South Carolina Basic Business Taxes 2012
South Carolina's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include corporate income taxes, property tax abatements, and worker training incentives.
•The company must create a minimum of 40 new full-time jobs that are engaged in corporate headquarters or research and development functions. At least 20 of these jobs must be classified as staff employees as provided by statute.
•The facility must be the location where corporate staff members or employees are domiciled and where the majority of the company's financial, legal, personnel, planning, and/or other staff functions are handled on a regional or national basis.
•The facility must be the sole corporate headquarters within the region or nation with other facilities that report to it. A region is defined as a geographical area comprised of either five states (including South Carolina) or two or more states (including South Carolina) if the entire business operations of the company are performed in fewer than five states. Headquarters facilities for distinct business units of a company may also be eligible for this credit.
The corporate headquarters credit is not limited in its ability to eliminate corporate income or license taxes, and unused credits may be carried forward for up to 10 years.
Enhanced Corporate Headquarters Credit:
Companies that qualify for the corporate headquarters credit may also be eligible for an enhanced corporate headquarters credit. The enhanced corporate headquarters credit may be used against a company's corporate income or license tax and equals 20 percent of the tangible personal property costs of establishing the headquarters. Eligibility for this credit requires that a company meet the following qualifications:
•The property must be purchased for, and used for, the headquarters facility or research and development facility, which is a part of the same project.
•The company must create at the facility a minimum of 75 new full-time jobs performing headquarters- or research and development-related functions and services. At least 20 of the jobs must be staff level and the 75 jobs must pay at least twice the State's per capita income.
The enhanced corporate headquarters credit is not limited in its ability to eliminate corporate income or license taxes, and unused credits may be carried forward for up to 15 years.
Infrastructure Construction Credit:
Credits to corporate income taxes are permitted for corporate contributions to infrastructure construction or improvement of water lines, sewer lines, and road improvements that are eventually dedicated to public use or a qualifying private entity. Credit is given for 50 percent of the expense, not to exceed $10,000 per project per year, with a 3 year carry-forward of unused credits up to $30,000 for each project. The maximum infrastructure credit that may be claimed for each project is $40,000.
Child Care Program Credit:
Credits to state income tax, bank tax, or insurance premium tax are permitted for costs incurred in establishing a child-care program for employees' children, with maximum credit equal to 50 percent of incurred expenditures, not to exceed $100,000. Credits can be used to offset up to 50 percent of South Carolina income tax after all other credits have been applied, and unused credits may be carried forward 10 years.
Credit is also permitted for operating a child-care program with credits not to exceed $3,000 per employee per year.
Exporters' Income Deferral:
Tax on income attributable to the increase in gross income from foreign trade may be deferred for whichever occurs first: the taxpayer intentionally ceases exporting property, or after three taxable years with no gross income from foreign trading receipts.
Deferrals are available if:
1. The base amount equal to the average of annual gross income from foreign trading receipts over the three prior years does not exceed $5 million;
2. Annual interest is paid on the aggregate deferred tax at the base period T-bill rate. The interest is due on the date the taxpayer must file the annual return required without regard to any extension; no interest is due on amounts deferred for less than an entire taxable year.
Biodiesel Production Credit:
South Carolina offers income tax credits for the production of biodiesel. The amount of the credit is 20 cents per gallon of soy-based biodiesel produced and 30 cents per gallon of non-soy biodiesel produced. In order to receive the credit, a company must meet certain standards and minimum production requirements. The company must produce over 25 percent of its nameplate design capacity by December 31, 2011. The company is eligible to claim the credit after its facility has six consecutive months of operation at an average production rate of at least 25 percent of its nameplate design capacity. In the first taxable year in which the company is eligible to claim the credit, the company may claim the credit for the first six months it met the requirements in addition to qualifying production during its current taxable year. The credit is allowed for up to a 60 month period beginning with the first month for which the facility is eligible to receive the credit and ending not later than December 31, 2016. Not more than 25 million gallons of biodiesel produced annually by the company is eligible for the credits. Not more than 125 million gallons of biodiesel produced by the company by the end of the 60-month period is eligible for the credits. Any unused credits may be carried forward for 10 years. These credits can be used to offset 100 percent of state income tax. To obtain the maximum amount of the credit available, a company must submit a request for credit to the State Energy Office by January 31st for all gallons of qualifying fuel produced in the previous calendar year.
Biodiesel Construction Credit:
Income tax credits may also be available for constructing a facility in South Carolina that produces and/or distributes renewable fuels. Renewable fuel means a liquid nonpetroleum based fuel that can be placed in motor vehicle fuel tanks and used as fuel in highway vehicles.The amount of the credit for constructing a production facility is equal to 25 percent of the cost of constructing or renovating a building and equipping the facility for the purpose of producing renewable fuel and must be taken in seven equal annual installments beginning with the taxable year the facility is placed in service. The amount of credit for constructing a distribution facility is equal to 25 percent of the cost of purchasing, constructing, and installing the property. Eligible property includes pumps, storage tanks, and related equipment that are directly and exclusively used for distribution, dispensing, or storing renewable fuel. The equipment used to store, distribute, or dispense renewable fuel must be labeled for this purpose and clearly identified as associated with renewable fuel. The credit must be taken in three equal annual installments beginning with the taxable year in which the property is placed in service. The credits for the construction of biodiesel production or distribution facilities can completely eliminate state income tax, and unused credits may be carried forward for up to 10 years. To obtain the amount of credit available, a company must submit a request for credit to the State Energy Office by January 31st for all qualifying property or a qualifying facility, as applicable, placed in service in the previous calendar year.
Solar Energy Credit:
South Carolina allows a taxpayer a credit against income taxes equal to 25 percent of the costs incurred in the purchase and installation of a solar energy system, including a small hydropower system, for heating water, space heating, air cooling, energy efficient daylighting, heat reclamation, energy-efficient demand response or the generation of electricity in or on a facility (or home) in South Carolina owned by the taxpayer. The credit cannot be claimed before installation of the system is completed. The amount of the credit may not exceed $3,500 for each facility or 50 percent of the taxpayer's tax liability for the taxable year, whichever is less. The credit in excess of $3,500 for each facility can be carried forward for 10 years. A "system" includes all controls, tanks, pumps, heat exchangers, and other equipment used directly and exclusively for the solar energy system. It does not include any land or structural elements of the building such as walls and roofs or other equipment ordinarily contained in the structure.
To qualify for the credit, the system must be certified for performance by the nonprofit Solar Rating and Certification Corporation or a comparable entity endorsed by the State Energy Office.
Biomass Resources Credit:
South Carolina allows a corporation a credit against corporate income taxes or corporate license fees, or both, for 25 percent of the costs incurred for the purchase and installation of equipment used to create power, heat, steam, electricity, or another form of energy for commercial use from a fuel consisting of 90 percent or more biomass resource.
The statute defines the following terms:
1. "Biomass resource" - non-commercial wood, by-products of wood processing, demolition debris containing wood, agricultural or animal waste, sewage, landfill gas, and other organic materials, not including fossil fuels.
2. "Commercial use" - a use intended for the purposes of generating a profit.
The credit is claimed in the year the equipment is placed in service for all expenses incurred for the purchase and installation of the equipment. All costs must be certified by the State Energy Office. The taxpayer may use up to $650,000 in a tax year. Any unused credit may be carried forward 15 years.
Each taxpayer must submit a request for credit to the State Energy Office by January 31st for qualifying expenses. The State Energy Office will notify the taxpayer of the amount of credit it may claim by March 1st.
If the equipment ceases using biomass resources as it primary fuel source before the entire credit is used, any unused credit cannot be used until it resumes using biomass resources as at least 90 percent of its fuel source. The carryforward period is not extended if the credit is suspended.
Energy Conservation and Renewable Energy Credit:
South Carolina allows a taxpayer a credit equal to 25 percent of all expenditures incurred during the taxable year for the purchase and installation of the following energy conservation and renewable energy production measures:
•Conservation tillage equipment
•Drip/trickle irrigation systems including all necessary measures and equipment
•Dual purpose combination truck and crane equipment.
A taxpayer may claim the credit only one time for each of the three measures in a lifetime. The maximum credit that may be claimed for each measure is $2,500. In the case of pass through entities, the credit is determined at the entity level and is limited to $2,500. Any unused credit can be carried forward for 5 years.