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AMENDED
January 26, 1999
H. 3259
Introduced by Reps. Chellis, H. Brown, Seithel, Stuart, Edge, R. Smith, Young-Brickell, Cave, Cato, Tripp, Altman, Robinson, Bailey, Barrett, Beck, Dantzler, Fleming, Leach, Hinson, Loftis, Meacham, Sandifer, Riser, Harrell, Witherspoon, Hamilton, Wilkins, Keegan, Kelley, Walker, Rodgers, Neilson, Webb, Simrill, Limehouse, Gilham, McKay, Govan, Bales, Davenport, Lanford, Sharpe, Knotts, Whatley, Barfield and Lee
S. Printed 1/26/99--H.
Read the first time January 12, 1999.
REVENUE IMPACT 1/
This bill would reduce general fund individual income tax revenue by an estimated $6.0 million in FY99-00.
When the retiree exemption was first enacted in 1993, it allowed retirees over age 65 a $10,000 exemption from retirement income. Retirees under age 65 were given a non-revocable option to take a $3,000 exemption in 1993 and each year thereafter, or wait until age 65 and take a $10,000 exemption. If a retiree took the $3,000 option, he was allowed only the $3,000 exemption even after age 65. In 1997, the law was amended so that all retirees over age 65 were allowed an $11,500 exemption. This resolution would allow those retirees under age 65 who did not take the $3,000 exemption to re-file for all tax years back to 1993 and take the $3,000 exemption. Each retiree who re-files will receive a refund for each year he re-files up to $210, plus accrued interest from the tax year. Because there was no requirement to keep track of those retirees under age 65 who did not take the $3,000 exemption, the state does not know exactly how many retirees will re-file, nor how many years for which they will re-file. The number of retirees in the state under 65 is large, particularly in light of the closing of the Charleston Navy Base, which caused a lot of federal employees to take early retirement. There are 16,500 retirees under age 65 in the state retiree system alone. The Department of Revenue reported that there were 52,015 who claimed the $3,000 election in 1994. It is believed that there are at least 20,000 retirees under 65 who did not take the $3,000 deduction. Not all will re-file, but it is expected that 10,000 will. Figured at an average refund of $200 because not all re-filers will receive the full amount, it will cost approximately $2.0 million for each year re-filed. Not all of these taxpayers will be able to re-file for the full six years back to 1993. It is expected that there will be 3.0 years, on average, of re-filings. The total cost of H.B. 3259 is therefore expected to be $6.0 million in one-time refunds in FY1999-00.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO ALLOW A STATE INDIVIDUAL INCOME TAX DEDUCTION OF RETIREMENT INCOME, NOT TO EXCEED THREE THOUSAND DOLLARS A YEAR OF SUCH INCOME, FOR TAXABLE YEARS 1994 THROUGH 1997, FOR TAXPAYERS WHO ELECTED TO DEFER A RETIREMENT INCOME DEDUCTION UNTIL AGE SIXTY-FIVE OR WHO FAILED TO MAKE SUCH AN ELECTION.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. (A) Regardless of an election made pursuant to Section 12-6-1170 of the 1976 Code to defer until age sixty-five a retirement income deduction, as that section applied for taxable years 1993 through 1997, or in the alternative, in case of a failure to make such an election, a South Carolina individual income taxpayer who received retirement income in one or more of those taxable years and who for one or more of those years claimed no retirement income deduction with respect to that retirement income is allowed a deduction from South Carolina taxable income of retirement income received in such a year not to exceed three thousand dollars.
(B) For purposes of this section, "retirement income" has the meaning provided in Section 12-6-1170(4) of the 1976 Code as this section applied in taxable years 1993 through 1997.
(C) Notwithstanding the provisions of Section 12-54-85(F) of the 1976 Code relating to the timeliness of claims for refunds and for taxable years inserting 1993 through 1995 only, the period within which such claims are timely filed is extended through December 31, 1999, for taxpayers filing a claim pursuant to this section.
SECTION 2. This joint resolution takes effect upon approval by the Governor.
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