South Carolina General Assembly
116th Session, 2005-2006

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H. 4431

STATUS INFORMATION

General Bill
Sponsors: Reps. Coates, McGee, Lucas, Duncan, Ott, Pinson, Bowers, Funderburk, Moody-Lawrence, M.A. Pitts, Taylor and Brady
Document Path: l:\council\bills\bbm\9122htc06.doc

Introduced in the House on January 12, 2006
Currently residing in the House Committee on Ways and Means

Summary: Motor fuels user fee

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
   1/12/2006  House   Introduced and read first time HJ-27
   1/12/2006  House   Referred to Committee on Ways and Means HJ-28
   1/12/2006          Scrivener's error corrected
   1/24/2006  House   Member(s) request name added as sponsor: Brady

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

1/12/2006
1/12/2006-A

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-6-3600 SO AS TO ALLOW A STATE INCOME TAX CREDIT EQUAL TO TWENTY CENTS A GALLON FOR ETHANOL PRODUCED IN AN ETHANOL FACILITY IN THIS STATE AND TO PROVIDE THE REQUIREMENTS FOR EARNING THIS CREDIT AND THE MAXIMUM TIME THE CREDIT IS ALLOWED; BY ADDING SECTION 12-6-3610 SO AS TO ALLOW A STATE INCOME TAX EQUAL TO TWENTY-FIVE PERCENT OF THE COSTS INCURRED BY A TAXPAYER IN PLACING IN SERVICE IN THIS STATE A DISPENSING FACILITY FOR RENEWABLE FUEL, TO ALLOW A STATE INCOME TAX CREDIT EQUAL TO TWENTY-FIVE PERCENT OF THE COSTS INCURRED BY A TAXPAYER IN PLACING IN SERVICE IN THIS STATE A COMMERCIAL FACILITY FOR PROCESSING RENEWABLE FUEL, AND TO DEFINE "RENEWABLE FUEL"; BY ADDING SECTION 12-28-745 SO AS TO EXEMPT RENEWABLE FUEL, WHETHER PURE OR BLENDED WITH TAXABLE FUELS, FROM THE MOTOR FUELS USER FEE; TO AMEND SECTION 12-28-110, RELATING TO DEFINITIONS FOR PURPOSES OF THE MOTOR FUELS USER FEE, SO AS TO INCLUDE NEW DEFINITIONS FOR BIODIESEL FUEL AND RENEWABLE FUEL; TO AMEND SECTION 12-28-710, RELATING TO MOTOR FUELS USER FEE EXEMPTIONS, SO AS TO EXEMPT RENEWABLE FUEL SOLD FROM JULY 1, 2006, THROUGH JUNE 30, 2011; AND TO AMEND SECTION 12-28-990, RELATING TO THE USER FEE ON BLENDED FUELS, SO AS TO EXTEND THESE REQUIREMENTS TO RENEWABLE FUELS.

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 12-6-3600.    (A)    For taxable years beginning after 2006, and before 2014, there is allowed a credit against the tax imposed pursuant to this chapter for any ethanol facility which is in production at the rate of at least twenty-five percent of its name plate design capacity for the production of ethanol, before denaturing, on or before December 31, 2009. The facility must be placed in use after 2006. The credit equals twenty cents a gallon of ethanol produced and is allowed for sixty months beginning with the first month for which the facility is eligible to receive the credit and ending not later than December 31, 2014. The credit only may be claimed if the ethanol facility maintains an average production rate of at least twenty-five percent of its name plate design capacity for at least six months after the first month for which it is eligible to receive the credit.

(B)    As used in this section:

(1)    'Ethanol facility' means a plant or facility primarily engaged in the production of ethanol or ethyl alcohol derived from grain components, coproducts, or byproducts; and

(2)    'Name plate design capacity' means the original designed capacity of an ethanol facility. Capacity may be specified as bushels of grain ground or gallons of ethanol produced a year.

(C)    An ethanol facility eligible for a tax credit under subsection (A) of this section also shall receive a credit against the tax imposed pursuant to this chapter the amount of twenty cents a gallon of ethanol produced in excess of the original name plate design capacity which results from expansion of the facility completed after 2006 and before 2009. The tax credit is allowed for sixty months beginning with the first month for which production from the expanded facility is eligible to receive the tax credit and ending not later than 2014.

(D)(1)    Pursuant to this chapter, beginning January 1, 2014, an ethanol facility must receive a credit against the tax imposed in the amount of seven and one-half cents a gallon of ethanol, before denaturing, for new production for a period not to exceed thirty-six consecutive months.

(2)    For purposes of this subsection, 'new production' means production which results from a new facility, a facility which has not received credits before 2014, or the expansion of the capacity of an existing facility by at least two million gallons first placed into service after 2014, as certified by the design engineer of the facility to the Department of Revenue.

(3)    For expansion of the capacity of an existing facility, 'new production' means annual production in excess of twelve times the monthly average of the highest three months of ethanol production at an ethanol facility during the twenty-four-month period immediately preceding certification of the facility by the design engineer.

(4)    Credits are not allowed pursuant to this subsection for expansion of the capacity of an existing facility until production is in excess of twelve times the three-month average amount determined pursuant to this subsection during any twelve-consecutive-month period beginning no sooner than January 1, 2014.

(5)    The amount of a credit granted pursuant to this section based on new production must be approved by the Department of Revenue based on the ethanol production records as may be necessary to reasonably determine the level of new production.

(E)(1)    The credits described in this section are allowed only for ethanol produced at a plant in this State at which all fermentation, distillation, and dehydration takes place. Credit is not allowed for ethanol produced or sold for use in the production of distilled spirits.

(2)    Not more than twenty-five million gallons of ethanol produced annually at an ethanol facility is eligible for the credits in subsections (A) and (C) of this section, and the credits only may be claimed by a producer for the periods specified in subsections (A) and (C) of this section.

(3)    Not more than ten million gallons of ethanol produced during a twelve-consecutive-month period at an ethanol facility is eligible for the credit described in subsection (D) of this section, and the credit only may be claimed by a producer for the periods specified in subsection (D) of this section.

(4)    Not more than one hundred twenty-five million gallons of ethanol produced at an ethanol facility by the end of the sixty-month period set for in subsection (A) or (C) of this section is eligible for the credit under the subsection. An ethanol facility which receives a credit for ethanol produced under subsection (A) or (C) of this section may not receive a credit pursuant to subsection (D) of this section until its eligibility to receive a credit under subsection (A) or (C) of this section has been completed.

(E)    The Department of Revenue shall prescribe an application form and procedures for claiming credits under this section.

(F)    For purposes of ascertaining the correctness of any application for claiming a credit allowed pursuant to this section, the Department of Revenue may examine or cause to have examined, by any agent or representative designated for that purpose, any books, papers, records, or memoranda bearing upon these matters."

SECTION    2.    A.        Article 25, Chapter 6, Title 12 of the 1976 Code is amended by adding:

"Section 12-6-3610.    (A)    As used in this section, renewal fuel means liquid nonpetroleum based fuels that can be placed in motor vehicle fuel tanks and used as a fuel in a highway vehicle. It includes all forms of fuel commonly or commercially known or sold as biodiesel and ethanol.

(B)    A taxpayer that constructs and installs and places in service in this State a qualified commercial facility for dispensing renewable fuel is allowed a credit equal to twenty-five percent of the cost to the taxpayer against the taxpayer's liability for a tax imposed pursuant to this chapter constructing and installing the part of the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing renewable fuel. A facility is qualified if the equipment used to store or dispense renewable fuel is labeled for this purpose and clearly identified as associated with renewable fuel. The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the portion of the facility directly and exclusively used for dispensing or storing renewable fuel is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The unused portion of an unexpired credit may be carried forward for not more than ten succeeding taxable years.

(C)    A taxpayer that constructs and places in service in this State a commercial facility for processing renewable fuel is allowed a credit equal to twenty-five percent of the cost to the taxpayer of constructing and equipping the facility. The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The unused portion of an unexpired credit may be carried forward for not more than ten succeeding taxable years.

(D)    A taxpayer that claims any other credit allowed under this article with respect to the costs of constructing and installing a facility may not take the credit allowed in this section with respect to the same costs."

B.        Section 12-6-3610 of the 1976 Code as added by this section is repealed effective for facilities placed in service after 2011.

C.        Notwithstanding the general effective date of this act, this section takes effect upon approval of this act by the Governor and applies for facilities placed in service after 2006.

SECTION    3.    Article 7, Chapter 28, Title 12 of the 1976 Code is amended by adding:

"Section 12-28-745.    (A)    Renewable fuel exempt from tax pursuant to Section 12-28-710(A)(17), whether blended with other fuels or used in its pure state, is fully exempt from taxation and is not subject to the refund procedures contained in this article. If blended with other nonexempt motor fuels, the nonexempt portion of the blended fuel must be taxed as prescribed by law.

(B)    The sale of fuels exempt from tax under Section 12-28-710(A)(17) must be documented and reported to the department by the supplier of renewable fuel according to procedures prescribed by the department."

SECTION    4.    A.     Section 12-28-110(39) of the 1976 Code is amended to read:

"(39)    'Motor fuel' means gasoline, diesel fuel, renewable fuel, and blended fuel."

B.     Section 12-28-110 of the 1976 Code is amended by adding at the end:

"(69)    'Biodiesel' means vegetable or animal based fuels used as a substitute for diesel fuel.

(70)    'Renewable fuel' means liquid nonpetroleum based fuels that can be placed in vehicle fuel tanks and used as a fuel in a highway vehicle. It includes all forms of fuel commonly or commercially known or sold as biodiesel and ethanol."

SECTION    5.    Section 12-28-710(A) of the 1976 Code is amended by adding a new item at the end to read:

"(17)    renewable fuel sold from July 1, 2006 through June 30, 2011."

SECTION    6.    Section 12-28-990(A) of the 1976 Code is amended to read:

"(A)    Each person blending materials on which the user fee has not been paid including blendstocks, additives, and fuel grade ethanol renewable fuels with motor fuels subject to the user fee as to which the user fee has been paid or accrued shall remit the user fee imposed by this chapter."

SECTION    7.    Except where otherwise provided, this act takes effect upon approval by the Governor.

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