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TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-8-610 SO AS TO REQUIRE WITHHOLDING FOR INDIVIDUAL INCOME TAX PURPOSES AT THE RATE OF SEVEN PERCENT ON ALL PAYMENTS NOT OTHERWISE SUBJECT TO OR EXEMPTED FROM STATE INCOME TAX WITHHOLDING, TO PROVIDE EXEMPTIONS FROM THIS ADDITIONAL WITHHOLDING REQUIREMENT, AND TO PROVIDE A PENALTY FOR VIOLATIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Article 5, Chapter 8, Title 12 of the 1976 Code is amended by adding:
"Section 12-8-610. (A)(1) A payor making payments to a person not otherwise covered by, or exempted by, another section in this article shall withhold at a rate of seven percent of the total payments unless otherwise exempted pursuant to this section.
(2) For purposes of this section, a payor is a person not conducting a trade or business, but a payor does not include an individual, a trust, or an estate.
(B) This section does not apply if:
(1) the payments are exempt from income tax pursuant to the Internal Revenue Code as defined in Section 12-6-40 or the payments are not subject to income tax in this state; or
(2) at the time of payment the total payments for the year are not expected to equal one thousand dollars or more.
(C) In addition to other penalties imposed pursuant to this title, if a payor fails to withhold in accordance with this section, notwithstanding any other provision of law for South Carolina income tax purposes, the payor is not entitled to any deduction related to the payment.
(D) If a person provides an affidavit to the payor made by the department in which the department certifies that the person has filed South Carolina income tax returns for the past year, the payor is not required to withhold pursuant to this section with respect to that person."
SECTION 2. This act takes effect January 1, 2007.
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