As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in South Carolina. I was able to attend an educational session, hosted by Marcella Forest of the South Carolina Department of Commerce, and learned some of their details (DOC site click here).
South Carolina’s main tax credits and incentives cover new capital investments, new jobs, infrastructure, R&D, and workforce training. Local incentives can include property tax abatement. Incentives and credits are available to a fairly wide range of targeted industries that include manufacturing, processing, warehousing and distribution, agribusiness, R&D, qualifying technology intensive facilities, headquarters facilities, and others creating 10+ net new jobs. Service-related facilities must hit a much higher threshold depending on location, wage rates, and other factors.
South Carolina’s credits and incentives are more complicated than many states, but are generally more generous.
- South Carolina Enterprise Program provides large tax credits taken against payroll withholding taxes. Requires pre-approval and takes the form of a legal contract. Includes Job Development Credit and Retraining Credit. Discretionary and performance-based. Up to 5 years to complete requirements, then up to 10 years to claim. Very complex but potentially large $$.
- Jobs Tax Credits are tied to threshold levels determined by a complex county tier system. These credits can can offset 50% of state income taxes, are available for a five year period, and have generous carryforwards up to 15 years.
- Investment Tax Credits offset up to 100% of state tax liability and apply to new production equipment. Percentages depend on IRS recovery periods.
- Headquarters Tax Credits offset costs associated with relocating or expanding corporate headquarters. Minimum 40 new jobs, can be carried forward up to 10 years. Enhanced credit for larger projects.
- Other incentives include tax credits for SC Port usage, Recycling Facilities, Solar Energy, Biomass Resources, Renewable Fuels, Renewable Energy Systems, and Energy Conservation; there’s also a Corporate Income Tax Moratorium program for less developed and poverty areas
- readySC Job Training Assistance Program offers comprehensive job recruiting, training, and other programs(click here).
- Local property and sales tax abatements are very generous and widely available, but negotiated locally.
Compared to Georgia, South Carolina has:
- A wider range of incentive and credits, including lower job creation thresholds.
- A wider range of companies eligible for most credits.
- A complex approach to determining company qualifying activities and $$ incentive amounts.
- Larger incentives that must be pre-approved and carefully planned
- Many other credits that can be taken after the fact and on amended tax returns.
To summarize, South Carolina is very competitive for new and expanding businesses. Representatives at both the Departments of Commerce and Revenue are alert and eager to help — for Enterprise Zone projects, they basically hold your hand all the way through the process!
Do any of your clients have South Carolina connections? If so, South Carolina economic developers will be very helpful in finding incentives. But make sure you review your clients’ potential qualifying activities today to maximize their $$ benefits tomorrow!!