Senate Finance Committee Amendment
H 4087 - Session 125 (2023-2024)
Income tax credits

The Committee on Finance proposes the following amendment (LC-4087.DG0014S):

Amend the bill, as and if amended, SECTION 2, by striking Section 12-6-3460(A)(3) and inserting:

 (3) "Qualified recycling facility" means a facility certified as a qualified recycling facility by a duly authorized representative of the department which includes all real and personal property incorporated into or associated with the facility located or to be located within this State that will be used by the taxpayer to manufacture or fabricate products for sale composed of at least fifty percent postconsumer waste material by weight or by volume. The minimum level of investment for a qualified recycling facility must be at least three one hundred fifty million dollars incurred by the end of the fifth calendar year after the year in which the taxpayer begins construction or operation of the facility.

Amend the bill further, SECTION 3, by striking Section 12-10-30(20) and inserting:

 (20) "Remote employee" is a full-time employee who is a resident of this State, North Carolina, or Georgia who is subject to withholding pursuant to Chapter 8 who is hired to fill a job for the project and who works either completely or partially from a home office or other residence within or without this State.

Amend the bill further, SECTION 3, by striking Section 12-10-60 and inserting:

 Section 12-10-60. (A) The council may enter into a revitalization agreement with each qualifying business with respect to the project. The terms and provisions of each revitalization agreement must be determined by negotiations between the council and the qualifying business. The decision to enter into a revitalization agreement with a qualifying business is solely within the discretion of the council based on the appropriateness of the negotiated incentives to the project and the determination that approval of the project is in the best interests of the State. The revitalization agreement must set a date by which the qualifying business shall have completed the project met the required investment and employment levels. Within three months of the completion dateAfter meeting the thresholds, the qualifying business shall document the actual costs of the project in a manner acceptable to the council. A business is allowed to count jobs filled by remote employees towards the minimum employment levels. While remote employees count towards a business's minimum employment levels, a business may claim job development credits on a remote employee only to the extent the remote employee was subject to withholdings pursuant to Chapter 8. A business which pays withholdings on a remote employee in South Carolina and some other state can only claim job development credits to the extent of the South Carolina withholdings.
 (B) If a qualifying business that entered into a revitalization agreement before January 1, 1997, receives council approval to amend its revitalization agreement to increase its minimum job requirement, the law in effect on the date of the amendment determines the amount of job development credit a qualifying business may claim pursuant to Section 12-10-80 for additional jobs created after the date of the amendment. This subsection does not apply to a business whose application for job development fees or credits pursuant to Section 12-10-81 has been approved by council before the effective date of this act.

Amend the bill further, by striking SECTIONS 5 and 6 and inserting:

SECTION X. Section 12-36-2120(79) of the S.C. Code is amended to read:

 (79)(A)(1) original or replacement computers, computer equipment, and computer hardware and software purchases used within a datacenter; and
   (2) electricity used by a datacenter and eligible business property to be located and used at the datacenter. This subsubitem does not apply to sales of electricity for any other purpose, and such sales are subject to the tax, including, but not limited to, electricity used in administrative offices, supervisory offices, parking lots, storage warehouses, maintenance shops, safety control, comfort air conditioning, elevators used in carrying personnel, cafeterias, canteens, first aid rooms, supply rooms, water coolers, drink boxes, unit heaters and waste house lights.
  (B) As used in this section:
   (1) "Computer" means an electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions.
   (2) "Computer equipment" means original or replacement servers, routers, switches, power units, network devices, hard drives, processors, memory modules, motherboards, racks, other computer hardware and components, cabling, cooling apparatus, and related or ancillary equipment, machinery, and components, the primary purpose of which is to store, retrieve, aggregate, search, organize, process, analyze, or transfer data or any combination of these, or to support related computer engineering or computer science research. This also includes equipment cooling systems for managing the performance of the datacenter property, including mechanical and electrical equipment, hardware for distributed and mainframe computers and servers, data storage devices, network connectivity equipment, and peripheral components and systems.
   (3) "Computer software" means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.
   (4) "Concurrently maintainable" means capable of having any capacity component or distribution element serviced or repaired on a planned basis without interrupting or impeding the performance of the computer equipment.
   (5) "Datacenter" means a new or existing facility at a single locationor an array of facilities in a single county in South Carolina, including its contracted tenants, owners, operators, and other entities with an ownership or financial interest thereto:
    (i) that provides infrastructure for hosting or data processing services and that has power and cooling systems that are created and maintained to be concurrently maintainable and to include redundant capacity components and multiple distribution paths serving the computer equipment at the facility. Although the facility must have multiple distribution paths serving the computer equipment, a single distribution path may serve the computer equipment at any one time;
    (ii)(a) where a taxpayer invests at least fifty million dollars in real or personal property or both over a five year period; or
     (b) where one or more taxpayers invests a minimum aggregate capital investment of at least seventy-five million dollars in real or personal property or both over a five year period;
    (iii) where a taxpayer creates and maintainsone or more taxpayers create at least twenty-five full-time jobs over a five-year period at the facility datacenter with an average cash compensation level of one hundred fifty percent of the per capita income of the State or of the county in which the facility datacenter is located, whichever is lower, according to the most recently published data available at the time the facility datacenter is certified by the Department of Commerce;
    (iv) where the jobs created pursuant to subitem (B)(5)(iii) are maintained for three consecutive years after a facility datacenter with the minimum capital investment and number of jobs has been certified by the Department of Commerce; and
    (v) which is certified by the Department of Commerce pursuant to subitem (D)(1) under such policies and procedures as promulgated by the Department of Commerce.
   (6) "Eligible business property" means property used for the generation, transformation, transmission, distribution, or management of electricity, including exterior substations and other business personal property used for these purposes.
   (7) "Multiple distribution paths" means a series of distribution paths configured to ensure that failure on one distribution path does not interrupt or impede other distribution paths.
   (8) "Redundant capacity components" means components beyond those required to support the computer equipment.
  (C)(1) To qualify for the exemption allowed by this item, a taxpayer, and the facility datacenter in the case of a seventy-five million dollar investment made by more than one taxpayer, shall notify the Department of Revenue and Department of Commerce, in writing, of its a datacenter taxpayer's intention to claim the exemption. For purposes of meeting the requirements of subitems (B)(5)(ii) and (B)(5)(iii) , capital investment and job creation begin accruing once the taxpayer datacenter notifies each department. Also, the five-year period begins upon notification.
   (2) Once the taxpayer datacenter collectively meets the requirements of subitem (B)(5), or at the end of the five-year period, the taxpayer datacenter shall notify the Department of Revenue, in writing, whether it has or has not met the requirements of subitem (B)(5). The taxpayer datacenter shall provide the proof the department determines necessary to determine that the requirements have been met.
  (D)(1) Upon notifying each department of its intention to claim the exemption pursuant to subitem (C)(1), and upon certification by the Department of Commerce, the taxpayer datacenter may claim the exemption on eligible purchases at any time during the period provided in Section 12-54-85(F), including the time period prior to subitem (B)(5)(iv) being satisfied.
   (2) For purposes of this section, the running of the periods of limitations for assessment of taxes provided in Section 12-54-85 is suspended for:
    (i) the time period beginning with notice to each department pursuant to subitem (C)(1) and ending with notice to the Department of Revenue pursuant to subitem (C)(2); and
    (ii) during the three year job maintenance requirement pursuant to subitem (B)(5)(iv).
  (E) Any subsequent purchase of or investment in computer equipment, computer hardware and software, and computers, including to replace originally deployed computer equipment or to implement future expansions, likewise shall qualify for the exemption provided in this subitem, regardless of when the taxpayer datacenter makes the investments.
  (F)(1) If a taxpayer datacenter receives the exemption for purchases but fails to meet the requirements of subitem (B)(5) at the end of the five-year period, the department may assess any state or local sales or use tax due on items purchased.
   (2) If a taxpayer datacenter meets the requirements of subitem (B)(5), but subsequently fails to maintain the number of full-time jobs with the required compensation level at the facilitydatacenter, as previously required pursuant to subitem (B)(5)(iii), the taxpayer is:
    (i) not allowed the exemption for items described in subitem (A)(1) until the taxpayer datacenter meets the previous qualifying jobs requirements pursuant to subitem (B)(5)(iii); and
    (ii) allowed the exemption for electricity pursuant to subitem (A)(2), but the exemption only applies to a percentage of the sale price, calculated by dividing the number of qualifying jobs by twenty-five.
  (G) This subitem only applies to a datacenter that is certified by the Department of Commerce pursuant to subitem (D)(1) prior to January 1, 2032. However, this item shall continue to apply to a taxpayer datacenter that is certified by December 31, 2031, for an additional ten year period. Upon the end of the ten year period, this subitem is repealed;

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.