1, SECTION 1, by striking line 33 and inserting:
/ credits for use within five subsequent tax years if the taxpayer: /
Renumber sections to conform.
Amend title to conform.
HUGH K. LEATHERMAN, SR. for Committee.
This bill is not expected to impact state general or other fund revenue in FY2004-05. This bill is expected to reduce general fund corporate income tax revenue by an estimated $150,000 in FY2005-06 and by an estimated $1,350,000 in FY2006-07.
This bill would extend the carry forward period for unused Economic Impact Zone Act investment tax credits for certain taxpayers beyond ten-years. Only taxpayers meeting stringent employment and capital investment criteria would benefit from the proposed extension. According to DOR officials, because the investment tax credit did not become effective until April 4, 1995, the initial ten-year carry forward period referenced under current law would not expire until the end of tax year 2005. Because corporate taxes for 2005 would not be due until 2006, investment tax credits carried forward beyond the current ten-year window would not fully impact general fund revenue until FY2006-07. Because filers accounting for an estimated 10 percent of this credit would be expected to adjust their estimated tax payments to take advantage of this carry forward extension as soon as possible, this bill would reduce general fund revenue in FY2005-06. This bill would not impact general fund revenue in FY2004-05. DOR cannot release proprietary data regarding characteristics of corporations currently benefiting from investment tax credits. However, according to publicly available date from DOR, investment tax credits claimed by companies in the state averaged a total of $28,900,000 per year over the last three years. Based on additional information provided by DOR, an estimated $5,800,000 of investment tax credits are carried forward annually by corporations that either meet the 50 percent income tax reduction credit cap, or do not have enough tax liability in a given year to take the full credit. Because this bill reduces the current credit cap from 50 to 25 percent of tax liability for filers carrying forward credit beyond ten years, this bill would be expected to reduce general fund revenue by an estimated $2,900,000 in FY2006-07 if every eligible taxpayer reached the ten-year limit in 2005. Given that it is unlikely that every eligible taxpayer would reach the ten-year window in 2005 and based on an analysis of the distribution of carry forward amounts provided by DOR, this bill would reduce general fund corporate income tax revenue by an estimated $1,500,000 in FY2006-07. However, accounting for filers expected to take advantage of this carry forward extension as soon as possible reduces general fund corporate income tax revenue by an estimated $150,000 in FY2005-06. As such, the impact of this bill in FY2006-07 would be reduced by the same amount to $1,350,000.
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 SECTION 12-14-60, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE INVESTMENT TAX CREDIT AGAINST STATE INCOME TAX ALLOWED FOR ECONOMIC IMPACT ZONE QUALIFIED MANUFACTURING AND PRODUCTIVE EQUIPMENT PROPERTY, SO AS TO EXTEND FOR CERTAIN TAXPAYERS THE TEN-YEAR CARRY-FORWARD PERIOD FOR UNUSED TAX CREDITS AND PROVIDE THE REQUIREMENTS NECESSARY FOR A TAXPAYER TO RECEIVE THE ADDITIONAL CARRY-FORWARD PERIOD.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-14-60(D) of the 1976 Code is amended to read:
"(D)(1) Unused credit allowed pursuant to this section may be carried forward for ten years from the close of the tax year in which the credit was earned.
(2) In the case of credit earned and unused within the initial ten-year period, a taxpayer may continue to carry forward unused credits for use in any subsequent tax years if the taxpayer:
(a) is engaged in this State in an activity or activities listed under the North American Industry Classification System Manual (NAICS) Section 31, 32, or 33;
(b)(i) is employing one thousand or more full-time workers in this State and having a total capital investment in this State of not less than five hundred million dollars; or
(ii) is employing eight hundred fifty or more full-time workers in this State and having a total capital investment in this State of not less than seven hundred fifty million dollars; and
(c) made a total capital investment of not less than fifty million dollars in the previous five years.
Credits carried forward beyond the initial ten-year period may not reduce a taxpayer's state income tax liability in any subsequent tax year by more than twenty-five percent."
SECTION 2. This act takes effect upon approval by the Governor.
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