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A335, R379, H4800
Sponsors: Reps. Bannister, Allen, Cato, Hamilton, Haskins, Leach, Loftis, Rice, F.N. Smith, G.R. Smith, Taylor, Tripp, Vaughn, Skelton, Duncan, Mitchell, Moody-Lawrence, Haley, E.H. Pitts, Martin, Huggins, Anderson, Anthony, Bailey, Ballentine, Battle, Cooper, Hardwick, Harrell, Harrison, Hiott, Limehouse, Mahaffey, Norman, Owens, Perry, Sandifer, Scarborough, Sinclair, W.D. Smith, Stewart, Young and Thompson
Document Path: l:\council\bills\bbm\9291htc06.doc
Introduced in the House on March 14, 2006
Introduced in the Senate on April 26, 2006
Last Amended on May 25, 2006
Passed by the General Assembly on May 25, 2006
Governor's Action: June 6, 2006, Signed
Summary: Pogo Bill
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 3/14/2006 House Introduced and read first time HJ-20 3/14/2006 House Referred to Committee on Ways and Means HJ-20 4/20/2006 House Committee report: Favorable Ways and Means HJ-2 4/25/2006 House Member(s) request name added as sponsor: Young, Thompson 4/25/2006 House Read second time HJ-77 4/25/2006 Scrivener's error corrected 4/26/2006 House Read third time and sent to Senate HJ-16 4/26/2006 Senate Introduced and read first time SJ-12 4/26/2006 Senate Referred to Committee on Finance SJ-12 5/5/2006 Senate Referred to Subcommittee: O'Dell (ch), Peeler, Reese, Short, Fair, Verdin 5/17/2006 Senate Committee report: Favorable with amendment Finance SJ-15 5/18/2006 Senate Amended SJ-69 5/18/2006 Senate Read second time SJ-69 5/23/2006 Senate Read third time and returned to House with amendments SJ-10 5/25/2006 House Senate amendment amended HJ-41 5/25/2006 House Returned to Senate with amendments HJ-41 5/25/2006 Senate Concurred in House amendment and enrolled SJ-190 5/31/2006 Ratified R 379 6/6/2006 Signed By Governor 6/9/2006 Copies available 6/9/2006 Effective date 06/06/06 6/16/2006 Act No. 335
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VERSIONS OF THIS BILL
(A335, R379, H4800)
AN ACT TO AMEND SECTIONS 12-6-3360 AND 12-6-3410, BOTH AS AMENDED, AND 12-6-3420, ALL OF THE CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING RESPECTIVELY TO THE TARGETED JOBS TAX CREDIT, THE INCOME TAX CREDIT FOR ESTABLISHING OR ADDING TO A CORPORATE HEADQUARTERS IN THIS STATE, AND THE TAX CREDIT ALLOWED A CORPORATION FOR CONSTRUCTION OR IMPROVEMENT OF AN INFRASTRUCTURE PROJECT, SO AS TO ALLOW THESE CREDITS TO BE CLAIMED AGAINST THE BANK TAX AND TO MAKE CONFORMING AMENDMENTS; TO FURTHER PROVIDE THAT THE TARGETED JOBS TAX CREDIT IS AVAILABLE TO A TECHNOLOGY INTENSIVE FACILITY USED FOR COMPUTER RESEARCH, DEVELOPMENT, AND TECHNOLOGY; TO AMEND SECTION 12-36-2120, AS AMENDED, RELATING TO EXEMPTIONS FROM THE STATE SALES AND USE TAX, SO AS TO EXEMPT CERTAIN COMPUTER EQUIPMENT OF A TAXPAYER WHO MEETS MINIMUM INVESTMENT OR JOB CREATION STANDARDS AND TO EXEMPT THE ELECTRICITY USED BY THAT FACILITY; AND TO AMEND SECTION 12-23-20 RELATING TO EXEMPTIONS FROM THE TAX ON THE RESALE OF ELECTRIC POWER, SO AS TO EXEMPT THE ELECTRICITY USED BY A COMPUTER TECHNOLOGY INTENSIVE FACILITY.
Be it enacted by the General Assembly of the State of South Carolina:
Job tax credit
SECTION 1. A. Section 12-6-3360(A) of the 1976 Code, as last amended by Act 332 of 2002, is further amended to read:
"(A) Taxpayers that operate manufacturing, tourism, processing, warehousing, distribution, research and development, corporate office, 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 or distressed. Credits under this section may be claimed against income taxes imposed by Section 12-6-510 or 12-6-530, bank taxes imposed pursuant to Chapter 11 of this title, 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, bank tax, or 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."
B. Section 12-6-3360(K)(2)(a) of the 1976 Code is amended to read:
"(a) The amount of the credit allowed a shareholder, partner, or member by this subsection is equal to the shareholder's percentage of stock ownership, partner's interest in the partnership, or member's interest in the limited liability company for the taxable year multiplied by the amount of the credit earned by the entity. This nonrefundable credit is allowed against taxes due under Section 12-6-510 or 12-6-530 and bank taxes imposed pursuant to Chapter 11 of this title and may not exceed fifty percent of the shareholder's, partner's, or member's tax liability under Section 12-6-510 or 12-6-530 or bank tax liability imposed pursuant to Chapter 11 of this title."
C. Section 12-6-3360(M)(1) of the 1976 Code is amended to read:
"(1) 'Taxpayer' means a sole proprietor, partnership, corporation of any classification, limited liability company, or association taxable as a business entity which is subject to South Carolina taxes as contained in Sections 12-6-510 and 12-6-530, Chapter 11 of this title, and Chapter 7 of Title 38."
D. Section 12-6-3360(M)(9) of the 1976 Code is amended to read:
"(9) 'Research and development facility' means an establishment engaged in laboratory, scientific, or experimental testing and development related to new products, new uses for existing products, or improving existing products. The term does not include an establishment engaged in efficiency surveys, management studies, consumer surveys, economic surveys, advertising, promotion, banking, or research in connection with literary, historical, or similar projects."
E. That portion of subitem (b) of Section 12-6-3360(M)(13) of the 1976 Code that precedes subsubitem (i) is amended to read:
"a business, other than a business engaged in legal, accounting, banking, or investment services or retail sales, which has a net increase of at least:"
Corporate headquarters tax credit
SECTION 2. A. Section 12-6-3410(A) of the 1976 Code is amended to read:
"(A) A corporation establishing a corporate headquarters in this State, or expanding or adding to an existing corporate headquarters, is allowed a credit against any tax due pursuant to Section 12-6-530, Section 12-11-20, or Section 12-20-50 as set forth in this section."
B. Item (6) of Section 12-6-3410(J), and item (9) of Section 12-6-3410(J) as added by Act 89 of 2001, are amended to read:
"(6) 'Research and development' means laboratory, scientific, or experimental testing and development related to new products, new uses for existing products, or improving existing products, but 'research and development' does not include efficiency surveys, management studies, consumer surveys, economic surveys, advertising, promotion, banking, or research in connection with literary, historical, or similar projects.
(9) 'Corporation', 'corporate', 'company', and 'taxpayer' for purposes of this section also include a limited liability company which is subject to regulation under the Federal Power Act (16 U.S.C. Section 791(a)) and which is formed to operate or to take functional control of electric transmission assets as defined in the Federal Power Act regardless of whether the limited liability company is treated as a partnership or as a corporation for South Carolina income tax purposes. If treated as a partnership, a limited liability company that qualifies for a credit under this section passes the credit through to its members in proportion to their interests in the limited liability company. Each member's share of the credit is nonrefundable but is allowed as a credit against any tax under Section 12-6-530 or Section 12-20-50 and bank taxes imposed pursuant to Chapter 11 of this title. Each member may carry any unused credit forward as provided in subsection (F). The limited liability company may not carry forward a credit that passes through to its members."
C. Item (1) of Section 12-6-3410(J), as last amended by Act 89 of 2001, is further amended to read:
"(1) 'Corporate headquarters' means the facility or portion of a facility where corporate staff employees are physically employed, and where the majority of the company's financial, personnel, legal, planning, information technology, or other headquarters-related functions are handled either on a regional or national basis. A corporate headquarters must be a regional corporate headquarters or a national corporate headquarters as defined below; provided, however, for taxpayers which are subject to tax under Chapter 11 of Title 12, a corporate headquarters must be a regional corporate headquarters:
(a) National corporate headquarters must be the sole corporate headquarters in the nation and handle headquarters-related functions on a national basis. A national headquarters shall be deemed to handle headquarters-related functions on a national basis from this State if the corporation has a facility in this State from which the corporation engages in interstate commerce by providing goods or services for customers outside of this State in return for compensation.
(b) Regional corporate headquarters must be the sole corporate headquarters within the region and must handle headquarters-related functions on a regional basis. For purposes of this section, 'region' or 'regional' means a geographic area comprised of either:
(i) at least five states, including this State; or
(ii) two or more states, including this State, if the entire business operations of the corporation are performed within fewer than five states; provided, however, that with respect to taxpayers which are subject to tax under Chapter 11 of Title 12, the requirement that 'the entire business operations of the corporation are performed within fewer than five states', is replaced with 'if all branches of the taxpayer, as defined below, are physically located in fewer than five states'. For taxpayers which are subject to tax under Chapter 11 of Title 12, such taxpayer must have two or more branches, as that term is defined in Section 34-25-10(8), in each state within its region."
Infrastructure construction or improvement tax credit
SECTION 3. Section 12-6-3420(A) of the 1976 Code is amended to read:
"(A) A corporation may claim a credit for the construction or improvement of an infrastructure project against taxes due under Section 12-6-530 or Section 12-11-20 for:
(1) expenses paid or accrued by the taxpayer;
(2) contributions made to a governmental entity; or
(3) contributions made to a qualified private entity in the case of water or sewer lines and their related facilities in areas served by a private water and sewer company."
Computer technology intensive facility
SECTION 4. A. Section 12-6-3360(M)(14) of the 1976 Code, as added by Act 283 of 2000, is amended to read:
"(14) 'Technology intensive facility' means:
(a) a facility at which a firm engages 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 Systems, NAICS, codes published by the Office of the Management and Budget of the federal government:
(i) 5114 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; or
(b) a facility primarily used for one or more activities listed under the 2002 version of the NAICS Codes 51811 (Internet Service Providers and Web Search Portals)."
B. Section 12-36-2120 of the 1976 Code is amended by adding two appropriately numbered new items at the end to read:
"( )(a) computer equipment, as defined in subitem (b) of this item, used in connection with a technology intensive facility as defined in Section 12-6-3360(M)(14)(b), where:
(i) the taxpayer invests at least three hundred million dollars in real or personal property or both comprising or located at the facility over a five-year period;
(ii) the taxpayer creates at least one hundred new jobs at the facility during that five-year period, and the average cash compensation of at least one hundred of the new jobs is one hundred fifty percent of the per capita income of the state according to the most recently published data available at the time the facility's construction starts; and
(iii) at least sixty percent of the three hundred million dollars minimum investment consists of computer equipment.
(b) For the purposes of this item, 'computer equipment' means original or replacement servers, routers, switches, power units, network devices, hard drives, processors, memory modules, motherboards, racks, other computer hardware and components, cabling, cooling apparatus, and related or ancillary equipment, machinery, and components, the primary purpose of which is to store, retrieve, aggregate, search, organize, process, analyze, or transfer data or any combination of these, or to support related computer engineering or computer science research.
(c) This exemption applies from the start of the investment in or construction of the facility as defined in subitem (a). The taxpayer shall notify the Department of Revenue of its use of the exemption provided in this item on or before the first sales tax return filed with the department after the first such use. Upon receipt of the notification, the department shall issue an appropriate exemption certificate to the taxpayer to be used for qualifying purposes under this item. Within six months after the fifth anniversary of the taxpayer's first use of this exemption, the taxpayer shall notify the department in writing that it has or has not met the investment and job requirements of this item by the end of that five-year period. Once the department certifies that the taxpayer has met the investment and job requirements, all subsequent purchases of or investments in computer equipment, including to replace originally deployed computer equipment or to implement future expansions, likewise shall qualify for the exemption described above, regardless of when the taxpayer makes the investments.
(d) The department may assess any tax due on property purchased tax free pursuant to this item but due the State if the taxpayer subsequently fails timely to meet the investment and job requirements of this item after being granted the exemption; for purposes of determining whether the taxpayer has timely satisfied the investment requirement, replacement computer equipment counts toward the investment requirement to the extent that the value of the replacement computer equipment exceeds the cost of the computer equipment so replaced, but, provided the taxpayer otherwise qualifies for the exemption, the full value of the replacement computer equipment is exempt from sales and use tax. The running of the periods of limitation within which the department may assess taxes provided pursuant to Section 12-54-85 is suspended during the time period beginning with the taxpayer's first use of this exemption and ending with the later of the fifth anniversary of first use or notice to the department that the taxpayer either has met or has not met the investment and job requirements of this item;
( ) electricity used by a technology intensive facility as defined in Section 12-6-3360(M)(14)(b) and qualifying for the sales tax exemption provided pursuant to item ( ) of this section, and the equipment and raw materials including, without limitation, fuel used by such qualifying facility to generate, transform, transmit, distribute, or manage electricity for use in such a facility."
C. Section 12-23-20 of the 1976 Code is amended by adding a new item at the end to read:
"(9) electricity used by a technology intensive facility as defined in Section 12-6-3360(M)(14)(b) and qualifying for the sales tax exemption provided pursuant to Section 12-36-2120( ), and the equipment and raw materials including, without limitation, fuel used by such qualifying facility to generate, transform, transmit, distribute, or manage electricity for use in such a facility."
SECTION 5. This act takes effect upon approval by the Governor.
Ratified the 31st day of May, 2006.
Approved the 6th day of June, 2006.
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