"is no deduction for state and local income taxes"
1 Indicates Matter Stricken 2 Indicates New Matter 3 4 AMENDED 5 April 19, 2005 6 7 H. 3768 8 9 Introduced by Rep. Kirsh 10 11 S. Printed 4/19/05--H. 12 Read the first time March 15, 2005. 13 14 [3768-1] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, BY ADDING SECTION 12-21-1085 SO AS TO PROVIDE 13 FOR SALES AND USE TAXES ON BEER AND WINE; BY 14 ADDING SECTION 12-28-1400 SO AS TO REQUIRE THE 15 REPORTING THE DEPARTMENT OF REVENUE REQUIRES 16 BY REGULATION FOR PURPOSES OF THE USER FEE ON 17 MOTOR FUELS AND PROVIDE AN ADDITIONAL CIVIL 18 PENALTY FOR VIOLATORS; BY ADDING SECTION 19 12-54-123 SO AS TO PROTECT FROM LIABILITY A PERSON 20 WHO SURRENDERS THE PROPERTY OF ANOTHER 21 LEVIED ON BY THE DEPARTMENT OF REVENUE; BY 22 ADDING CHAPTER 55 TO TITLE 12, ENACTING THE 23 OVERDUE DEBT COLLECTION ACT AUTHORIZING THE 24 SOUTH CAROLINA DEPARTMENT OF REVENUE TO 25 IMPOSE A COLLECTION ASSISTANCE FEE ON CERTAIN 26 OVERDUE TAX DEBTS EQUAL TO TWENTY PERCENT OF 27 THE OVERDUE AMOUNT AND TO ALLOW THE 28 DEPARTMENT TO RETAIN A PORTION OF THE 29 COLLECTION ASSISTANCE FEE FOR ITS OPERATION; BY 30 ADDING SECTION 61-4-725 SO AS TO ALLOW A LICENSED 31 WINERY TO SELL, DELIVER, AND PERMIT ON-PREMISES 32 CONSUMPTION ON SUNDAYS IN JURISDICTIONS WHERE 33 MINIBOTTLE SALES ARE ALLOWED ON SUNDAYS; TO 34 AMEND SECTION 4-29-67, AS AMENDED, RELATING TO 35 THE FEE IN LIEU OF PROPERTY TAX, SO AS TO DELETE 36 THE NET PERCENT VALUE METHOD OF CALCULATING 37 ANNUAL FEE PAYMENTS; TO AMEND SECTION 6-1-320, 38 AS AMENDED, RELATING TO THE LIMITS ON ANNUAL 39 INCREASES IN LOCAL GOVERNMENT AND SCHOOL 40 DISTRICT PROPERTY TAX MILLAGE, SO AS TO CLARIFY 41 THE METHOD OF CALCULATING THE ALLOWED 42 CONSUMER PRICE INDEX INCREASE IN THE MILLAGE  1 1 RATE; TO AMEND SECTIONS 12-6-40 AND 12-6-50, BOTH 2 AS AMENDED, RELATING TO DEFINITIONS AND 3 CONFORMITY PROVISIONS FOR PURPOSES OF THE 4 SOUTH CAROLINA INCOME TAX ACT, SO AS TO UPDATE 5 THE REFERENCE DATE BY WHICH THIS STATE ADOPTS 6 VARIOUS PROVISIONS OF THE INTERNAL REVENUE 7 CODE OF 1986 AND CLARIFY THOSE PROVISIONS NOT 8 ADOPTED; TO AMEND SECTIONS 12-6-1110 AND 9 12-6-1130, RELATING TO CALCULATIONS OF INCOME, SO 10 AS TO PROVIDE FOR CALCULATIONS WITHOUT SOME 11 OF THE DEDUCTIONS ALLOWED BY THE INTERNAL 12 REVENUE CODE; TO AMEND SECTION 12-6-1140, AS 13 AMENDED, RELATING TO DEDUCTIONS FROM SOUTH 14 CAROLINA INDIVIDUAL TAXABLE INCOME FOR 15 PURPOSES OF THE STATE INCOME TAX, SO AS TO 16 DELETE AN OBSOLETE DEDUCTION RELATING TO 17 MEDICAL INSURANCE PREMIUMS; TO AMEND SECTION 18 12-6-2220, RELATING TO ALLOCATION AND 19 APPORTIONMENT FOR PURPOSES OF THE STATE 20 INCOME TAX, SO AS TO PROVIDE FOR THE ALLOCATION 21 OF DIVIDENDS; TO AMEND SECTION 12-6-3360, AS 22 AMENDED, RELATING TO THE TARGETED JOBS TAX 23 CREDIT, SO AS TO REVISE THE DEFINITION OF “NEW 24 JOB”; TO AMEND SECTION 12-6-3365, AS AMENDED, 25 RELATING TO THE CORPORATE INCOME TAX 26 MORATORIUM FOR JOB CREATION, SO AS TO CLARIFY 27 THE APPLICATION OF THE MORATORIUM TO 28 INSURANCE PREMIUM TAXES; TO AMEND SECTION 29 12-6-3480, RELATING TO TAX CREDITS, SO AS TO 30 FURTHER PROVIDE THE MANNER IN WHICH CREDITS 31 ARE ALLOWED AND MAY BE CLAIMED; TO AMEND 32 SECTION 12-6-4910, AS AMENDED, RELATING TO THOSE 33 REQUIRED TO FILE INCOME TAX RETURNS, SO AS TO 34 PROVIDE FOR THOSE NONRESIDENTS REQUIRED TO 35 FILE IN THIS STATE; TO AMEND SECTIONS 12-6-5020, AS 36 AMENDED, AND 12-6-5030, RELATING TO THE FILING OF 37 CONSOLIDATED CORPORATE INCOME TAX RETURNS 38 AND COMPOSITE INDIVIDUAL INCOME TAX RETURNS, 39 SO AS TO REQUIRE THE DETERMINATION OF CREDITS 40 ON A CONSOLIDATED BASIS AND FURTHER PROVIDE 41 FOR COMPOSITE RETURNS; TO AMEND SECTION 12-8-520 42 RELATING TO STATE INCOME TAX WITHHOLDING, SO 43 AS TO PROVIDE FOR THE WITHHOLDING OF  2 1 PARTNERSHIP AND SUBCHAPTER “S” CORPORATION 2 INCOME OF NONRESIDENTS; TO AMEND SECTION 3 12-8-1520, RELATING TO STATE INCOME TAX 4 WITHHOLDING, SO AS TO PROVIDE ADDITIONAL 5 REQUIREMENTS FOR WITHHOLDING AGENTS; TO 6 AMEND SECTION 12-10-105, RELATING TO ANNUAL FEES 7 FOR JOB DEVELOPMENT CREDITS FOR PURPOSES OF 8 THE ENTERPRISE ZONE ACT OF 1995, SO AS TO EXTEND 9 THESE FEES TO JOB RETRAINING CREDITS IN EXCESS OF 10 TEN THOUSAND DOLLARS AND PROVIDE FOR THE 11 COLLECTION OF THESE FEES; TO AMEND SECTION 12 12-20-105, AS AMENDED, RELATING TO TAX CREDITS 13 FOR PURPOSES OF THE CORPORATE LICENSE TAX, SO 14 AS TO CLARIFY THE APPLICATION OF THESE CREDITS; 15 TO AMEND SECTION 12-28-740, RELATING TO 16 EXEMPTIONS FROM THE MOTOR FUELS USER FEE, SO AS 17 TO DELETE A REFERENCE TO A CREDIT; TO AMEND 18 SECTIONS 12-21-1090 AND 12-21-6550, RELATING TO 19 LICENSE TAXES, SO AS TO PROVIDE FOR THE 20 PERMISSIVE PROMULGATION OF REGULATIONS AND 21 FURTHER PROVIDE FOR THE APPLICATIONS REQUIRED 22 PURSUANT TO THE TOURISM INFRASTRUCTURE 23 ADMISSIONS TAX ACT; TO AMEND SECTION 12-28-1730, 24 AS AMENDED, RELATING TO PENALTIES FOR PURPOSES 25 OF THE MOTOR FUELS TAX, SO AS TO DELETE A CIVIL 26 PENALTY; TO AMEND SECTION 12-36-530, RELATING TO 27 THE REQUIREMENT FOR THE RETURN OF A RETAIL 28 LICENSE WHEN A BUSINESS CLOSES OR IS SOLD, SO AS 29 TO ELIMINATE THE REQUIREMENT THAT THE TAX IS 30 DUE AT THE TIME OF SALE AND CONSTITUTES A LIEN 31 ON THE PROPERTY IN THE HANDS OF THE PURCHASER; 32 TO AMEND SECTION 12-36-1310, AS AMENDED, 33 RELATING TO THE SOUTH CAROLINA SALES AND USE 34 TAX ACT, SO AS TO FURTHER PROVIDE FOR THE 35 APPLICATION OF SALES TAX TO 36 TELECOMMUNICATIONS SERVICES; TO AMEND SECTION 37 12-36-2120, AS AMENDED, RELATING TO SALES AND USE 38 TAX EXEMPTIONS, SO AS TO EXEMPT PRESCRIPTIONS 39 AND OVER-THE-COUNTER MEDICINES AND MEDICAL 40 SUPPLIES SOLD TO A FREE CLINIC; TO AMEND SECTION 41 12-36-2510, RELATING TO THE SOUTH CAROLINA SALES 42 AND USE TAX ACT, SO AS TO PROVIDE FURTHER FOR 43 THE ISSUE OF CERTIFICATES BY THE DEPARTMENT OF  3 1 REVENUE FOR DIRECT PAY AND EXEMPTIONS AND 2 PROVIDE FOR MORE EFFICIENT ADMINISTRATION OF 3 SALES TAXES AND SALES TAX EXEMPTIONS; TO AMEND 4 SECTION 12-37-220, AS AMENDED, RELATING TO 5 PROPERTY TAX EXEMPTIONS, SO AS TO DELETE 6 OBSOLETE REFERENCES IN EXISTING EXEMPTIONS; TO 7 AMEND SECTION 12-37-230, RELATING TO SERVICE 8 CONTRACTS WITH NONPROFIT HOUSING 9 CORPORATIONS, SO AS TO ALLOW A COUNTY OR 10 MUNICIPALITY TO CHARGE REASONABLE FEES FOR 11 SERVICES NOT TO EXCEED TAXES THAT WOULD 12 OTHERWISE BE DUE ON THE PROPERTY; TO AMEND 13 SECTION 12-44-50, AS AMENDED, RELATING TO THE “FEE 14 IN LIEU OF TAX SIMPLIFICATION ACT OF 1997”, SO AS 15 TO REVISE THE ELIGIBILITY TO USE THE NET PERCENT 16 VALUE METHOD OF CALCULATING THE ANNUAL FEE 17 PAYMENT; TO AMEND SECTIONS 12-54-42 AND 12-54-43, 18 AS AMENDED, RELATING TO THE UNIFORM METHOD OF 19 COLLECTION AND ENFORCEMENT OF STATE LEVIED 20 TAXES, SO AS TO CLARIFY THE APPLICATION OF 21 PENALTIES FOR FAILING TO PROVIDE WITHHOLDING 22 STATEMENTS, AND CLARIFY AND REVISE THE 23 APPLICATION OF CIVIL PENALTIES FOR FILING 24 GROUNDLESS RETURNS OR FOR MISUSE OF A SALES 25 TAX CERTIFICATE; TO AMEND SECTION 12-54-90, 26 RELATING TO THE COLLECTION AND ENFORCEMENT OF 27 STATE TAXES, SO AS TO ALLOW THE DEPARTMENT OF 28 REVENUE TO REFUSE TO ISSUE A LICENSE TO A 29 TAXPAYER IN VIOLATION; TO AMEND SECTIONS 30 12-54-210 AND 12-54-240, AS AMENDED, RELATING TO 31 THE COLLECTION AND ENFORCEMENT OF STATE 32 TAXES, SO AS TO INCREASE THE PENALTY FOR FAILURE 33 TO KEEP RECORDS, FILE RETURNS, AND COMPLY WITH 34 REGULATIONS, UPDATE REFERENCES RELATING TO 35 THE CONFIDENTIALITY OF RETURNS, AND DELETE AN 36 EXEMPTION TO THE CONFIDENTIALITY REQUIREMENTS 37 FOR RECORDS SUBPOENAED BY A FEDERAL GRAND 38 JURY; TO AMEND SECTION 12-58-185, AS AMENDED, 39 RELATING TO THE TAXPAYERS’ BILL OF RIGHTS, SO AS 40 TO CLARIFY AND EXTEND THE APPLICATION OF 41 HARDSHIP EXTENSIONS TO PAY; TO AMEND SECTIONS 42 12-60-420 AND 12-60-490, BOTH AS AMENDED, RELATING 43 TO THE REVENUES PROCEDURE ACT, SO AS TO PROVIDE  4 1 THAT THE APPLICATION OF A DIVISION DECISION OR A 2 DETERMINATION OF DEFICIENCY APPLIES TO LOCAL 3 TAXES ADMINISTERED BY THE DEPARTMENT OF 4 REVENUE AND REQUIRE THE NOTICE TO PROVIDE THAT 5 FAILURE TO FILE A PROTEST RESULTS IN A DECISION 6 BECOMING FINAL AND TO PROVIDE, FURTHER, FOR 7 SETOFFS AGAINST TAX REFUNDS; TO AMEND SECTION 8 61-4-747, RELATING TO REGULATION OF WINE, SO AS TO 9 REQUIRE OUT-OF-STATE WINE SHIPPERS TO PAY SALES 10 AND EXCISE TAXES ON WINE SHIPPED TO RESIDENTS 11 OF THIS STATE BY JANUARY TWENTIETH OF EACH 12 YEAR FOR THE PRECEDING YEAR; BY ADDING SECTION 13 33-14-420 SO AS TO FURTHER PROVIDE FOR CLAIMANTS 14 AGAINST FUNDS OF A DISSOLVED CORPORATION; TO 15 REPEAL SECTION 12-37-240, RELATING TO PAYMENTS IN 16 LIEU OF TAXES BY EXEMPT NONPROFIT HOUSING 17 CORPORATIONS AND SECTION 12-37-290, RELATING TO 18 AN OBSOLETE HOMESTEAD EXEMPTION PROVISION. 19 Amend Title To Conform 20 21 Be it enacted by the General Assembly of the State of South 22 Carolina: 23 24 SECTION 1.A. Section 12-36-140(C)(3), as added by Act 387 of 25 2000, is amended to read: 26 27 “(3) for the purpose of being distributed as (i) cooperative direct 28 mail promotional advertising materials, or (ii) promotional maps, 29 brochures, pamphlets, or discount coupons by nonprofit chambers 30 of commerce or convention and visitor bureaus who are exempt 31 from income taxation pursuant to Internal Revenue Code Section 32 501(c) by means of interstate carrier, a mailing house, or a United 33 States Post Office to residents of this State from locations both 34 inside and outside the State. For purposes of this item, ‘cooperative 35 direct mail promotional advertising materials’ means discount 36 coupons, advertising leaflets, and similar printed advertising, 37 including any accompanying envelopes and labels which are 38 distributed with promotional advertising materials of more than 39 one business in a single package to potential customers, at no 40 charge to the potential customer, of the businesses paying for the 41 delivery of the material.” 42  5 1 B. Section 12-36-2120(58) of the 1976 Code, as added by Act 2 387 of 2000, is amended to read: 3 4 “(58) cooperative direct mail promotional advertising materials 5 and promotional maps, brochures, pamphlets, or discount coupons 6 by nonprofit chambers of commerce or convention and visitor 7 bureaus who are exempt from income taxation pursuant to Internal 8 Revenue Code Section 501(c) delivered at no charge by means of 9 interstate carrier, a mailing house, or a United States Post Office to 10 residents of this State from locations both inside and outside the 11 State. For purposes of this item, ‘cooperative direct mail 12 promotional advertising materials’ means discount coupons, 13 advertising leaflets, and similar printed advertising, including any 14 accompanying envelopes and labels which are distributed with 15 promotional advertising materials of more than one business in a 16 single package to potential customers, at no charge to the potential 17 customer, of the businesses paying for the delivery of the 18 material.” 19 20 C. This section takes effect for tax years beginning after 2005, 21 but does not authorize or permit refunds of taxes paid. 22 23 SECTION 2. Article 13, Chapter 28, Title 12 of the 1976 Code is 24 amended by adding: 25 26 “Section 12-28-1400. (A) All information required to be 27 reported in this chapter must be used in the tracking of petroleum 28 products and must be submitted in the manner provided by the 29 department. The requirements may include, but not be limited to, 30 the data elements, the format of the data elements, and the method 31 and medium of transmission to the department. 32 (B) A person liable for reporting under this chapter who fails to 33 meet the requirements of this section within three months after 34 notification of the failure by the department, in addition to all other 35 penalties prescribed by this chapter, is subject to an additional 36 penalty of five thousand dollars for each month the failure 37 continues.” 38 39 SECTION 3. A.Chapter 54, Title 12 of the 1976 Code is amended 40 by adding: 41 42 “Section 12-54-123. A person in possession of property upon 43 which a levy has been made who, upon demand by the department,  6 1 surrenders the property to the department must not be held 2 personally liable for any obligation or liability to the taxpayer and 3 any other person with respect to the property that arises from the 4 surrender or payment. If a person brings an action not allowed 5 pursuant to this section in any court of this State, the court shall 6 dismiss the case.” 7 8 B. This section takes effect July 1, 2005. 9 10 SECTION 4. A.Title 12 of the 1976 Code is amended by adding: 11 12 “CHAPTER 55 13 14 Overdue Tax Debt Collection Act 15 16 Section 12-55-10. This chapter may be cited as the ‘Overdue 17 Tax Debt Collection Act’. 18 19 Section 12-55-20. The General Assembly finds that the 20 Department of Revenue has documented that the state’s cost of 21 collecting overdue tax debts exceeds twenty percent of the cost of 22 collecting overdue debts. The General Assembly further finds that 23 the cost of collecting overdue tax debts is currently borne by 24 taxpayers who pay their taxes on time. It is the intent of the 25 General Assembly by enacting the ‘Overdue Tax Debt Collection 26 Act’ to ship this cost to the delinquent taxpayers who owe overdue 27 tax debts. 28 29 Section 12-55-30. (A) As used in this chapter: 30 (1) ‘Overdue tax debt’ means any part of a tax debt that 31 remains unpaid one hundred twenty days or more after the 32 taxpayer receives notice as defined in Section 12-55-30(A)(2). 33 (2) ‘Notice’ means a notice of assessment issued by the 34 department to the taxpayer pursuant to the South Carolina Revenue 35 Procedures Act. 36 (3) ‘Tax debt’ means the total amount of tax, fees, penalties, 37 interest, and costs for which notice has been issued by the 38 department to the taxpayer. 39 (B) Except when the context clearly indicates a different 40 meaning, the definitions in Section 12-60-30 also apply to this 41 chapter. 42  7 1 Section 12-55-40. A collection assistance fee may be imposed 2 on an overdue tax debt. To impose a collection assistance fee on a 3 tax debt, the department shall notify the taxpayer that the 4 collection assistance fee may be imposed if the tax debt becomes 5 overdue tax debt. 6 7 Section 12-55-50. The collection assistance fee is collectible as 8 part of the debt. The department may waive the fee to the same 9 extent as if it were a penalty. 10 11 Section 12-55-60. The amount of the collection assistance fee 12 is twenty percent of the amount of the overdue tax. 13 14 Section 12-55-70. The proceeds of the collection assistance fee 15 must be credited to a special account within the department and 16 must be used to fund the South Carolina Business One Stop 17 (SCBOS) program within the department. Any excess proceeds of 18 the collection assistance fee above the amount required to fund the 19 SCBOS program must be credited to the department to be retained 20 and expended for use in budgeted operations. 21 22 Section 12-55-80. The department may bring suits in the courts 23 of other states to collect taxes legally due this State. The officials 24 of other states are empowered to sue for the collection of taxes in 25 the courts of this State. Whenever the department considers it 26 expedient to employ local counsel to assist in bringing suit in an 27 out-of-state court, the department may employ local counsel. 28 29 Section 12-55-90. Collection agencies with which the 30 department contracts under Sections 12-4-340 and 12-54-227 are 31 also authorized to collect on behalf of the department overdue tax 32 debts and the collection fee imposed by this chapter.” 33 34 B. The ‘Overdue Tax Debt Collection Act’ as added by this 35 section applies for all tax debts incurred before which remain 36 outstanding on December 1, 2002, and to all tax debts incurred on 37 or after December 1, 2002. 38 39 SECTION 5. A.Article 7, Chapter 4, Title 61 of the 1976 Code is 40 amended by adding: 41 42 “Section 61-4-725. Notwithstanding any other provision of law, 43 a licensed winery located in a county or municipality that has  8 1 conducted a favorable referendum under the provisions of Section 2 61-6-2010, during those same hours authorized by permits issued 3 under Section 61-6-2010, may sell, possess, and permit the 4 consumption of wine on the premises.” 5 6 B. This section takes effect July 1, 2005. 7 8 SECTION 6. Section 6-1-320(A) of the 1976 Code is amended to 9 read: 10 11 “(A) Notwithstanding Section 12-37-251(E), a local governing 12 body may increase the millage rate imposed for general operating 13 purposes above the rate imposed for such purposes for the 14 preceding tax year only to the extent of the increase in the 15 consumer price index for the in the average of the twelve monthly 16 consumer price indexes for the most recent twelve-month period 17 consisting of January through December of the preceding calendar 18 year. However, in the year in which a reassessment program is 19 implemented, the rollback millage, as calculated pursuant to 20 Section 12-37-251(E), must be used in lieu of the previous year’s 21 millage rate.” 22 23 SECTION 7. Section 12-6-40(A)(1) of the 1976 Code, as last 24 amended by Act 69 of 2003, is further amended to read: 25 26 “(1)(a) Except as otherwise provided, ‘Internal Revenue Code’ 27 means the Internal Revenue Code of 1986, as amended through 28 December 31, 2002 2004, and includes the effective date 29 provisions contained in it. 30 (b) For purposes of sections 63 and 179 of the Internal 31 Revenue Code, the amendments made by sections 103 and 202 of 32 the Jobs and Growth Tax Relief Reconciliation Act of 2003, P.L. 33 108-27 (May 28, 2003) are effective only for taxable years 34 beginning after December 31, 2003.” 35 36 SECTION 8. Section 12-6-50 of the 1976 Code, as last amended 37 by Act 69 of 2003, is further amended to read: 38 39 “Section 12-6-50. For purposes of this chapter title and all 40 other titles which provide for taxes administered by the 41 department, except as otherwise specifically provided, the 42 following Internal Revenue Code Sections are specifically not 43 adopted by this State:  9 1 (1) Sections 1(a) through 1(e), 3, 11, and 1201 relating to 2 federal tax rates; 3 (2) Sections 22 through 53, 515, 853, 901 through 908, and 4 960 relating to tax credits; 5 (3) Sections 55 through 59 relating to minimum taxes; 6 (4) Sections 78, 86, 87, 168(k), 196, and 280C relating to 7 dividends received from certain foreign corporations by domestic 8 corporations, taxation of social security and certain railroad 9 retirement benefits, the alcohol fuel credit, bonus depreciation, 10 deductions for certain unused business credits, and certain 11 expenses for which credits are allowable; 12 (5) Sections 72(m)(5)(B), 72(f), 72(o), 72(q), and 72(t), 13 relating to penalty taxes on certain retirement plan distributions; 14 (6) Section 172(b)(1) relating to net operating loss carrybacks; 15 (7) Section 199 relating to the deduction attributable to 16 domestic production activities; 17 (8) Sections 531 through 564 relating to certain special taxes 18 on corporations; 19 (8)(9) Sections 581, 582, and 585 through 596 relating to the 20 taxation of banking institutions; 21 (9)(10) Sections 665 through 668 relating to taxation of certain 22 accumulation distributions from trusts; 23 (10)(11) Sections 801 through 845 relating to taxation of 24 insurance companies; 25 (11)(12) Sections 861 through 908, 912, 931 through 940, and 26 944 through 989 relating to the taxation of foreign income; 27 (13) Sections 1352 through 1359 relating to an alternative tax on 28 qualifying shipping activities; 29 (12)(14) Sections 1401 through 1494; 30 (13)(15) Sections 1501 through 1505 relating to consolidated 31 tax returns; and 32 (14)(16) Sections 2001 through 7655, 7801 through 7871, and 33 8001 through 9602, except for Section 6015, and except for 34 Sections 6654 and 6655 which are adopted as provided in Section 35 12-6-3910.” 36 37 SECTION 9. Section 12-6-1110 of the 1976 Code is amended to 38 read: 39 40 “Section 12-6-1110. (A) For South Carolina income tax 41 purposes, gross income, adjusted gross income, and taxable 42 income as calculated under the Internal Revenue Code are  10 1 modified as provided in this article and subject to allocation and 2 apportionment as provided in Article 17 of this chapter. 3 (B) If a taxpayer has made an election pursuant to Internal 4 Revenue Code Section 1354 to be taxed under the provisions of 5 Section 1352-1359 of the Internal Revenue Code, Election to 6 Determine Taxable Income from Certain International Shipping 7 Activities, the election is not effective for South Carolina income 8 tax purposes, and the taxpayer is taxed in accordance with this 9 chapter as though no federal Section 1354 election has been 10 made.” 11 12 SECTION 10. A.Section 12-6-1130(2) of the 1976 Code is 13 amended to read: 14 15 “(2) The deduction for taxes permitted by Internal Revenue 16 Code Section 164 is computed in the same manner as provided in 17 Section 164 except there is no deduction for state and local income 18 taxes, or state and local franchise taxes measured by net income, or 19 any other income taxes, or any taxes measured by or with respect 20 to net income, or state or local sales or use taxes.” 21 22 B. Section 12-6-1130 of the 1976 Code, as amended by Act 363 23 of 2002, is further amended by adding an appropriately numbered 24 item at the end to read: 25 26 “( ) Adjusted gross income and taxable income are computed 27 without the deduction allowed pursuant to Internal Revenue Code 28 Section 199 relating to domestic production activities.” 29 30 SECTION 11. Section 12-6-1140(8) of the 1976 Code is 31 amended to read: 32 33 “(8) RESERVED. the portion of premiums not deductible 34 pursuant to Internal Revenue Code Section 162(l) because the 35 “applicable percentage” as defined in that section is less than one 36 hundred percent.” 37 38 SECTION 12. A. Section 12-6-2220(2) of the 1976 Code is 39 amended to read: 40 41 “(2) Dividends received from corporate stocks owned not 42 connected with the taxpayer’s business, less all related expenses, 43 are allocated to the state of the corporation’s principal place of  11 1 business as defined in Section 12-6-30(9) or the domicile of an 2 individual taxpayer.” 3 4 B. Section 12-6-2220(2) of the 1976 Code, as amended by this 5 section, applies for taxable years beginning after 2004. 6 7 SECTION 13. The ultimate undesignated paragraph of Section 8 12-6-3360(M)(3) of the 1976 Code, as last amended by Act 168 of 9 2004, is further amended to read: 10 11 “Notwithstanding any other another provision of law, ‘new job’ 12 includes jobs created by a taxpayer when the taxpayer hires more 13 than five hundred full-time individuals: 14 (a) at a manufacturing facility located in a county classified 15 as least developed distressed; 16 (b) immediately before their employment by the taxpayer, 17 the individuals were employed by a company operating, as of the 18 effective date of this paragraph, under Chapter 11 of the United 19 States Bankruptcy Code; and 20 (c) the taxpayer, as an unrelated entity, acquires as of July 21 10, 2002 March 12, 2004, substantially all of the assets of the 22 company operating under Chapter 11 of the United States 23 Bankruptcy Code.” 24 25 SECTION 14. A. Section 12-6-3365(A) of the 1976 Code, as 26 last amended by Act 172 of 2004, is further amended to read: 27 28 “(A) A taxpayer creating and maintaining at least one hundred 29 full-time new jobs, as defined in Section 12-6-3360(M), at a 30 facility of a type identified in Section 12-6-3360(M) may petition, 31 utilizing the procedure in Section 12-6-2320(B), for a moratorium 32 on state corporate income or insurance premium taxes imposed 33 pursuant to Section 12-6-530 or insurance premium taxes imposed 34 pursuant to Title 38 for the ten taxable years beginning the first full 35 taxable year after the taxpayer qualifies and ending either ten years 36 from that year or the year when the taxpayer’s number of full-time 37 new jobs falls below one hundred, whichever is earlier. For 38 purposes of insurance premium taxes, the petition pursuant to 39 Section 12-6-2320(B) must be made to and approved by the 40 director of the Department of Insurance.” 41  12 1 B. The amendment to Section 12-6-3365 of the 1976 Code in 2 this section does not affect its repeal as provided in Section 3 of 3 Act 277 of 2000. 4 5 SECTION 15. A.Section 12-6-3480 of the 1976 Code is 6 amended to read: 7 8 “Section 12-6-3480. (A) Notwithstanding any other provision 9 of law: 10 (1) Any credits under Title 38 may be applied against any 11 taxes imposed under this chapter or license fees imposed under 12 Chapter 20 of this title. 13 (2) Any credits under this chapter or Chapter 14 of this title 14 which are earned by one member of a controlled group of 15 corporations a corporation included in a consolidated corporate 16 income tax return under Section 12-6-5020 may must be used and 17 applied against the consolidated tax, unless otherwise specifically 18 provided by that member and by any other members of the 19 controlled group of corporations. 20 (3) Any limitations upon the total amount of liability for 21 taxes or license fees that can be reduced by the use of a credit must 22 be computed one credit at a time before any other another credit is 23 used to reduce any remaining tax or license fee liability under this 24 chapter or Chapter 20 of this title. Subject to item (4), The 25 taxpayer may apply any credits arising under this chapter or 26 Chapter 14 of this title in any order the taxpayer elects, and may 27 apply a credit that is allowed for use against both taxes and license 28 fees in any order, unless otherwise specifically provided, and 29 against either one or both taxes and license fees in any given year, 30 subject to specific limitations in the applicable credit statute and 31 this item. 32 (4) No credit amount may be used more than once, and all 33 credits must be used, to the extent possible in any given year, first 34 by the company that earned them, and second against the tax 35 which generated them. Unless otherwise provided by law, a tax 36 credit administered by the department must be used to the extent 37 possible in the year it is generated and cannot be refunded. 38 (5) As used in this section:, 39 (a) the term “controlled group of corporations” has the 40 same meaning as provided under Section 1563 of the Internal 41 Revenue Code without regard to Section 1563(a)(4), (b)(2)(A), 42 only with respect to corporations which are in existence for less  13 1 than one-half the number of days in the tax year referred to therein, 2 and (b)(2)(C) and (D); 3 (b) the term ‘tax credit’ or ‘credit’ means a statutorily 4 directed or authorized reduction in the tax liability made after any 5 applicable tax rates are applied.” 6 7 B. Section 12-6-3480 of the 1976 Code, as amended by this 8 section, applies for taxable years beginning after 2004. 9 10 SECTION 16. A. Section 12-6-4910(1)(d) of the 1976 Code is 11 amended to read: 12 13 “(d) a nonresident individual with South Carolina gross income 14 greater than the personal exemption amount provided in Internal 15 Revenue Code Section 151(d).” 16 17 B. Section 12-6-4910(1)(d) of the 1976 Code, as amended by 18 this section, applies for taxable years beginning after 2005. 19 20 SECTION 17. A.Section 12-6-5020(F) of the 1976 Code is 21 amended to read: 22 23 “(F) If a corporation which files or is required to file a 24 consolidated return is entitled to one or more income tax credits, 25 including the carryover of unused credits from prior years, the 26 income tax credits may must be determined on a consolidated 27 basis. Limitations on credits which refer to the income or the 28 income tax liability of a corporation are deemed to refer to the 29 income or income tax liability of the consolidated group, and 30 credits shall reduce the consolidated group’s tax liability regardless 31 of whether or not the corporation entitled to the credit contributed 32 to the tax liability or of the consolidated group.” 33 34 B. Section 12-6-5020(F), as amended by this section, applies for 35 taxable years beginning after 2004. 36 37 SECTION 18. A.Section 12-6-5030 of the 1976 Code is 38 amended to read: 39 40 “Section 12-6-5030. (A) A partnership or ‘S’ Corporation may 41 file a composite individual income tax return on behalf of the 42 nonresident partners or shareholders that are individuals, or trusts, 43 and or estates in which the income is taxed to the trust or estate, or  14 1 the department may require that a partnership or ‘S’ Corporation 2 file a composite individual income tax return on behalf of the 3 nonresident partners or shareholders that are individuals, or trusts 4 and estates in which the income is taxed to the trust or estate, 5 provided that a nonresident partner or ‘S’ Corporation shareholder 6 having taxable income within the jurisdiction of this State from 7 sources other than the partnership or ‘S’ Corporation may not file 8 as part of the composite return. 9 (B)(1) A composite return is one which combines the separate 10 South Carolina tax liabilities of the nonresident partners or 11 shareholders and a single return for two or more taxpayers having 12 the same tax year in which each participant’s share of the 13 partnerships or ‘S’ Corporation’s taxable income or loss is 14 separately computed and added together to arrive at the total tax 15 due on the composite return. The partnership or ‘S’ Corporation 16 may elect to determine each participant’s tax due by one of the 17 following methods: 18 (a) compute the pro rata share of the standard deduction 19 or itemized deductions, and personal exemption amount for each 20 participant pursuant to Section 12-6-1720(2) in the same manner as 21 if it was being separately reported; or 22 (b) compute each participant’s share of South Carolina 23 income without regard to any deductions or exemptions. 24 (2) The composite return is signed by a general partner or an 25 authorized officer of the ‘S’ Corporation. 26 (C) If there is not sufficient information to determine the 27 separate liability or the state of residence, then no deduction is 28 allowed for personal exemptions, individual itemized deductions, 29 or standard deductions. 30 (D)(1) A composite return may be filed even if some of the 31 nonresident fiduciary and individual shareholders and partners 32 eligible to participate in filing a composite return choose not to 33 participate. Corporate taxpayers may not participate in a 34 composite return. 35 (2) A nonresident participating in the composite return that 36 has South Carolina income from sources other than the entity filing 37 the composite return is required to file appropriate returns and 38 make payment of all South Carolina taxes required by law. Taxes 39 paid for the nonresident with the composite return shall reduce 40 taxes due at the time the nonresident subject to this subitem files a 41 separate return for the tax year reporting South Carolina income 42 from all sources. The entity shall furnish to each nonresident a 43 written statement as required by Section 12-8-1540(A) as proof of  15 1 the amount that has been paid by the partnership or ‘S’ corporation 2 as estimated payments for the nonresident and the amount paid for 3 the nonresident with the composite return. 4 (E)(D) The department may establish procedures or promulgate 5 rules and promulgate regulations necessary to carry out the 6 provisions of this section.” 7 8 B. Section 12-6-5030 of the 1976 Code, as amended by this 9 section, applies for taxable years beginning after 2004. 10 11 SECTION 19. A.Subsections (A) and (D)(3) of Section 12 12-8-520 of the 1976 Code are amended to read: 13 14 “(A) An employer paying wages at the rate of eight hundred 15 dollars or more a year to an employee shall withhold income tax 16 for that employee if at the time of payment the wages are expected 17 to equal one thousand dollars or more during the year, except as 18 provided in (C), using the tables and rules promulgated by the 19 department. 20 21 (3) for personal services performed on occasional, sporadic, or 22 casual visits to in this State by nonresident employees in 23 connection with their regular employment outside of this State; 24 when the gross South Carolina wages are equal to or less than the 25 personal exemption amount provided in Internal Revenue Code 26 Section 151(d) as defined in Section 12-6-40. However, this item 27 does not apply to employees performing construction, installation, 28 engineering, or similar services are considered to have earned 29 wages in this State if where the situs of the job is in this State;” 30 31 B. Subsections (A) and (D)(3) of Section 12-8-520 of the 1976 32 Code, as amended by this section, apply for taxable years 33 beginning after 2005. 34 35 SECTION 20. A. Section 12-8-1520(A)(2) of the 1976 Code is 36 amended to read: 37 38 “(2) If a resident withholding agent is required under the 39 Internal Revenue Code to deposit withheld funds at a financial 40 institution, then the withholding agent shall deposit the funds 41 required to be withheld under this chapter at a financial institution 42 selected by the State Treasurer, unless otherwise instructed by the 43 department.”  16 1 B. Section 12-8-1520 of the 1976 Code is amended by adding at 2 the end: 3 4 “(D) Any withholding agent making at least twenty-four 5 payments in a year must do so as provided in Section 12-54-250.” 6 7 C. Section 12-8-1520(A)(2) of the 1976 Code, as amended in 8 subsection A of this section, takes effect July 1, 2005. The 9 amendment to Section 12-8-1520 in the 1976 Code in subsection 10 (B) of this section applies for payments due after January 1, 2006. 11 12 SECTION 21. Section 12-10-105 of the 1976 Code, as added by 13 Act 334 of 2002, is amended to read: 14 15 “Section 12-10-105. In addition to the application fee provided 16 in Section 12-10-100, an additional annual fee of one thousand 17 dollars must be remitted by those qualifying businesses receiving 18 claiming in excess of ten thousand dollars of job development 19 credits or in excess of ten thousand dollars in job retraining credits 20 in one calendar year . to the department The fee is due for each 21 project that is subject to a revitalization or retraining agreement 22 that exceeds ten thousand dollars in one calendar year and must be 23 remitted to the Department of Revenue to be used to reimburse the 24 department of Revenue for costs incurred auditing reports required 25 pursuant to Section 12-10-80(A). The fee becomes due at the time 26 the single project’s claims for job development credits or job 27 retraining credits exceeds ten thousand dollars for that calendar 28 year.” 29 30 SECTION 22. A.Subsections (B)(1) and (C) of Section 31 12-20-105 of the 1976 Code, as last amended by Act 69 of 2003, 32 are further amended to read: 33 34 “(1) To be considered an eligible project for purposes of this 35 section, the project must qualify for income tax credits under 36 Chapter 6 of Title 12, withholding tax credit under Chapter 10 of 37 Title 12, income tax credits under Chapter 14 of Title 12, or fees in 38 lieu of property taxes under either Chapter 12 of Title 4, Chapter 39 29 of Title 4, Chapter 37 of Title 12, or Chapter 44 of Title 12. 40 (C) For the purpose of this section, ‘infrastructure’ means 41 improvements for water, sewer, gas, steam, electric energy, and 42 communication services made to a building or land that are  17 1 considered necessary, suitable, or useful to an eligible project. 2 These improvements include, but are not limited to: 3 (1) improvements to both public or private water and sewer 4 systems; 5 (2) improvements to both public or private electric, natural 6 gas, and telecommunications systems including, but not limited to, 7 ones owned or leased by an electric cooperative, electric utility, or 8 electric supplier, as defined in Chapter 27, Title 58; 9 (3) fixed transportation facilities including highway, road, 10 rail, water, and air; 11 (4) for a qualifying project under subsection (B)(2), 12 infrastructure improvements include industrial shell buildings and 13 the purchase of land for an office, business, commercial, or 14 industrial park which is owned or constructed by a county or 15 political subdivision of this State.” 16 17 B. Subsections (B)(1) and (C) of Section 12-20-105 of the 1976 18 Code, as amended by this section, apply for taxable years 19 beginning after 2004. 20 21 SECTION 23. Section 12-21-1090 of the 1976 Code is amended 22 to read: 23 24 “Section 12-21-1090. The department shall may promulgate 25 rules and regulations for the payment and collection of the taxes 26 levied by this article. The administrative provisions of Section 27 12-21-2870, wherever applicable, are hereby adopted for the 28 administration and enforcement of the provisions of this article.” 29 30 SECTION 24. A.Section 12-21-6550 of the 1976 Code is 31 amended to read: 32 33 “Section 12-21-6550. In order to obtain the amounts provided in 34 Sections 12-21-6530 and 12-21-6540: 35 (A) The county or municipality in which the major tourism or 36 recreation facility or major tourism or recreation area is located 37 must file with the Department of Parks, Recreation and Tourism a 38 certification application. The Department of Parks, Recreation and 39 Tourism shall review the application for completeness and 40 accuracy and if necessary contact the county or municipality for 41 additional information. A separate certification application must 42 be filed for each tourism or recreation facility located in a tourism  18 1 or recreation area. The certification application must be filed 2 within one year of the end of the investment period. 3 (B) When the application is complete, the Department of Parks, 4 Recreation and Tourism shall forward the application on to the 5 department. The department must shall notify the county or the 6 municipality, in writing, if the certification application has been 7 approved. 8 (B)(C) A tourism or recreation facility for which a certification 9 application has been filed must request a determination from the 10 council as to the status of the tourism or recreation facility. The 11 council must classify each tourism or recreation facility as a new 12 tourism or recreation facility or an expansion to an existing 13 tourism or recreation facility. If a tourism or recreation facility is 14 classified as an expansion to an existing tourism or recreation 15 facility, Section 12-21-6580 applies. The request for 16 determination of classification must be included in the certification 17 application. The department must forward a copy of the request to 18 the council for its determination.” 19 20 B. This section takes effect July 1, 2005. 21 22 SECTION 25. Section 12-28-740(3)(b) of the 1976 Code is 23 amended to read: 24 25 “(b) by application for a refund or credit against its liabilities 26 otherwise arising under this chapter, if the purchase is charged to a 27 credit card issued to an eligible government entity, the issuer of the 28 card elects to be the ultimate vendor, and the federal agency is 29 billed without the user fee;” 30 31 SECTION 26. Subsections (C) and (F) of Section 12-28-1730 of 32 the 1976 Code are amended to read: 33 34 “(C) Reserved. The department shall impose a civil penalty on 35 the operator of a vehicle of two hundred dollars for the initial 36 occurrence in each calendar year of a violation of the prohibition 37 of use of dyed motor fuel subject to the user fee on the public 38 highways of this State. Each subsequent offense in a calendar year 39 is subject to a civil penalty of five thousand dollars. 40 41 (F) The department shall impose a civil penalty in an amount 42 equivalent to that imposed by Section 6715 of the Internal 43 Revenue Code on the operator of a vehicle who knowingly violates  19 1 the prohibition on the sale or use of dyed fuel upon public 2 highways of this State. The department shall impose a civil 3 penalty in the amount of one thousand dollars or ten dollars for 4 each gallon of dyed fuel involved, whichever is greater, on the 5 operator of a vehicle that is used on the highways of this State, or 6 is authorized or otherwise allowed to be used on the highways of 7 this State, and who uses dyed fuel for the propulsion of that vehicle 8 or who stores dyed fuel to be used for the propulsion of a vehicle 9 on the highways of this State, regardless of whether any of such 10 dyed fuel is used for a nontaxable purpose, unless permitted to do 11 so under federal law. 12 For purposes of this section, the operator is the person 13 responsible for the management and operation of the vehicle, 14 whether as owner, lessee, or other party.” 15 16 SECTION 27. Section 12-36-530 of the 1976 Code is amended 17 to read: 18 19 “Section 12-36-530. Retailers, after closing or selling a 20 business, must return the retail license to the department for 21 cancellation and remit any unpaid or accrued taxes. The 22 department may refuse to issue a new retail license to any person 23 who has failed to comply with the provisions of this section. 24 In the case of sale of any business the tax is considered to be due 25 at the time of the sale of the fixtures and equipment incident to the 26 business and constitutes a lien against the stock of goods and the 27 fixtures and equipment in the hands of the purchaser, or any other 28 third party, until the tax is paid. The department may not issue a 29 retail license to continue or conduct the business to the purchaser 30 until all taxes due the State have been settled and paid.” 31 32 SECTION 28. Section 12-36-1310(B) of the 1976 Code, as last 33 amended by Act 334 of 2002, is further amended to read: 34 35 “(B) The use tax imposed by this article also applies to the: 36 (1) gross proceeds accruing or proceeding from the business 37 of providing or furnishing any a laundering, dry cleaning, dyeing, 38 or pressing service, but does not apply to the gross proceeds 39 derived from coin operated laundromats and dry cleaning 40 machines; 41 (2) gross proceeds accruing or proceeding from the sale of 42 electricity;  20 1 (3)(a) gross proceeds accruing or proceeding from the 2 charges for the ways or means for the transmission of the voice or 3 messages, including the charges for use of equipment furnished by 4 the seller or supplier of the ways or means for the transmission of 5 the voice or messages. Gross proceeds from the sale of prepaid 6 wireless calling arrangements subject to tax at retail pursuant to 7 item (5) of this subsection are not subject to tax pursuant to this 8 item. Effective for bills rendered after August 1, 2002, charges for 9 mobile telecommunications services subject to the tax under this 10 item must be sourced in accordance with the Mobile 11 Telecommunications Sourcing Act as provided in Title 4 of the 12 United States Code. The term ‘charges for mobile 13 telecommunications services’ is defined for purposes of this 14 section the same as it is defined in the Mobile Telecommunications 15 Sourcing Act. All other definitions and provisions of the Mobile 16 Telecommunications Sourcing Act as provided in Title 4 of the 17 United States Code are adopted; 18 (b)(i) for purposes of this item, a ‘bundled transaction’ 19 means a transaction consisting of distinct and identifiable 20 properties or services, which are sold for one nonitemized price but 21 which are treated differently for tax purposes: 22 (ii) for bills rendered on or after January 1, 2004, that 23 include telecommunications services in a bundled transaction, if 24 the nonitemized price is attributable to properties or services that 25 are taxable and nontaxable, the portion of the price attributable to 26 any nontaxable property or service is subject to tax unless the 27 provider can reasonably identify that portion from its books and 28 records kept in the regular course of business for purposes other 29 than sales taxes. 30 (4) fair market value of tangible personal property brought 31 into this State, by the manufacturer thereof, for storage, use, or 32 consumption in this State by the manufacturer. 33 (5) gross proceeds accruing or proceeding from the sale or 34 recharge at retail for prepaid wireless calling arrangements. 35 (a) ‘Prepaid wireless calling arrangements’ means 36 communication services that: 37 (i) are used exclusively to purchase wireless 38 telecommunications; 39 (ii) are purchased in advance; 40 (iii) allow the purchaser to originate telephone calls by 41 using an access number, authorization code, or other means 42 entered manually or electronically; and  21 1 (iv) are sold in units or dollars which decline with use in 2 a known amount. 3 (b) All charges for prepaid wireless calling arrangements 4 must be sourced to the: 5 (i) location in this State where the over-the-counter sale 6 took place; 7 (ii) shipping address if the sale did not take place at the 8 seller’s location and an item is shipped; or 9 (iii) either the billing address or location associated with 10 the mobile telephone number if the sale did not take place at the 11 seller’s location and no item is shipped.” 12 13 SECTION 29. Section 12-36-2120 of the 1976 Code, as 14 amended by Act 69 of 2003, is further amended by adding an 15 appropriately numbered item at the end to read: 16 17 “( ) prescription and over-the-counter medicines and medical 18 supplies, including diabetic supplies, diabetic diagnostic 19 equipment, and diabetic testing equipment, sold to a health care 20 clinic that provides medical and dental care without charge to all of 21 its patients.” 22 23 SECTION 30. A. Section 12-36-2510 of the 1976 Code is 24 amended to read: 25 26 “Section 12-36-2510. (A)(1) Notwithstanding other provisions 27 of this chapter, when, in the opinion of the department, the nature 28 of a taxpayers business renders it impracticable for the taxpayer to 29 account for the sales or use taxes, as imposed by this chapter, at the 30 time of purchase, the department may issue its certificate to the 31 taxpayer authorizing the purchase at wholesale and the taxpayer is 32 liable for the taxes imposed by this chapter with respect to the 33 gross proceeds of sale, or sales price, of the property withdrawn, 34 used or consumed by the taxpayer within this State. at its 35 discretion, may issue or authorize for the efficient administration 36 of the sales and use tax law any type of certificate allowing a 37 taxpayer to purchase tangible personal property tax free and be 38 liable for any taxes. 39 (2) In addition to any other type of certificate the department 40 considers necessary to issue, the department may issue at its 41 discretion: 42 (a) Direct Pay Certificate: a direct pay certificate allows 43 its holder to make all purchases tax free and to report and pay  22 1 directly to the department any taxes due. The holder of a direct pay 2 certificate is liable for any taxes due. If an exemption or exclusion 3 is not applicable, the tax is due upon the withdrawal, use, or 4 consumption of the tangible personal property purchased with the 5 certificate. 6 (b) Exemption Certificate: an exemption certificate, as 7 opposed to allowing its holder to make all purchases tax free, 8 allows its holder to make only certain purchases tax free such as 9 machinery, electricity, or raw materials. The holder of an 10 exemption certificate is liable for any taxes due. If an exemption 11 or exclusion is not applicable, the tax is due upon purchase, or 12 upon the withdrawal, use, or consumption of the tangible personal 13 property purchased with the certificate if the application of the 14 exemption or exclusion cannot be determined at the time of 15 purchase. 16 (B) To reduce the complexity and administrative burden of 17 transactions exempt from sales or use tax, the following provisions 18 must be followed when a purchaser claims an exemption by use of 19 an exemption certificate: 20 (1) the seller shall obtain at the time of the purchase any 21 information determined necessary by the department, including the 22 reason the purchaser is claiming a tax exemption or exclusion; 23 (2) the department, at its discretion, may utilize a system 24 where the purchaser exempt from the payment of the tax is issued 25 an identification number which must be presented to the seller at 26 the time of the sale; 27 (3) the seller shall maintain proper records of exempt or 28 excluded transactions and provide them to the department when 29 requested and in the form requested by the department. 30 (C) A seller that complies with the provisions of this section is 31 relieved from any tax otherwise applicable if it is determined that 32 the purchaser improperly claimed an exemption or exclusion by 33 use of a certificate, provided the seller fraudulently did not fail to 34 collect or remit the tax, or both, or solicit a purchaser to participate 35 in an unlawful claim of an exemption. The liability for any tax 36 shifts to the purchaser who improperly claimed the exemption or 37 exclusion by use of the certificate.” 38 39 B. This section takes effect October 1, 2005. 40 41 SECTION 31. Items (5) and (8) of Section 12-37-220(B) of the 42 1976 Code are amended to read: 43  23 1 “(5) All property of the American Legion, the Veterans of 2 Foreign Wars, the Spanish American War Veterans, the Disabled 3 American Veterans, and Fleet Reserve Association or any similar 4 Veterans Organization chartered by the Congress of the United 5 States, whether belonging to the department or to any of the Posts 6 in this State when used exclusively for the purpose of such 7 organization and not used for any purpose other than club rooms, 8 offices, meeting places or other activities directly in keeping with 9 the policy stated in the National Constitution of such organization, 10 and such property is devoted entirely to its own uses and not held 11 for ‘pecuniary profit’. For the purposes of this item ‘pecuniary 12 profit’ refers to income received from the sale of alcoholic 13 beverages to persons other than bona fide members and their bona 14 fide guests, or any income, any part of which inures to the benefit 15 of any private individual. Where any structure or parcel of land is 16 used partly for the purposes of such organization and partly for 17 such pecuniary profits, the area for pecuniary profits shall be 18 assessed separately and that portion shall be taxed. 19 20 (8) Properties of whatever nature or kind owned within the 21 State and used or occupied by the Palmetto Junior Homemakers 22 Association, the New Homemakers of South Carolina, the South 23 Carolina Association of Future Farmers of America and the New 24 Farmers of South Carolina, so long as such properties are used 25 exclusively to promote vocational education or agriculture, better 26 business methods and more effective organization for farming or to 27 encourage thrift or provide recreation for persons studying 28 agriculture or home economics in the public schools.” 29 30 SECTION 32. A.Subsections (a) and (b) of Section 12-54-42 of 31 the 1976 Code are amended to read: 32 33 “(a) An employer A person who fails to comply with the 34 provisions of Section 12-8-1540, requiring the furnishing of a 35 withholding statement to employees is subject to a penalty of not 36 less than one hundred dollars nor more than one thousand dollars 37 for each violation. 38 (b) An employer A person who fails to comply with the 39 provisions of Section 12-8-540(A)(1) 12-8-1550, requiring the 40 filing of withholding statements with the department is subject to a 41 penalty of not less than one hundred dollars nor more than two 42 thousand dollars for each violation.” 43  24 1 B. This section takes effect July 1, 2005. 2 3 SECTION 33. A. Section 12-54-43(I) of the 1976 Code is 4 amended to read: 5 6 “(I) A person: 7 (1)(a) who files what purports to be a return of the tax 8 imposed by a provision of law administered by the department but 9 which: 10 (a)(i) does not contain information on which the 11 substantial correctness of the tax liability may be judged; or 12 (b)(ii) contains information that on its face indicates the 13 liability is substantially incorrect; and or 14 (b) who files a claim, a protest, or document, other than a 15 return, that contains information that on its face indicates its 16 position is substantially incorrect; and 17 (2) whose conduct is due to: 18 (a) a position which is frivolous or groundless; or 19 (b) a desire, which appears on the purported return, claim, 20 protest, or document, to delay or impede the administration of state 21 tax laws; 22 (3) is liable to a penalty of five hundred dollars for the first 23 filing, twenty-five hundred dollars for the second filing, and five 24 thousand dollars for each subsequent filing. This penalty is These 25 penalties are in addition to all other penalties provided by law.” 26 27 B. Section 12-54-43 of the 1976 Code, as last amended by Act 28 89 of 2001, is further amended by adding an appropriately lettered 29 subsection at the end to read: 30 31 “( ) If a purchaser uses a resale, wholesale, or an exemption 32 certificate issued or authorized by the department to purchase 33 tangible personal property tax free which the purchaser knows is 34 not excluded or exempt from the tax under the provisions of 35 Chapter 36 of this title, then the purchaser, in addition to any other 36 penalties due under this title, is liable for a penalty of five percent 37 of the amount of the tax if the failure is for not more than one 38 month, with an additional five percent for each additional month or 39 fraction of the month during which the failure continues, not 40 exceeding fifty percent in the aggregate. The provisions of this 41 section do not apply to direct pay certificates.” 42  25 1 C. Section 12-54-43(I) of the 1976 Code, as amended by 2 subsection A. of this section, takes effect October 1, 2005. Section 3 12-54-43 of the 1976 Code, as amended by subsection B. of this 4 section, takes effect July 1, 2005. 5 6 SECTION 34. Section 12-54-90(A) of the 1976 Code is 7 amended to read: 8 9 “(A) When a person fails, neglects, violates, or refuses to 10 comply with a provision of law or regulation administered by the 11 department, the department, in its discretion, may refuse to issue a 12 license to a taxpayer and may revoke one or more licenses held by 13 the taxpayer. within ten days of notification in writing of the 14 taxpayer’s failure to comply. The notification may be served by 15 certified mail or personally.” 16 17 SECTION 35. A. Section 12-54-210(A) of the 1976 Code is 18 amended to read: 19 20 “(A) A person liable for a tax, license, fee, or surcharge 21 administered by the department or for the filing of a return with the 22 department, including information returns, required by this title 23 shall keep books, papers, memoranda, records, render statements, 24 make returns, and comply with regulations as the department 25 prescribes. Persons failing to comply with the provisions of this 26 section must be penalized in an amount to be assessed by the 27 department not to exceed five hundred dollars for the period 28 covered by the return in addition to other penalties provided by 29 law.” 30 31 B. This section takes effect July 1, 2005. 32 33 SECTION 36. A. Items (11) and (12) of Section 12-54-240(B) 34 of the 1976 Code are amended to read: 35 36 “(11) disclosure of information contained on a return to the 37 South Carolina Employment Security department Commission, 38 Department of Revenue, or to the Department of the Treasury, 39 Alcohol, and Tobacco Tax and Firearms Division Trade Bureau; 40 (12)(a) disclosure to any state agency, county auditor, or 41 county assessor of whether a resident or nonresident tax return was 42 filed by any particular taxpayer.;  26 1 (b) disclosure to any county auditor or county assessor of 2 whether the four percent assessment pursuant to Section 3 12-43-220(c)(1) has been claimed by a taxpayer in any county.” 4 5 B. Section 12-54-240(B)(24) of the 1976 Code, as added by Act 6 69 of 2003, is further amended to read: 7 8 “(24) disclosure of information pursuant to a subpoena issued 9 by a federal grand jury or the State Grand Jury of South Carolina.” 10 11 SECTION 37. Section 12-58-185(A) of the 1976 Code, as last 12 amended by Act 89 of 2001, is further amended to read: 13 14 “(A) The department, in its discretion, may accept installment 15 payment payments for amounts due it for a period not to exceed 16 one year from the date the payment was due originally. Interest 17 accrues during the installment period, pursuant to Section 18 12-54-25. In addition, the department may extend the time for 19 payment of an amount due it. An extension pursuant to this section 20 may be granted only beyond one year if it is shown to the 21 satisfaction of the department that the payment of the amount due 22 it upon the date originally fixed for the payment will result in 23 undue hardship to the taxpayer.” 24 25 SECTION 38. A. Section 12-60-420 of the 1976 Code, as last 26 amended by Act 69 of 2003, is further amended to read: 27 28 “Section 12-60-420. (A) If a division of the department makes 29 a division decision or determines there is a deficiency in a state or 30 local tax administered by the department, it may send by first class 31 mail or deliver the division decision or the proposed assessment to 32 the taxpayer. The division decision or the proposed assessment 33 must explain the basis for the division decision or the proposed 34 assessment and state that assessment will be made or the decision 35 will become final unless the taxpayer protests the division decision 36 or the proposed assessment as provided in Section 12-60-450. 37 (B) If the taxpayer fails to file a protest, the division decision or 38 proposed assessment will become final and, if applicable, an 39 assessment will be made for the amount of a proposed assessment. 40 The department shall make available forms which taxpayers may 41 use to protest the division decision or the proposed assessments. 42 The division decision or the proposed assessment is effective if 43 mailed to the taxpayer’s last known address even if the taxpayer  27 1 refuses or fails to take delivery, is deceased, or is under a legal 2 disability, or, if a corporation, has terminated its existence. For a 3 joint tax return or liability, one division decision or the proposed 4 assessment may be mailed to both taxpayers unless the department 5 has notice that the taxpayers have separate addresses in which 6 event a duplicate original of the division decision or the proposed 7 assessment must be sent to each taxpayer at his last known 8 address.” 9 10 B. This section takes effect January 1, 2005. 11 12 SECTION 39. Section 12-60-490 of the 1976 Code, as last 13 amended by Act 69 of 2003, is further amended to read: 14 15 “Section 12-60-490. If a taxpayer is due a refund, the refund 16 must be applied first against any amount of that same tax that is 17 assessed and is currently due from the taxpayer. The remaining 18 refund, if any, must then be applied against any other state taxes 19 that have been assessed against the taxpayer and that are currently 20 due, or offset as provided in Article 3, Chapter 54 Chapter 56 of 21 this title, or offset to collect a debt pursuant to Section 12-4-580, or 22 both. If any excess remains, the taxpayer must be refunded the 23 amount plus interest as determined in Section 12-54-25, or, at the 24 taxpayer’s request, it may be credited to future tax liabilities.” 25 26 SECTION 40. A. Section 61-4-747(C)(4) of the 1976 Code, as 27 added by Act 40 of 2003, is amended to read: 28 29 “(4) annually, by August thirty-first January twentieth of each 30 year, pay to the department all sales taxes and excise taxes due on 31 sales to residents of this State in the preceding calendar year, the 32 amount of the taxes to be calculated as if the sale were in this State 33 at the location where delivery is made;” 34 35 B. Section 61-4-747(C)(4) of the 1976 Code, as amended by this 36 section, applies for reports due after 2005. 37 38 SECTION 41. A.Article 4, Chapter 14, Title 33 of the 1976 39 Code is amended by adding: 40 41 “Section 33-14-420. Notwithstanding another provision of this 42 title, a claimant may not commence a suit or other proceeding 43 against a former shareholder of a dissolved corporation for any  28 1 known or unknown claim arising from the liabilities of the 2 corporation, acts or omissions of the corporation, or acts 3 committed in its name if the corporation filed its articles of 4 dissolution with the Secretary of State before January 1, 1989, or 5 was otherwise judicially or administratively dissolved before 6 January 1, 1989. Further, a claimant may not satisfy a judgment 7 rendered against a dissolved corporation by proceeding against or 8 joining an individual shareholder if the corporation filed its articles 9 of dissolution with the Secretary of State before January 1, 1989, 10 or was otherwise judicially or administratively dissolved before 11 January 1, 1989.” 12 13 B. This section takes effect upon approval of the Governor, and 14 applies to corporations dissolved before, on, or after the effective 15 date of this section. 16 17 SECTION 42. If any section, subsection, paragraph, 18 subparagraph, sentence, clause, phrase, or word of this act is for 19 any reason held to be unconstitutional or invalid, such holding 20 shall not affect the constitutionality or validity of the remaining 21 portions of this act, the General Assembly hereby declaring that it 22 would have passed this, and each and every section, subsection, 23 paragraph, subparagraph, sentence, clause, phrase, and word 24 thereof, irrespective of the fact that any one or more other sections, 25 subsections, paragraphs, subparagraphs, sentences, clauses, 26 phrases, or words hereof may be declared to be unconstitutional, 27 invalid, or otherwise ineffective. 28 29 SECTION 43. Except where otherwise provided, this act takes 30 effect upon approval by the Governor. 31 ----XX---- 32  29