Did PLR 94-5 preserve job-tax credits when new employees moved from a leased plant to a permanent plant in the same industrial park?

Plain-English summary

South Carolina Private Letter Ruling 94-5 allowed job-tax credits for new manufacturing employees first placed in a leased facility and later transferred to ABC's permanent facility in the same multi-county industrial park and county.

On the historical facts, the park rules treated ABC as located in the participating county offering the larger regular credit. The ruling approved a $1,000 regular credit and an additional $500 industrial-park credit for each qualifying new full-time job for five years, covering years two through six after job creation.

The result depended on meeting every other statutory condition. The ruling expressly declined to address what would happen if ABC located in or moved to a different county with a different credit amount.

Common questions

Q: Did starting in a leased facility disqualify the jobs? No.

Q: Did moving to the permanent facility disqualify them? No, because it was in the same industrial park and county under the stated facts.

Q: What historical credit amounts did the ruling approve? $1,000 plus an additional $500 per qualifying job for years two through six.

Q: Did the ruling cover a move to another county? No.

Citations and references

• S.C. Code Ann. § 12-7-1220 (historical regular and multi-county-industrial-park job tax credits)
• S.C. Constitution art. VIII, § 13 and S.C. Code Ann. § 4-1-170 (multi-county industrial park cited in the facts)

Subject

Job Tax Credit

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR94-5.pdf

Original ruling text

SC PRIVATE LETTER RULING #94-5 (TAX)

TO:

ABC

SUBJECT:

Job Tax Credit
(Income Tax)

DATE:

May 27, 1994

REFERENCE:

S. C. Code Ann. Section 12-7-1220 (Supp. 1993)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (Supp. 1993)
SC Revenue Procedure #94-1

SCOPE:

A Private Letter Ruling is an official advisory opinion issued by the
Department of Revenue to a specific person.

NOTE:

A Private Letter Ruling may only be relied upon by the person to whom it
is issued and only for the transaction or transactions to which it relates. A
Private Letter Ruling has no precedential value.

Question:
Based upon the facts presented, will the full-time jobs created by ABC qualify for the five year job
tax credit provided in Code Section 12-7-1220 if the jobs are initially staffed at a leased facility in
XYZ Park in D County while ABC's permanent facility is being constructed in the same industrial
park?
Conclusion:
Based upon the facts presented, the full-time jobs created by ABC, at a leased facility in XYZ Park
in D County and transferred to a new, permanent facility in the same industrial park upon
completion will qualify for the job tax credit of $1000 and the additional job tax credit of $500 for
five years beginning with years two through six after the creation of the jobs, provided all other
requirements of Code Section 12-7-1220 are met.
NOTE: This document provides no opinion as to the job tax credit consequences if ABC, locates in
a different county or moves to another county having a different job tax credit dollar amount.
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Facts:
ABC, is a recently formed South Carolina corporation that will manufacture precision metal
components for sale to automobile manufacturers. The company plans to begin training employees
in South Carolina during April 1994 and begin production during July 1994. The company will
hire at least 10 new full time employees to fill new jobs no later than September 30, 1994, ABC's
tax year end.
Due to its training requirements and its customer contracts, ABC, is in immediate need of a
manufacturing facility. ABC, will lease a manufacturing facility located in XYZ Park on X Road
in D County. The company will occupy the leased facility until construction of its permanent
facility is complete. Upon completion, the employees will move to the permanent facility that will
also be located in XYZ Park.
XYZ Park will be classified as a multi-county industrial park, pursuant to Section 13, Article VIII
of the South Carolina Constitution and Section 4-1-170, no later than September 30, 1994, ABC'S
tax year end. D County, a developed county for purposes of the job tax credit, and E County, a less
developed county for purposes of the job tax credit, will participate in the industrial park.
Discussion:
JOB TAX CREDIT
Code Section 12-7-1220(A) provides that corporations which create new full-time jobs qualify for
the appropriate tax credit as provided in subsections (B), (C), and (D). The subsections provide, in
part:
(B) Corporations operating manufacturing...facilities in counties designated by the
commission as less developed are allowed a job tax credit for taxes imposed by
Section 12-7-230...equal to one thousand dollars annually for each new full-time
employee job for five years beginning with years two through six after the creation
of the job. The number of new full-time jobs must be determined by comparing the
monthly average number of full-time employees subject to South Carolina income
tax withholding in the applicable county for the taxable year with the corresponding
period of the prior taxable year. Only those corporations that increase employment
by ten or more in a less developed county are eligible for the credit. Credit is not
allowed during the five years if the net employment increase falls below ten. The
appropriate commission shall adjust the credit allowed each year for net new
employment fluctuations above the minimum level of ten.
(C) Corporations operating manufacturing...facilities in counties that have been
designated by the commission as moderately developed are allowed a job tax credit
for taxes imposed by Section 12-7-230...equal to six hundred dollars annually for
each new full-time employee job for five years...

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(D) Corporations operating manufacturing...facilities in counties designated by the
commission as developed are allowed a job tax credit for taxes imposed by Section
12-7-230...equal to three hundred dollars annually for each new full-time employee
job for five years...
Therefore, the credit for each new full-time employee job is $1000.00 to corporations with a
minimum increase of 10 jobs in less developed counties, $600.00 to corporations with a minimum
increase of 18 jobs in moderately developed counties and $300.00 to corporations with a minimum
increase of 50 jobs in developed counties.
In accordance with Code Section 12-7-1220(A), the South Carolina Department of Revenue ranks
South Carolina counties as less developed, moderately developed and developed each year for
computation of the new job tax credit. This ranking of a county by the Department of Revenue is
effective for corporate tax years which begin after the date of designation.
For tax years of permanent business enterprises which began after December 31, 1993, the
Department of Revenue ranked D County as a developed county. This designation generally
allows corporations a $300.00 job tax credit for each new full-time job created in D County.
However, Code Section 12-7-1220(I), provides an exception to this designation for permanent
business enterprises that locate in a multi-county industrial park. Code Section 12-7-1220(I) reads,
in part:
Notwithstanding which of the participating counties where the permanent business
is located, for purposes of the regular job tax credits authorized by subsections (B),
(C), and (D), the participating county which would qualify for the greatest dollar
amount of job tax credit is the county the permanent business enterprise is deemed
to be located in regardless of whether or not it actually is located in another
participating county.
Therefore, for purposes of the regular job tax credit, ABC, is deemed to create jobs in E County,
the county participating in the industrial park which qualifies for the largest dollar credit, whether
or not ABC, is actually located in that participating county.
ADDITIONAL JOB TAX CREDIT FOR MULTI-COUNTY INDUSTRIAL PARKS
In addition to the regular job tax credit provided above, subsection (I) provides an additional
$500.00 job tax credit for each new full-time job created by corporations located in a multi-county
industrial park. Subsection (I) reads, in part:
(I) Permanent business enterprises engaged in manufacturing...industries in a
business or industrial park jointly established and developed by a group of counties
pursuant to Section 13, Article VIII of the Constitution of this State are allowed an
additional job tax credit for taxes imposed by Section 12-7-230, in addition to those
job tax credits already authorized by this section, equal to five hundred dollars
annually for each new full time employee job for five years beginning with years
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two through six after the creation of the job. The number of new full-time jobs
must be determined by comparing the monthly average number of full-time
employees subject to South Carolina income tax withholding for the taxable year
with the corresponding period of the prior taxable year...
DEFINITIONS
Finally, we must determine if ABC, is a corporation that will create new full-time jobs in South
Carolina as provided in Code Section 12-7-1220. The definition for the terms "new job", "fulltime" and "manufacturing facility" are provided in subsection (H) and read:
(1) "New job" means a job created by an employer in South Carolina at the time a
new facility or an expansion initially is staffed but does not include a job created
when an employee is shifted from an existing South Carolina location to a new or
expanded facility.
(2) "Full-time" means a job requiring a minimum of thirty-five hours of an
employee's time a week for the entire normal year of company operations or a job
requiring a minimum of thirty-five hours of an employee's time for a week for a year
in which the employee was hired initially for or transferred to the South Carolina
facility.

(4) "Manufacturing facility" means an establishment where tangible personal
property is produced or assembled.
Based upon the facts presented in this ruling and by the taxpayer, ABC, will meet the
requirements, and will be allowed to claim the regular job tax credit and the additional job tax
credit for five years beginning with years two through six after the creation of the jobs, provided all
the statutory requirements are met. The fact that ABC will move from its leased facility in XYZ
Park in D County to its permanent facility in the same industrial park in the same county will not
affect the computation of the credit.

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