2017 South Carolina Code of Laws
Title 12 - Taxation
CHAPTER 6 - SOUTH CAROLINA INCOME TAX ACT
Section 12-6-3360. Job tax credit.
(A) Taxpayers that operate manufacturing, tourism, processing, agricultural packaging, warehousing, distribution, research and development, corporate office, qualifying service-related facilities, agribusiness operations, extraordinary retail establishment, and qualifying technology intensive facilities, and banks as defined pursuant to this title are allowed an annual jobs 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 "Tier IV". As used in this section, "corporate office" includes general contractors licensed by the South Carolina Department of Labor, Licensing and Regulation. Credits pursuant to 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, 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 a tax payable by a taxpayer pursuant to Section 38-7-90, the credit allowable pursuant to this section must be treated as a premium tax paid pursuant to Section 38-7-20.
(B) The department shall rank and designate the state's counties by December thirty-first each year using data from the South Carolina Department of Employment and Workplace and the United States Department of Commerce. The county designations are effective for taxable years that begin in the following calendar year. The counties are ranked using the last three completed calendar years of per capita income data and the last thirty-six months of unemployment rate data that are available on November first, with equal weight given to unemployment rate and per capita income as follows:
(1) The twelve counties with a combination of the highest unemployment rate and lowest per capita income are designated "Tier IV" counties. Notwithstanding any other provision of law, no more than twelve counties may be designated or classified as "Tier IV" and notwithstanding any other provision of this section, a county may be designated as "Tier IV" only by virtue of the criteria provided in this item.
(2) The twelve counties with a combination of the next highest unemployment rate and next lowest per capita income are designated "Tier III" counties.
(3) The eleven counties with a combination of the next highest unemployment rate and the next lowest per capita income are designated "Tier II" counties.
(4) The eleven counties with a combination of the lowest unemployment rate and the highest per capita income are designated "Tier I" counties.
(C)(1) Subject to the conditions provided in subsection (M) of this section, a job tax credit is allowed for five years beginning in year two after the creation of the job for each new full-time job created if the minimum level of new jobs is maintained. The credit is available to taxpayers that increase employment by ten or more full-time jobs, and no credit is allowed for the year or any subsequent year in which the net employment increase falls below the minimum level of ten. The amount of the initial job credit is as follows:
(a) Eight thousand dollars for each new full-time job created in "Tier IV" counties.
(b) Four thousand two hundred fifty dollars for each new full-time job created in "Tier III" counties.
(c) Two thousand seven hundred fifty dollars for each new full-time job created in "Tier II" counties.
(d) One thousand five hundred dollars for each new full-time job created in "Tier I" counties.
(2)(a) Subject to the conditions provided in subsection (M) of this section, a job tax credit is allowed for five years beginning in year two after the creation of the job for each new full-time job created if the minimum level of new jobs is maintained. The credit is available to taxpayers with ninety-nine or fewer employees that increase employment by two or more full-time jobs, and may be received only if the gross wages of the full-time jobs created pursuant to this section amount to a minimum of one hundred twenty percent of the county's or state's average per capita income, whichever is lower. No credit is allowed for the year or any subsequent year in which the net employment increase falls below the minimum level of two. The amount of the initial job credit is as described in subsection (C)(1).
(b) If the taxpayer with ninety-nine or fewer employees increases employment by two or more full-time jobs but the gross wages do not amount to a minimum one hundred twenty percent of the county's or state's average per capita income, whichever is lower, then the amount of the initial job credit is as follows:
(i) Four thousand dollars for each new full-time job created in "Tier IV" counties.
(ii) Two thousand one hundred twenty-five dollars for each new full-time job created in "Tier III" counties.
(iii) One thousand three hundred seventy-five dollars for each new full-time job created in "Tier II" counties.
(iv) Seven hundred fifty dollars for each new full-time job created in "Tier I" counties.
(D) If the taxpayer qualifying for the new jobs credit under subsection (C) creates additional new full-time jobs in years two through six, the taxpayer may obtain a credit for those new jobs for five years following the year in which the job is created. The amount of the credit for each new full-time job is the same as provided in subsection (C).
(E)(1) Taxpayers which qualify for the job tax credit provided in subsection (C) and which are located in a business or industrial park jointly established and developed by a group of counties pursuant to Section 13 of Article VIII of the Constitution of this State are allowed an additional one thousand dollar credit for each new full-time job created. This additional credit is permitted for five years beginning in the taxable year following the creation of the job.
(2) Taxpayers which otherwise qualify for the job tax credit provided in subsection (C) and which are located and the qualifying jobs are located on property where a response action has been completed pursuant to a nonresponsible party voluntary cleanup contract pursuant to Article 7, Chapter 56, Title 44, the Brownfields Voluntary Cleanup Program, are allowed an additional one thousand dollar credit for each new full-time job created. This additional credit is permitted for five years beginning in the taxable year following the creation of the job. No credit under this item is allowed a taxpayer that is a "responsible party" as defined in that article.
(F)(1) The number of new and additional new full-time jobs is determined by comparing the monthly average number of full-time employees subject to South Carolina income tax withholding in the applicable county for the taxable year with the monthly average in the prior taxable year. For purposes of calculating the monthly average number of full-time employees in the first year of operation in this State, a taxpayer may use the actual months in operation or a full twelve-month period. If a taxpayer's business is in operation for less than twelve months a year, the number of new and additional new full-time jobs is determined using the monthly average for the months the business is in operation.
(2)(a) A taxpayer who makes a capital investment of at least fifty million dollars at a single site within a three-year period may elect to have the number of new and additional new full-time jobs determined by comparing the monthly average number of full-time jobs subject to South Carolina income tax withholding at the site for the taxable year with the monthly average for the prior taxable year.
(b) For purposes of this item, "single site" means a stand-alone building whether or not several stand-alone buildings are located in one geographical location.
(c) The calculation of new and additional jobs provided for in this item is allowed for only a five-year period commencing in the year in which the fifty million dollars of capital investment is completed.
(d) For purposes of this subsection a "new job" does not include a job transferred from one site to another site by the taxpayer or a related person. A related person includes any entity or person that bears a relationship to the taxpayer as set forth in Section 267 of the Internal Revenue Code.
(G) Except for credits carried forward under subsection (H), the credits available under this section are only allowed for the job level that is maintained in the taxable year that the credit is claimed. If the job level for which a credit was claimed decreases, the five-year period for eligibility for the credit continues to run.
(H) A credit claimed pursuant to this section but not used in a taxable year may be carried forward for fifteen years from the taxable year in which the credit is earned by the taxpayer. Credits that are carried forward must be used in the order earned and before jobs credits claimed in the current year. A taxpayer who earns credits allowed by this section and who also is eligible for the moratorium provided in Section 12-6-3367 may claim the credits and may carry forward unused credits beginning after the moratorium period expires.
(I) The merger, consolidation, or reorganization of a taxpayer, where tax attributes survive, does not create new eligibility in a succeeding taxpayer, but unused job tax credits may be transferred and continued by the succeeding taxpayer subject to the limitations of Section 12-6-3320. In addition, a taxpayer may assign its rights to its jobs tax credit to another taxpayer if it transfers all or substantially all of the assets of the taxpayer or all or substantially all of the assets of a trade or business or operating division of a taxpayer related to the generation of the jobs tax credits to that taxpayer if the required number of new jobs is maintained for that amount of credit. A taxpayer is not allowed a jobs tax credit if the net employment increase for that taxpayer falls below two. The appropriate agency shall determine if qualifying net increases or decreases have occurred and may require reports, adopt rules or promulgate regulations, and hold hearings needed for substantiation and qualification.
(J) For a taxpayer which plans a significant expansion in its labor forces at a location in this State, the appropriate agency shall prescribe certification procedures to ensure that the taxpayer can claim credits in future years even if a particular county is removed from the list of "Tier IV", "Tier III", or "Tier II" counties.
(K)(1) An "S" corporation, limited liability company taxed as a partnership, or partnership that qualifies for a credit under this section may pass through the credit earned to each shareholder of the "S" corporation, partner of the partnership, or member of the limited liability company. For purposes of this subsection, limited liability company means a limited liability company taxed as a partnership.
(2)(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.
(b) Notwithstanding subitem (a), the credit earned pursuant to this section by an "S" corporation owing corporate level income tax must be used first at the entity level. Only the remaining credit passes through to each shareholder.
(3) A credit claimed pursuant to this subsection but not used in a taxable year may be carried forward by each shareholder, partner, or member for fifteen years from the close of the tax year in which the credit is earned by the "S" corporation, partnership, or limited liability company. The entity earning the credit may not carry over credit that passes through to its shareholders, partners, or members.
(L) Reserved.
(M) As used in this section:
(1) "Taxpayer" means a sole proprietor, partnership, corporation of any classification, limited liability company, or association taxable as a business entity that is subject to South Carolina taxes as contained in Section 12-6-510, Section 12-6-530, Chapter 11, Title 12, or Chapter 7, Title 38.
(2) "Appropriate agency" means the Department of Revenue, except that for taxpayers subject to the premium tax imposed by Chapter 7, Title 38, it means the Department of Insurance.
(3) "New job" means a job created in this State at the time a new facility or an expansion is initially staffed. Except as otherwise provided in this item, the term does not include a job created when an employee is shifted from an existing location in this State to a new or expanded facility whether the transferred job is from, or to, a facility of the taxpayer or a related person. A related person includes any entity or person that bears a relationship to the taxpayer as described in Section 267 of the Internal Revenue Code. However, this exclusion of a new job created by employee shifting does not extend to a job created at a new or expanded facility located in a county in which is located an "applicable federal facility" as defined in Section 12-6-3450(A)(1)(b). The term "new job" also includes an existing job at a facility of an employer which is reinstated after the employer has rebuilt the facility due to:
(a) its destruction by accidental fire, natural disaster, or act of God;
(b) involuntary conversion as a result of condemnation or exercise of eminent domain by the State or any of its political subdivisions or by the federal government.
Destruction for purposes of this provision means that more than fifty percent of the facility was destroyed. For purposes of this section, involuntary conversion as a result of condemnation or exercise of eminent domain includes a legally binding agreement for the purchase of a facility of an employer entered into between an employer and the State of South Carolina or a political subdivision of the State under threat of exercise of eminent domain by the State or its political subdivision.
The year of reinstatement is the year of creation of the job. All reinstated jobs qualify for the credit pursuant to this section, and a comparison is not required to be made between the number of full-time jobs of the employer in the taxable year and the number of full-time jobs of the employer with the corresponding period of the prior taxable year.
(4) "Full-time" means a job requiring a minimum of thirty-five hours of an employee's time a week for the entire normal year of company operations or a job requiring a minimum of thirty-five hours of an employee's time for a week for a year in which the employee was hired initially for or transferred to the South Carolina facility. For the purposes of this section, two half-time jobs are considered one full-time job. A "half-time job" is a job requiring a minimum of twenty hours of an employee's time a week for the entire normal year of the company's operations or a job requiring a minimum of twenty hours of an employee's time a week for a year in which the employee was hired initially for or transferred to the South Carolina facility. For agricultural packaging and agribusiness operations, seasonal workers may be considered a full-time employee; however, a seasonal employee only counts as a fraction of a full-time worker, with the numerator being the number of hours worked a week multiplied by the number of weeks worked, and the denominator being the number one thousand eight hundred twenty.
(5) "Manufacturing facility" means an establishment where tangible personal property is produced or assembled.
(6) "Processing facility" means an establishment that prepares, treats, or converts tangible personal property into finished goods or another form of tangible personal property. The term includes a business engaged in processing agricultural, aquacultural, or maricultural products and specifically includes meat, poultry, and any other variety of food processing operations. It does not include an establishment in which retail sales of tangible personal property are made to retail customers.
(7) "Warehousing facility" means an establishment where tangible personal property is stored but does not include any establishment where retail sales of tangible personal property are made to retail customers.
(8) "Distribution facility" means an establishment where shipments of tangible personal property are processed for delivery to customers. The term does not include an establishment where retail sales of tangible personal property are made to retail customers on more than twelve days a year except for a facility which processes customer sales orders by mail, telephone, or electronic means, if the facility also processes shipments of tangible personal property to customers and if at least seventy-five percent of the dollar amount of goods sold through the facility are sold to customers outside of South Carolina. Retail sales made inside the facility to employees working at the facility are not considered for purposes of the twelve-day and seventy-five percent limitation. For purposes of this definition, "retail sale" and "tangible personal property" have the meaning provided in Chapter 36 of this title.
(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.
(10) "Corporate office facility" means a corporate headquarters that meets the definition of a "corporate headquarters" contained in Section 12-6-3410(J)(1). The corporate headquarters of a general contractor licensed by the South Carolina Department of Labor, Licensing and Regulation qualifies even if it is not a regional or national headquarters as those terms are defined in Section 12-6-3410(J)(1).
(11) The terms "retail sales" and "tangible personal property" for purposes of this section are defined in Chapter 36 of this title.
(12) "Tourism facility" means an establishment used for a theme park; amusement park; historical, educational, or trade museum; botanical garden; cultural center; theater; motion picture production studio; convention center; arena; auditorium; or a spectator or participatory sports facility; and similar establishments where entertainment, education, or recreation is provided to the general public. Tourism facility also includes new hotel and motel construction, except that to qualify for the credits allowed by this section and regardless of the county in which the facility is located, the number of new jobs that must be created by the new hotel or motel is twenty or more. It does not include that portion of an establishment where retail merchandise or retail services are sold directly to retail customers.
(13) "Qualifying service-related facility" means:
(a) an establishment engaged in an activity or activities listed under the North American Industry Classification System Manual (NAICS) Section 62, subsectors 621, 622, and 623, or Sector 4881, subsector 488190; or
(b) 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:
(i) one hundred seventy-five jobs at a single location;
(ii) one hundred fifty jobs at a single location comprised of a building or portion of building that has been vacant for at least twelve consecutive months prior to the taxpayer's investment;
(iii) one hundred jobs at 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;
(iv) fifty jobs at 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
(v) twenty-five jobs at 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.
A taxpayer shall use the most recent per capita income data available as of the end of the taxable year in which the jobs are filled. Determination of the required number of jobs is in accordance with the monthly average described in subsection (F).
(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 Codes, NAICS, 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) 541711 research and development in biotechnology; 2007 NAICS;
(vii) 541712 research and development in physical, engineering, and life sciences; 2007 NAICS;
(viii) 518210 data processing, hosting, and related services;
(ix) 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).
(15) "Extraordinary retail establishment" as defined in Sections 12-21-6520 and 12-21-6590.
(16) "Agricultural packaging" means the technology of enclosing or protecting or preserving agricultural products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages used for agricultural products. Packaging can be described as a coordinated system of preparing agricultural goods for transport, warehousing, logistics, sale, and end use.
(N) Except for employees employed in "Tier IV" counties, the maximum aggregate credit that may be claimed in any tax year for a single employee pursuant to this section and Section 12-6-3470(A) is five thousand five hundred dollars.
HISTORY: 1995 Act No. 76, Section 1; 1996 Act No. 231, Section 7A; 1996 Act No. 462, Section 9A; 1997 Act No. 143, Sections 1, 2; 1997 Act No. 149, Section 10; 1997 Act No. 151, Section 6; 1998 Act No. 432, Section 3A; 1999 Act No. 93, Section 19; 1999 Act No. 114, Section 4G; 1999 Act No. 114, Section 4H; 2000 Act No. 277, Section 2, eff May 19, 2000; 2000 Act No. 283, Section 5(A) and (B), eff for taxable years beginning after June 30, 2001; 2000 Act No. 399, Section 3(A)(1), eff August 17, 2000; 2001 Act No. 89, Section 66, eff July 20, 2001; 2002 Act No. 280, Section 5, eff May 28, 2002; 2002 Act No. 332, Sections 1A, 1B, 1C, eff June 18, 2002; 2003 Act No. 69, Section 3.M.1, eff June 18, 2003; 2003 Act No. 69, Section 3.VV, eff January 1, 2005; 2004 Act No. 168, Section 1; 2005 Act No. 145, Section 13, eff June 7, 2005; 2005 Act No. 157, Section 3, eff June 10, 2005, applicable for taxable years beginning January 1, 2006; 2005 Act No. 161, Sections 7, 32.A, eff June 9, 2005; 2006 Act No. 335, Sections 1.A, 1.B, 1.C, 1.D, 1.E, 4.A, eff June 6, 2006; 2006 Act No; 384, Sections 4.A, 5, 18.A, 21, 22.A, 22.B, eff June 14, 2006; 2006 Act No. 386, Section 7.A, eff June 14, 2006 applicable to taxable years beginning on and after January 1, 2006; 2006 Act No; 386, Sections 8, 48.A, 48.B, 53, eff June 14, 2006; 2006 Act No. 389, Sections 1, 5.A, eff June 14, 2006; 2006 Act No. 390, Section 1, eff June 14, 2006; 2006 Act No; 394, Section 1, eff June 14, 2006; 2007 Act No. 9, Section 1, eff April 11, 2007, applicable to county designations beginning in 2007; 2007 Act No. 110, Sections 12.A, 14.A, eff June 21, 2007, applicable to taxable years beginning after 2005; 2007 Act No. 110, Sections 13.A, 39, eff June 21, 2007; 2007 Act No. 116, Sections 8, 45, eff June 28, 2007, applicable for tax years beginning after 2007; 2007 Act No; 116, Section 19.A, eff June 28, 2007; 2007 Act No. 116, Section 20.A, eff June 28, 2007, applicable to tax years beginning after December 31, 2005; 2010 Act No. 290, Section 16, eff January 1, 2011; 2012 Act No. 187, Section 1, eff June 7, 2012; 2016 Act No. 256 (S.427), Sections 1-4, eff June 8, 2016.
Editor's Note
2000 Act No. 277, Section 3, provides in part as follows:
"This act takes effect upon approval by the Governor and applies to tax years beginning after 1999."
2002 Act No. 280, Section 7, provides as follows:
"The incentives offered in this act apply only to projects receiving a certification of completion from the Department of Health and Environmental Control after the effective date of this act."
2004 Act No. 168, Section 3, provides as follows:
"This act is effective for taxable years beginning after 2002 where the job tax credit pursuant to Section 12-6-3360 of the 1976 Code, as amended by this act, was earned after June 1, 2002."
2005 Act No. 157, Section 5, as amended by 2006 Act No. 389, Section 4, provides as follows:
"(A) The General Assembly finds that many tax incentives outlive their usefulness and should exist only for a time certain. It is the intent of the General Assembly to provide for a sunset provision on each tax incentive, including credits and exemptions, enacted by this act.
"(B) Each tax incentive, including credits and exemptions, enacted by this act shall be repealed for tax years beginning after five years from the date of enactment, unless a different time frame is otherwise provided herein, but this repeal does not apply to the small business targeted jobs tax credit allowed pursuant to Section 12-6-3360(C)(2), as amended by this act."
2005 Act No. 161, Section 32.B, provides as follows:
"This SECTION takes effect upon approval by the Governor and applies to tax years beginning after December 31, 2004."
2006 Act No. 384, Section 4.B, provides as follows:
"Except as otherwise provided, this section [amending subsection (A)] takes effect upon approval by the Governor. As this section applies to general contractors, this section takes effect upon approval by the Governor and applies to taxable years beginning after December 31, 2006."
2006 Act No. 384, Section 18.B, provides as follows:
"This section [adding subparagraph (B)(5)(g)] takes effect upon approval by the Governor and applies for taxable years beginning after 2005 and applies for any company that applied for job development credits pursuant to Section 12-6-3360 after 2005."
2006 Act No. 388, Section 5.B, provides as follows:
"Notwithstanding the general effective date provided in this act, this section takes effect upon approval of this act by the Governor and applies for taxable years beginning after 2005 and applies for any company which applied for job development credits pursuant to Section 12-6-3360 of the 1976 Code after 2005."
2006 Act No. 390, Section 2, provides as follows:
"This act takes [adding subparagraph (B)(5)(g)] effect upon approval by the Governor and applies for taxable years beginning after 2005 and applies for any company which applied for job development credits pursuant to Section 12-6-3360 of the 1976 Code after 2005."
2007 Act No. 9, Section 3.A, provides as follows:
For tax year 2006 only, due to adjustments to the jobs tax credit classification as a result of legislative changes, a taxpayer has until March 31, 2007, to lock into the county classification as provided in Section 12-6-3360(J).
2007 Act No. 9, Section 3.B, provides as follows:
This section takes effect upon approval by the Governor and only for the purpose of locking into the 2006 classification.
2016 Act No. 256, Section 7, provides as follows:
"SECTION 7. Except where specified otherwise, this act takes effect upon approval by the Governor. SECTION 1 [amending (M)(13)(a) of this section] applies to tax years beginning after 2015."
Effect of Amendment
2016 Act No. 256, Sections 1-4, in (A), inserted "agricultural packaging," in the first sentence; in (M)(4), added the last sentence, relating to packaging and agribusiness; in (M)(13)(a), inserted ", or Sector 4881, subsector 488190"; and added (M)(16), definition of "agricultural packaging".
