Many South Carolina Tax Law Changes in 2016; Overall Tax Structure to be Reviewed in 2017

The South Carolina Department of Revenue (SCDOR) released its annual tax legislative update on October 10, 2016 in SC Information Letter #16-11.  The guidance provides a summary of significant changes in tax and regulatory laws (both permanent and temporary) enacted during the 2016 South Carolina legislative session.  More than 70 changes are summarized in this SCDOR guidance.

A variety of income tax credits were modified, renewed or expanded during the 2016 legislative session, including, among others:

  • An expansion of the job tax credit;
  • A new alternative fuel property credit;
  • Amendment of the textile revitalization credit and deletion of the credit limitation;
  • Establishment of the ABLE savings program;
  • A new credit for solar energy property;
  • An expansion of the solar energy and hydropower system credit;
  • Amendment of the education credit for exceptional needs children tax credit; and
  • Renewal of the retail facilities revitalization act.

Many property tax laws were amended during the 2015 legislative session.  The 2016 legislative session made fewer changes to the property tax laws.  The new provisions and amendments include, among others:

  • Specification of the property tax value of green space for conservation for rollback tax purposes;
  • Clarification of liability for legal residence certification penalties;
  • New electronic property tax bill and receipt procedures;
  • Clarification on the applicability of rollback taxes to agricultural property;
  • Expansion of the multiple lot discount; and
  • Clarification of the taxation of off-premises outdoor advertising signs and sites.

Several new sales and use tax exemptions were added or amended in the 2016 legislative session, including, among others:

  • A new exemption for agricultural packaging machines;
  • A new exemption for construction materials used by nonprofit corporations;
  • Amendment of the exemption for parts or supplies used to repair aircraft;
  • A new exemption for children’s clothing sold to a private charitable organization;
  • Continuation of the use tax exemption for private schools;
  • Continuation of the exemption for respiratory syncytial virus medicines; and
  • Suspension of the sales and use tax on viscosupplementation therapies.

Many miscellaneous provisions were also enacted or amended, covering topics ranging from return due dates, new cigarette stamp procedures, fuel exemptions for school business, changes to the universal service fund, and reduction of the interest paid to taxpayers on refund claims.

The 2017 legislative session may bring many more changes to the South Carolina tax laws.  House Speaker Jay Lucas’ House Tax Policy Review Committee has been established to consider changes to the overall tax structure in South Carolina.  Information related to the committee, including meeting schedules, agendas, and presentations, is available on the South Carolina Legislature’s website.

About the Author

Jeffrey T. Allen
Jeff focuses his practice on business and tax matters. He provides advice to clients on a variety of transactional matters and represents clients in tax controversy matters before the South Carolina Department of Revenue (DOR), Internal Revenue Service (IRS), South Carolina Administrative Law Court, United States Tax Court and United States District Court.