S.C. Code Ann. § 12-6-3360 – Job tax credit

(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. Credits under this section may be claimed against income taxes imposed by Section 12-6-510 or 12-6-530, 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, 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) The department shall rank and designate the state's counties by December thirty-first each year using data from the South Carolina Employment Security Commission and the United States Department of Commerce. The counties are ranked using the last three years of available per capita income data and the last thirty-six months or three years of available unemployment rate data, with equal weight given to unemployment rate and per capita income as follows:
1. (1) The twelve counties with a combination of the highest unemployment rate and lowest per capita income are designated least developed counties.
2. (2) The twelve counties with a combination of the next highest unemployment rate and next lowest per capita income are designated under developed counties.
3. (3) The eleven counties with a combination of the next highest unemployment rate and the next lowest per capita income are designated moderately developed counties.
4. (4) The eleven counties with a combination of the lowest unemployment rate and the highest per capita income are designated developed counties. The designation by the department is effective for corporate taxable years which begin after the date of designation.
5. (5)
  1. (a) A county, any portion of which is located within twenty-five miles of the boundaries of an applicable military installation or applicable federal facility as defined in Section 12-6-3450(1), shall receive the next increased credit designation for five years beginning with the year in which the military installation or federal facility became an applicable military installation or applicable federal facility as defined in Section 12-6-3450(1), with the additional requirement that the military installation must have reduced employment on the installation of at least three thousand employees.
  2. (b) In addition to the designation in subitem (a), a county in which an applicable military installation or applicable federal facility is located is allowed an additional increased credit designation for five years beginning with the year the installation or facility meets the requirements.
  3. (c) Notwithstanding the designations in Section 12-6-3360, Laurens, Cherokee, and Union Counties shall qualify for the next increased credit designation.
  4. (d) In a county where less than five percent of the work force is in manufacturing, the credit allowed is one tier higher than the credit for which the county would otherwise qualify.
  5. (e) For a job created in a county that is not traversed by an interstate highway, the credit allowed is one tier higher than the credit for which jobs created in the county would otherwise qualify. This subitem does not apply to a job created in a county eligible for a higher tier pursuant to another provision of this item.
(C) Subject to the conditions provided in subsection (N) 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 only 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:
1. (1) Four thousand five hundred dollars for each new full-time job created in least developed counties.
2. (2) Three thousand five hundred dollars for each new full-time job created in under developed counties.
3. (3) Two thousand five hundred dollars for each new full-time job created in moderately developed counties.
4. (4) One thousand five hundred dollars for each new full-time job created in developed 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) 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.
(F)
1. (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. (2)
  1. (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.
  2. (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.
  3. (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.
  4. (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. However, this exclusion of a new job created by a job transferred from one site to another site 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).
(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 under 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 which 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 12-6-3365 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. No taxpayer is allowed a jobs tax credit if the net employment increase for that taxpayer falls below ten. The appropriate agency shall determine whether or not qualifying net increases or decreases have occurred and may require reports, promulgate rules or 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 least developed, under developed, or moderately developed counties.
(K)
1. (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. (2)
  1. (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 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.
  2. (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. (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) Notwithstanding any other provision of this section, a county with a population under twenty-five thousand as determined by the most recent United States Census shall receive the next increased credit designation for purposes of the credit allowed by this section.
(M) As used in this section:
1. (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 and Chapter 7 of Title 38.
2. (2) "Appropriate agency" means the Department of Revenue, except that for taxpayers subject to the premium tax imposed by Chapter 7 of Title 38, it means the Department of Insurance.
3. (3) "New job" means a job created in this State at the time a new facility or an expansion is initially staffed. 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:
  1. (a) its destruction by accidental fire, natural disaster, or act of God;
  2. (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. (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.
5. (5) "Manufacturing facility" means an establishment where tangible personal property is produced or assembled.
6. (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. It does not include an establishment in which retail sales of tangible personal property are made to retail customers.
7. (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. (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.
9. (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, or research in connection with literary, historical, or similar projects.
10. (10) "Corporate office facility" means a corporate headquarters that meets the definition of a 'corporate headquarters' contained in Section 12-6-3410(J)(1).
11. (11) The terms "retail sales" and "tangible personal property" for purposes of this section are defined in Chapter 36 of this title.
12. (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. (13) "Qualifying service-related facility" means:
  1. (a) an establishment engaged in an activity or activities listed under the Standard Industrial Classification (SIC) Code 80 according to the Federal Office of Management and Budget Standard Industrial Classification Manual, 1987 edition; or
  2. (b) a business, other than a business engaged in legal, accounting, or investment services or retail sales, which has a net increase of at least:
    1. (i) two hundred fifty jobs at a single location;
    2. (ii) one hundred twenty-five jobs at a single location and the jobs have an average cash compensation level of more than one and one-half times the per capita income in the county where the jobs are located;
    3. (iii) seventy-five jobs at a single location and the jobs have an average cash compensation level of more than twice the per capita income in the county where the jobs are located; or
    4. (iv) thirty jobs at a single location and the jobs have an average cash compensation level of more than two and one-half times the 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. (14) "Technology intensive facility" means a firm engaged 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 System, NAICS, codes published by the Office of Management and Budget of the federal government:
  1. (i) 51114 Database and Directory publishers
  2. (ii) 5112 Software publishers
  3. (iii) 54151 Computer systems design and related services
  4. (iv) 541511 Custom computer programming services
  5. (v) 541512 Computer systems design services
  6. (vi) 541710 Scientific research and development services
  7. (vii) 9271 Space research and technology.
(N) The maximum aggregate credit that may be claimed in any tax year for a single employee under this section and Section 12-6-3470(A)(1) is five thousand five hundred dollars.