South Carolina’s Enterprise Program is substantially different from the state’s other tax incentives because it does not reduce a particular tax liability; instead, it provides companies with funds to offset the cost of locating or expanding a business facility in this state. Representing actual cash contributions to the project, this incentive allows South Carolina to lower the effective cost of investment and positively contribute to a company’s bottom line and profitability.
The Job Development Credit effectively uses the personal withholding taxes of new employees to reimburse qualified, approved companies that add value to South Carolina and the community in which they locate. These reimbursements are for eligible capital expenditures (land, building, site development, pollution control equipment or infrastructure) associated with projects creating new full-time jobs that also provide health care benefits for South Carolina citizens.
The South Carolina Coordinating Council for Economic Development administers the Enterprise Program. Funds for the Job Development Credits come from state personal income tax withholding that is paid by a company’s employees. Employees receive a credit equal to the withholding used by the company; therefore, there is no financial impact on employees. No company will be allowed to claim a credit on any employee whose job was created in this state before the taxable year in which a company was approved for the program. In addition, the Coordinating Council generally caps annual collection at no more than $3,250 per employee per year.
To verify capital expenditures and qualifying jobs, a company is required to make its payroll books and records available for inspection by the Coordinating Council and the Department of Revenue. In addition, a company must furnish a report prepared by the company that itemizes the sources and uses of the funds, and such report must be filed by June 30 following the calendar year in which the refunds are received.
To be eligible to apply for the Job Development Credit, a company must:
- Meet the requirements of a manufacturing and processing, corporate office, warehouse and distribution, research and development, agribusiness, tourism, or qualified service-related facility as required for the Jobs Tax Credit;
- Create at least 10 new, full-time jobs (or meet additional requirements if qualifying as a service facility);
- Provide full-time employees with a benefits package that includes a comprehensive health plan and pay at least 50% of an eligible employee’s cost of health plan premiums; and
- Pay a non-refundable $4,000 application fee, receive a positive cost/benefit certification (the project is of greater benefit than cost to the state) from the Coordinating Council, and pay a $500 annual renewal fee.
Please note that the Coordinating Council will generally only allow companies to collect credits for 10 years, and only on new full-time jobs with wages at or above the current county average wage for the county in which the project is located. Click here to view the county tier map.
The Revitalization Agreement. Once a company’s application for eligibility to receive Job Development Credits is approved by the Coordinating Council, the company will be required to enter into an agreement with the Coordinating Council called a Revitalization Agreement. The Revitalization Agreement is a contract with the state guaranteeing the company’s participation in the program, assuming it stays current with state taxes and meets its commitments on job creation and investment. Under the terms of the Revitalization Agreement, the Coordinating Council and the company:
- Establish mutually agreeable investment and employment minimums that the company must meet and maintain in order to claim a Job Development Credit;
- Sets a date by which the project’s investment and employment will be completed (must be within five years of the date of the agreement); and
- Identifies a maximum reimbursement amount.