Bill 1240

                    Current Status

Bill Number:               1240
Ratification Number:       789
Act Number                 666
Introducing Body:          Senate
Subject:                   Property tax exemption for corporate
                           headquarters, office facilities, and
                           distribution facilities

(A666, R789, S1240)

AN ACT TO AMEND SECTION 12-37-220, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO PROPERTY TAX EXEMPTIONS, SO AS TO PROVIDE THAT ALL NEW CORPORATE HEADQUARTERS, CORPORATE OFFICE FACILITIES, DISTRIBUTION FACILITIES, AND ALL ADDITIONS TO EXISTING HEADQUARTERS, OFFICE FACILITIES, OR DISTRIBUTION FACILITIES, IF THE COST IS FIFTY THOUSAND DOLLARS OR MORE AND SEVENTY-FIVE OR MORE NEW FULL-TIME JOBS ARE CREATED IN SOUTH CAROLINA, ARE EXEMPT FROM COUNTY AD VALOREM TAXES FOR A PERIOD OF FIVE YEARS FROM THE TIME OF ESTABLISHMENT, AND TO PROVIDE THAT CORPORATIONS ESTABLISHING CORPORATE HEADQUARTERS IN THIS STATE OR ADDING TO AN EXISTING HEADQUARTERS, WHICH ESTABLISHMENT OR ADDITION COSTS FIFTY THOUSAND DOLLARS OR MORE AND RESULTS IN THE CREATION OF SEVENTY-FIVE OR MORE NEW FULL-TIME JOBS AT LEAST FORTY OF WHICH ARE STAFF EMPLOYEES, ARE ALLOWED A CORPORATE INCOME TAX CREDIT EQUAL TO TWENTY PERCENT OF CERTAIN DEVELOPMENT OR CONSTRUCTION COSTS.

Be it enacted by the General Assembly of the State of South Carolina:

Property tax exemption for corporate headquarters, office facilities, and distribution facilities

SECTION 1. Section 12-37-220(B) of the 1976 Code is amended by adding an appropriately numbered item to read:

"( ) All new corporate headquarters, corporate office facilities, distribution facilities, and all additions to existing corporate headquarters, corporate office facilities, or distribution facilities located in South Carolina, established or constructed, or placed in service after the effective date of this item, are exempt from county ad valorem taxes for a period of five years from the time of establishment, construction, or being placed in service if the cost of the new construction or additions is fifty thousand dollars or more and seventy-five or more new jobs which are full-time are created in South Carolina.

For the purpose of this exemption, the term:

(1) 'new job' means any job created by an employer in South Carolina at the time a new facility or an expansion is initially staffed, but does not include a job created when an employee is shifted from an existing South Carolina location to work in a new or expanded facility;

(2) '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 initially hired for or transferred to the South Carolina corporate headquarters, corporate office facility, or distribution facility and worked at a rented facility pending construction of a corporate headquarters, corporate office facility, or distribution facility;

(3) 'corporate headquarters' means the location where corporate staff members or employees are domiciled and employed, and where the majority of the company's financial, personnel, legal, planning, or other business functions are handled either on a regional or national basis and must be the sole such corporate headquarters within the region or nation;

(4) 'staff employee' or 'staff member' means executive, administrative, or professional worker. At least eighty percent of an executive employee's business functions must involve the management of the enterprise and directing the work of at least two employees. An executive employee has the authority to hire and fire or has the authority to make recommendations related to hiring, firing, advancement, and promotion decisions, and an executive employee must customarily exercise discretionary powers. An administrative employee is an employee who is not involved in manual work and whose work is directly related to management policies or general business operations. An administrative employee must customarily exercise discretion and independent judgment. A professional employee is an employee whose primary duty is work requiring knowledge of an advanced type in a field of science or learning. This knowledge is characterized by a prolonged course of specialized study. The work must be original and creative in nature, and the work cannot be standardized over a specific period of time. The work must require consistent exercise of discretion;

(5) 'region' or 'regional' means a geographic area comprised of either:

(a) at least five states, including South Carolina, or

(b) two or more states, including South Carolina, if the entire business operations of the corporation are performed within fewer than five states;

(6) 'corporate office facility' means the location where corporate managerial, professional, technical, and administrative personnel are domiciled and employed, and where corporate financial, personnel, legal, technical, support services, and other business functions are handled. Support services include, but are not limited to, claims processing, data entry, word processing, sales order processing, and telemarketing;

(7) 'distribution facility' means an establishment where shipments of tangible personal property are processed for delivery to customers, but the term 'distribution facility' does not include an establishment which operates as a location where retail sales of tangible personal property are made to customers. A distribution facility includes establishments which process customer sales orders by mail, telephone, or electronic means, if the establishment also processes shipments of tangible personal property to customers. The terms 'retail sale', and 'tangible personal property', for purposes of this definition, have those meanings as contained in Chapter 35 of Title 12.

Certification of the required investment and the number of new jobs which are full-time and which are created must be provided by the South Carolina Tax Commission to the appropriate local tax officials."

Corporate income tax credit for corporate headquarters

SECTION 2. A corporation establishing a corporate headquarters in this State, or adding to an existing corporate headquarters, is allowed a credit against any tax due pursuant to Section 12-7-230 or Section 12-19-70 of the 1976 Code in an amount equal to twenty percent of the (1) costs incurred in the design, preparation, and development of either establishing or expanding a corporate headquarters, and (2) direct construction or the direct lease costs during the first five years of operations for the corporate headquarters. This credit applies to all qualifying costs incurred to establish or expand a corporate headquarters which add at least seventy-five new jobs which are full-time in South Carolina with at least forty of the new jobs classified as staff employees, and the cost of the new construction or additions is fifty thousand dollars or more. This credit only applies to facilities established for the direct use of the headquarters staff employees. This credit is nonrefundable but an unused credit may be carried forward for ten taxable years.

For purposes of this section, the terms "corporate headquarters", "new jobs", and "full-time" are defined as provided in Section 12-37-220(B).

The amount of any credit allowed under this section must be reduced by the amount of any past-due debt owed to the State of South Carolina by the taxpayer.

Time effective

SECTION 3. This act takes effect upon approval by the Governor.