§ 12-10-80 — Job development credits.

South Carolina § 12-10-80

• Jurisdiction: South Carolina
• Title 12: TAXATION
• Ch. 10: ENTERPRISE ZONE ACT OF 1995

Text

(A) A business that qualifies pursuant to Section 12-10-50(A) and has certified to the council that the business has met the minimum job requirement and minimum capital investment provided for in the revitalization agreement may claim job development credits as determined by this section. (1) A business may claim job development credits against its withholding on its quarterly state withholding tax return for the amount of job development credits allowable pursuant to this section. (2) A business that is current with respect to its withholding tax and other tax due and owing the State and that has maintained its minimum employment and investment levels identified in the revitalization agreement may claim the credit on a quarterly basis beginning with the first quarter after the council's certification to the department that the minimum employment and capital investment levels were met for the entire quarter. If a qualifying business is not current as to all taxes due and owing to the State as of the date of the return on which the credit would be claimed, without regard to extensions, the business may claim the credit only in an amount reduced by the amount of taxes due and owing to the State as of the date of the return on which the credit is claimed. (3) A qualifying business may claim its initial job development credit only after the council has certified to the department that the qualifying business has met the required minimum employment and capital investment levels. (4) To be eligible to apply to the council to claim a job development credit, a qualifying business shall create at least ten new, full-time jobs, as defined in Section 12-6-3360(M), at the project described in the revitalization agreement within five years of the effective date of the agreement. (5) A qualifying business is eligible to claim a job development credit pursuant to the revitalization agreement for not more than fifteen years. (6) A qualifying business's job development credits shall be suspended during any quarter in which the qualifying business fails to maintain one hundred percent of the minimum job requirement set forth in the qualifying business's revitalization agreement. A company only may claim credits on jobs, including a range of jobs approved by the council, as set forth in the company's final revitalization agreement. (7) Credits may be claimed beginning the quarter subsequent to the council's approval of the qualifying business's documentation that the minimum jobs and capital investment requirements have been met. (8) To the extent any return of an overpayment of withholding that results from claiming job development credits is not used as permitted by subsection (C) or by Section 12-10-95, it must be treated as misappropriated employee withholding. (9) Job development credits may not be claimed for purposes of this section with regard to an employee whose job was created in this State before the taxable year of the qualifying business in which it enters into a preliminary revitalization agreement. (10) If a qualifying business claims job development credits pursuant to this section, it shall make its payroll books and records available for inspection by the council and the department at the times the council and the department request. Each qualifying business claiming job development credits pursuant to this section shall file with the council and the department the information and documentation requested by the council or department respecting employee withholding, the job development credit, and the use of any overpayment of withholding resulting from the claiming of a job development credit according to the revitalization agreement. (11) Each qualifying business claiming in excess of ten thousand dollars in a calendar year must furnish to the council and to the department a report that itemizes the sources and uses of the funds. The report must be filed with the council and the department no later than June thirtieth following the calendar year in which the job development credits are claimed, except when a qualifying business obtains the written approval by the council for an extension of that date. Extensions may be granted only for good cause shown. The department shall impose a penalty pursuant to Section 12-54-210 for all reports filed after June thirtieth or the approved extension date, whichever is later. The department shall audit each qualifying business with claims in excess of ten thousand dollars in a calendar year at least once every three years to verify proper sources and uses of the funds. (12) Each qualifying business claiming ten thousand dollars or less in any calendar year must furnish a report prepared by the company that itemizes the sources and uses of the funds. This report must be filed with the council and the department no later than June thirtieth following the calendar year in which the job development credits are claimed, except when a qualifying business obtains the written approval by the council for an extension of that date. Extensions may be granted only for good cause shown. The department shall impose a penalty pursuant to Section 12-54-210 for all reports filed after June thirtieth or the approved extension date, whichever is later. (13) An employer may not claim an amount that results in an employee's receiving a smaller amount of wages on either a weekly or on an annual basis than the employee would receive otherwise in the absence of this chapter. (14)(a) For purposes of this chapter, a qualifying business may designate up to two related persons whose jobs and investments located at the project may be included to determine whether the qualifying business has met and maintained the minimum job requirement and minimum capital investment requirement. Qualified expenditures described in subsection (C) incurred by a related person may be treated as though such qualifying expenditures were incurred by the qualifying business for purposes of claiming the job development credit and each related person may claim the job development credit for the jobs created by such related person and include any qualifying expenditures of the qualifying business or another related person for purposes of claiming the job development credit as if created and made by the related person. (b) A single-member limited-liability company that is not regarded as an entity separate from its owner and a qualified subchapter "S" subsidiary as defined in Section 1361(b)(3)(B) of the Internal Revenue Code that is not regarded as a separate entity from the "S" corporation that owns its stock, is treated as the qualifying business for all purposes under this chapter, including for purposes of claiming the job development credit against withholding but it counts as a related person for purposes of the limit described in subitem (a). (B)(1) The maximum job development credit a qualifying business may claim for new employees is limited to the lesser of withholding tax paid to the State on a quarterly basis or the sum of the following amounts: (a) two percent of the gross wages of each new employee who earns $8.74 or more an hour but less than $11.64 an hour; (b) three percent of the gross wages of each new employee who earns $11.65 or more an hour but less than $14.55 an hour; (c) four percent of the gross wages of each new employee who earns $14.56 or more an hour but less than $21.84 an hour; and (d) five percent of the gross wages of each new employee who earns $21.85 or more an hour. (2) The hourly gross wage figures in item (1) must be adjusted annually by an inflation factor determined by the Revenue and Fiscal Affairs Office. (C) To claim a job development credit, the qualifying business must incur qualified expenditures at the project or for utility or transportation improvements that serve the project. To be qualified, the expenditures must be: (1) incurred during the term of the revitalization agreement, including a preliminary revitalization agreement, or within sixty days before the council's receipt of an application for benefits pursuant to this section; (2) authorized by the revitalization agreement; and (3) used for any of the following purposes: (a) training costs and facilities; (b) acquiring and improving real property whether constructed or acquired by purchase, or in cases approved by the council, acquired by capital or operating lease with at least a five-year term or otherwise; (c) improvements to both public and private utility systems including water, sewer, electricity, natural gas, and telecommunications; (d) fixed transportation facilities including highway, rail, water, and air; (e) construction or improvements of real property and fixtures constructed or improved primarily for the purpose of complying with local, state, or federal environmental laws or regulations; (f) employee relocation expenses, but only for those employees to whom the company is paying gross wages at least two times the lower of the per capita income for either the state or the county in which the project is located; (g) financing the costs of a purpose described in items (a) through (f); (h) training for all relevant employees that enable a company to export or increase a company's ability to export its products, including training for logistics, regulatory, and administrative areas connected to the company's export process and other export process training that allows a qualified company to maintain or expand its business in this State; (i) apprenticeship programs; (j) quality improvement programs of the South Carolina Quality Forum. (D)(1) The amount of job development credits a qualifying business may claim for its use for qualifying expenditures is limited according to the designation of the county as defined in Section 12-6-3360(B), as follows: (a) one hundred percent of the maximum job development credits may be claimed by businesses located in counties designated as "Tier IV"; (b) eighty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as "Tier III"; (c) seventy percent of the maximum job development credits may be claimed by businesses located in counties designated as "Tier II"; or (d) fifty-five percent of the maximum job development credits may be claimed by businesses located in counties designated as "Tier I". (2) The amount that may be claimed as a job development credit by a qualifying business is limited by this subsection and by the revitalization agreement. The council may approve a waiver of ninety-five percent of the limits provided in item (1) for a significant business as defined in Section 12-10-30(18). (3) The designation of the county in which the project is located on the date the application for job development credit incentives is received in the office of the council remains in effect for the entire period of the revitalization agreement. (E) The council shall certify to the department the maximum job development credit for each qualifying business. After receiving certification, the department shall remit an amount equal to the difference between the maximum job development credit and the job development credit actually claimed to the State Rural Infrastructure Fund as defined and provided in Section 12-10-85. (F) Any job development credit of a qualifying business permanently lapses upon expiration or termination of the revitalization agreement. If an employee is terminated, the qualifying business immediately must cease to claim job development credits as to that employee. (G) For purposes of the job development credit allowed by this section, an employee is a person whose job was created in this State. (H) Job development credits may not be claimed by a governmental employer who employs persons at a closed or realigned military installation as defined in Section 12-10-88(E). (I) A taxpayer who qualifies for the job development credit pursuant to the provisions of this section and who is located in a multicounty business or industrial park jointly established pursuant to Section 13 of Article VIII of the Constitution of this State is allowed a job development credit equal to the amount allowed pursuant to subsection (D) for the designation of the county which has the lowest development status of the counties containing the park if: (1) the park is developed and established on the geographical boundary of adjacent counties; and (2) the written agreement, pursuant to Section 4-1-170, requires revenue from the park to be allocated to each county on an equal basis. (J) Where the qualifying business that creates new jobs under this section is a qualifying service-related facility as defined in Section 12-6-3360(M)(13), the determination of the number of jobs created for purposes of eligibility must be based on the total number of new jobs created within five years of the effective date of the revitalization agreement, without regard to monthly or other averaging. (K) For purposes of this section, the job and per capita income thresholds contained in the definition of "qualifying service-related facility" as set forth in Section 12-6-3360(M)(13)(b) must be modified to read as set forth in the item below: (1) a business, other than a business engaged in legal, accounting, banking, or investment services (including a business identified under NAICS Section 55) or retail sales, which has a net increase of at least: (a) one hundred twenty-five jobs on the payroll for a single location; (b) one hundred jobs at a single location comprised of a building or portion of a building that has been vacant for at least twelve consecutive months before the business's investment; (c) seventy-five jobs on the payroll for a single location and the jobs have an average cash compensation level of more than one and one-half times the lower of state per capita income or per capita income in the county where the jobs are located; (d) fifty jobs on the payroll for a single location and the jobs have an average cash compensation level of more than twice the lower of state per capita income or per capita income in the county where the jobs are located; or (e) twenty-five jobs on the payroll for a single location and the jobs have an average cash compensation level of more than two and one-half times the lower of state per capita income or per capita income in the county where the jobs are located. (L) For purposes of this section and notwithstanding the provisions of Section 12-10-50(A)(1), subject to the discretion of the council, the definition of "qualifying service-related facility" as defined in Section 12-6-3360(M)(13), as modified by Section 12-10-80(K)(1), shall also include the following: (1) a business engaged in legal, accounting, banking, or investment services operating at a single facility if the single facility would otherwise qualify as a qualifying service-related facility as defined in Section 12-6-3360(M)(13)(b), as modified by subsections (J) and (K) above, if not for the exclusions contained in Section 12-6-3360(M)(13)(b); (2) a business generally engaged in retail sales at a single facility if that single facility would otherwise qualify as a qualifying service-related facility as defined in Section 12-6-3360(M)(13)(b), as modified by subsections (J) and (K) above, if not for the exclusions contained in Section 12-6-3360(M)(13)(b) and provided that no retail sales are conducted at that single facility; and (3) in making a determination with regard to Section 12-10-80(L)(1) or Section 12-10-80(L)(2), the council may consider the following: (a) the percentage of such business's annual gross receipts from services or other income-producing activity derived from customers or clients located outside of South Carolina for the twelve months preceding the month in which such business applies to the council to claim a job development credit and such percentage may not be less than seventy-five percent; (b) the nature of the new jobs to be created at the project; (c) the wages of the new jobs to be created at the project; (d) the capital investment of the project; and (e) the potential for expansion or growth of the business or industry. (M) If the council approves an operating lease as an eligible expenditure under Section 12-10-80(C) for a qualifying business that qualifies pursuant to subsections (K) or (L) and will create at least twenty-five jobs for a project and all of the jobs will have a cash compensation level of more than two and one-half times the per capita income in the county where the project is located, the qualifying business may be reimbursed on an annual basis for lease payments before the certification to the council that the qualifying business has met the minimum job requirement and minimum capital investment provided for in the revitalization agreement. The reimbursements may begin in the first year in which the business creates at least ten new jobs that meet such wage threshold and may continue for up to ten years. This subsection does not apply to build-to-suit lease payments.

Legislative History

HISTORY: 1995 Act No. 25, SECTION 1; 1995 Act No. 32, SECTION 8A; 1996 Act No. 231, SECTIONS 9A, 9B; 1996 Act No. 462, SECTIONS 17A, 17B; 1997 Act No. 151, SECTION 7A; 2000 Act No. 283, SECTION 5(F), eff for taxable years beginning after June 30, 2001; 2000 Act No. 399, SECTION 3(B)(5), eff August 17, 2000; 2001 Act No. 89, SECTION 15, eff July 1, 2001; 2002 Act No. 332, SECTION 3, eff June 18, 2002; 2002 Act No. 334, SECTIONS 7F, 7G, 20, eff June 24, 2002; 2005 Act No. 161, SECTIONS 9, 39.B, eff June 9, 2005; 2006 Act No. 384, SECTIONS 8, 9, eff June 14, 2006; 2006 Act No. 386, SECTION 14, eff June 14, 2006; 2007 Act No. 116, SECTION 1, eff June 28, 2007, applicable for tax years beginning after 2007; 2008 Act No. 313, SECTIONS 2.E, 2.I.1, eff June 12, 2008; 2008 Act No. 352, SECTION 2.E, eff June 12, 2008; 2010 Act No. 290, SECTION 19, eff January 1, 2011; 2018 Act No. 265 (S.1043), SECTION 6.B, eff October 3, 2018; 2022 Act No. 237 (S.901), SECTION 6.B, eff June 22, 2022; 2024 Act No. 222 (H.4087), SECTION 3, eff July 2, 2024. Code Commissioner's Note At the direction of the Code Commissioner, references in this section to the offices of the former State Budget and Control Board, Office of the Governor, or other agencies, were changed to reflect the transfer of them to the Department of Administration or other entities, pursuant to the directive of the South Carolina Restructuring Act, 2014 Act No. 121, SECTION 5(D)(1). Editor's Note 2018 Act No. 265, SECTION 6.C, provides as follows: "C. This SECTION takes effect upon approval by the Governor and applies for tax years beginning after 2017." 2024 Act No. 222, SECTION 6, provides as follows: "SECTION 6. This act takes effect upon approval by the Governor and first applies to income tax years beginning after 2023, except that SECTION 3 first applies to income tax years beginning after 2020." Effect of Amendment 2018 Act No. 265, SECTION 6.B, added (K) and (L), making certain qualifying service-related facilities eligible for the credit. 2022 Act No. 237, SECTION 6.B, in (A), added (14). 2024 Act No. 222, SECTION 3, rewrote the section.