Bill Text: SC S0309 | 2019-2020 | 123rd General Assembly | Comm Sub
Bill Title: Industry Partnership Fund tax credit
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Engrossed - Dead) 2019-05-09 - Conference committee appointed Simrill, Pope, Rutherford [S0309 Detail]
Download: South_Carolina-2019-S0309-Comm_Sub.html
COMMITTEE REPORT
January 16, 2019
S. 309
S. Printed 1/16/19--S.
Read the first time January 8, 2019.
To whom was referred a Bill (S. 309) to amend Section 12-6-3585, Code of Laws of South Carolina, 1976, relating to the Industry Partnership Fund tax credit, so as to increase the aggregate, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
HUGH K. LEATHERMAN, SR. for Committee.
Explanation of Fiscal Impact
Introduced on January 8, 2019
State Expenditure
The Department of Revenue indicates that there will be no expenditure impact to the general fund, federal funds, or other funds from this bill. The Department can administer the legislative changes with existing resources.
State Revenue
Section 1. The Industry Partnership Fund was first available to taxpayers in tax year 2006. Pursuant to Section 12-6-3585, a taxpayer is allowed a nonrefundable credit against corporate and individual income taxes, bank taxes, license fees, or insurance premium taxes, or any combination of them equal to 100 percent of the taxpayer's qualified contributions to the Industry Partnership Fund at the South Carolina Research Authority, or a Research Authority designated affiliate, or both. Any unused credit may be carried forward for 10 years from the end of the tax year in which the qualifying contribution is made. The credit is subject to the following limitations:
For tax year 2006, the maximum credit is $650,000 for a single taxpayer, and $2,000,000 for all taxpayers,
For tax year 2007, the maximum credit is $1,300,000 for a single taxpayer, and $4,000,000 for all taxpayers, and
For tax years beginning after December 31, 2007, the maximum credit is $2,000,000 for a single taxpayer and $6,000,000 for all taxpayers.
This bill would amend Section 12-6-3585(A) of the Industry Partnership Fund program limitations and maximum aggregate credit limitations for each tax year beginning after tax year 2018 up to a maximum credit of $250,000 for a single taxpayer, not to exceed an aggregate credit of $12,000,000 for all taxpayers for each tax year. The table below describes the Industry Partnership Fund program limitations and the aggregate tax credits claimed by all taxpayers in each tax year of the fund's history.
After the first tax year the tax credit was made available, the aggregate tax credit limitation for all taxpayers was increased the next two tax years to $6,000,000 by tax year 2008. The aggregate tax credit limitation for all taxpayers has not changed since tax year 2008. Over the next seven tax years, the aggregate tax credits claimed by all taxpayers have approached the maximum tax credit limitation of $6,000,000. By raising the maximum aggregate tax credit limitation to $12,000,000 for all taxpayers, the Industry Partnership Fund will be able to attract additional investment for use at the South Carolina Research Authority or its affiliates. The maximum tax credit available for a single taxpayer, however, would be reduced from $2,000,000 per taxpayer to $250,000 per taxpayer beginning in tax year 2019. The lowering of the maximum tax credit available for a single taxpayer will limit the amount that each taxpayer may invest in the Industry Partnership Fund before reaching the aggregate maximum tax credit limitation. This limitation, however, should not affect the total contributions to the fund.
The historical table above suggests that it takes some time for aggregate tax credits claimed to reach a new maximum tax credit cap; therefore, it is not unreasonable to expect that annual contributions may increase in the future with taxpayers claiming an additional $1,000,000 in tax credits per tax year. This bill, therefore, would reduce corporate and individual income taxes, bank taxes, license fees, or insurance premium taxes by an estimated $1,000,000 in FY2019-20, and each fiscal year thereafter, until the maximum aggregate tax credits claimed reaches the maximum cap of $12,000,000 in the future.
This bill would amend Section 12-6-3585(E) to change the definition of "taxpayer" to disallow any member of the South Carolina Research Authority board of trustees or the SC Launch!, Inc. board of directors from claiming a tax credit against state taxes for qualified contributions to the Industry Partnership Fund.
This bill would amend Section 12-6-3585(F) to require a taxpayer who is certified by the South Carolina Research Authority as having priority entitlement to the tax credit for an applicable tax year must make a commitment to making a qualified contribution to the Industry Partnership Fund during the year no later than April 1st.
This bill would add sub-item (B) to indicate that the increased maximum tax credit amount shall be phased in in two equal and cumulative installment amounts beginning in tax years beginning after 2018. Notwithstanding the provisions of Section 12-6-3585, the maximum aggregate tax credit amount allowed by all taxpayers shall be $9,000,000 in tax year 2019 and $12,000,000 in tax year 2020, as shown in the table above.
Section 2. This section would add an appropriately numbered item to Section 12-6-3585 to require the South Carolina Research Authority to issue a report to the Chairman of the Senate Finance Committee, the Chairman of the House Ways and Means Committee, and the Governor by March fifteenth of each year. The report shall detail the amount contributed to the Industry Partnership Fund in the previous tax year, the taxpayers that received the tax credits, and the manner in which the tax credits were expended, or expected to be expended. The report must be reported in a conspicuous place on the website maintained by the South Carolina Research Authority.
Section 3. This act takes effect upon approval by the Governor and applies to tax years beginning after 2018, except that the Section 1 amendment to Section 12-6-3585(F) and Section 2 shall not take effect until January 1, 2020.
Frank A. Rainwater, Executive Director
Revenue and Fiscal Affairs Office
A BILL
TO AMEND SECTION 12-6-3585, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE INDUSTRY PARTNERSHIP FUND TAX CREDIT, SO AS TO INCREASE THE AGGREGATE ANNUAL CREDIT AMOUNT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. A. Section 12-6-3585(A), (E), and (F) of the 1976 Code are amended to read:
"(A) For each tax year beginning after 2018, a taxpayer may claim as a credit against state income tax imposed by Chapter 6, Title 12, bank tax imposed by Chapter 11, Title 12, license fees imposed by Chapter 20 of Title 12, or insurance premiums imposed by Chapter 7, Title 38, or any combination of them, one hundred percent of an amount contributed to the Industry Partnership Fund at the South Carolina Research Authority (SCRA), or an SCRA-designated affiliate, or both, pursuant to Section 13-17-88(E), up to a maximum credit of six hundred fifty thousand dollars for a single taxpayer, not to exceed an aggregate credit of two million dollars for all taxpayers in tax year 2006; up to a maximum credit of one million three hundred thousand dollars for a single taxpayer, not to exceed an aggregate credit of four million dollars for all taxpayers in tax year 2007; and up to a maximum credit of two million dollars for a single taxpayer, not to exceed an aggregate credit of six million dollars for all taxpayers for each tax year beginning after December 31, 2007 two hundred fifty thousand dollars for a single taxpayer, not to exceed an aggregate credit of twelve million dollars for all taxpayers. For purposes of determining a taxpayer's entitlement to the credit for qualified contributions for a given tax year in which more than the applicable aggregate annual limit on the credit is contributed by taxpayers for that year, taxpayers who have made contributions that are intended to be qualified contributions earlier in the applicable tax year than other taxpayers must be given priority entitlement to the credit. The SCRA shall certify to taxpayers who express a bona fide intention of making one or more qualified contributions as to whether the taxpayer is entitled to that priority.
(E) 'Taxpayer' means an individual, corporation, partnership, trust, bank, insurance company, or other entity having a state income or insurance premium tax or license fee liability who has made a qualified contribution. However, for purposes of this section, any member of the SCRA board of trustees or the SC Launch!, Inc. board of directors is not considered a taxpayer, and may not claim the credit allowed by this section.
(F) To qualify for the credit, the taxpayer shall retain a form provided by SCRA identifying the taxpayer and the year and amount of credit for which the taxpayer qualifies. The Department of Revenue may require a copy of the form be attached to the taxpayer's income tax return or be provided otherwise to the department. Also, to qualify for the credit, a taxpayer who is certified by SCRA under subsection (A) as having priority entitlement to the credit for an applicable year must make a commitment satisfactory to SCRA, at such time as SCRA may deem appropriate, but not later than April first of such year, to make the contribution during such year."
B. Notwithstanding the increase in the annual maximum credit amount for all taxpayers from six million dollars to twelve million dollars in Section 12-6-3585, as amended by this SECTION, the increased maximum credit amount shall be phased in in two equal and cumulative installment amounts beginning in tax years beginning after 2018.
SECTION 2. Section 12-6-3585 of the 1976 Code is amended by adding an appropriately lettered subsection to read:
"( ) By March fifteenth of each year, the South Carolina Research Authority shall issue a report to the Chairman of the Senate Finance Committee, the Chairman of the House Ways and Means Committee, and the Governor detailing the amount contributed to the Industry Partnership Fund in the previous tax year that entitled the taxpayer to the credit allowed by this section, the taxpayers that received the credit, and the manner in which such contributions were expended or are expected to be expended. The report also must be posted in a conspicuous place on the website maintained by the South Carolina Research Authority."
SECTION 3. This act takes effect upon approval by the Governor and applies to tax years beginning after 2018, except that the Section 1 amendment to Section 12-6-3585(F) and Section 2 shall not take effect until January 1, 2020.
