South Carolina General Assembly
116th Session, 2005-2006

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Bill 1245

Indicates Matter Stricken
Indicates New Matter


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

Indicates Matter Stricken

Indicates New Matter

AS PASSED BY THE SENATE

April 6, 2006

S. 1245

Introduced by Senators Thomas, Fair, Cromer, Ritchie, Anderson, Verdin, Setzler, Ryberg and Knotts

S. Printed 4/6/06--S.

Read the first time March 14, 2006.

            

A BILL

TO AMEND SECTIONS 12-6-3360, AS AMENDED, 12-6-3410, 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.

Amend Title To Conform

Be it enacted by the General Assembly of the State of South Carolina:

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 Sections 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:"

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 Sections 12-6-530, Section 12-11-20, or Section 12-20-50 as set forth in this section."

B.    Items (6) and (9) of Section 12-6-3410(J), as last amended 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."

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."

SECTION    4.    A.    Section 12-6-3360(B)(5) of the 1976 Code is amended by adding the following subitem at the end of item (5) to read:

"(g)    Notwithstanding the limitation imposed by subsection (B)(1)(a), in a county which is at least one thousand square miles in size and which has had an unemployment rate greater than the state average and an average per capita income lower than the state average for the past ten years, the credit allowed is two tiers higher than the credit for which the county would otherwise qualify. This subitem does not apply to a county eligible for a higher tier pursuant to another provision of this item."

B.    This section is effective for calendar year 2006 and shall apply to any company that applied for Job Development Credits on or after January 1, 2006.

SECTION    4.    This act takes effect upon approval by the Governor.

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