Under South Carolina's original manufacturing-property partial exemption, which manufacturers and property qualified and how was the exemption claimed?

Plain-English summary

South Carolina Revenue Ruling 18-13 explained the original partial property-tax exemption for manufacturing property beginning with property tax years after 2017. It is now historical: Revenue Ruling 22-13 expressly superseded it after later legislation changed the exemption.

Under RR 18-13, only a manufacturer qualified. The exemption applied to real or personal property owned by or leased to the manufacturer, used in conducting the manufacturing business, and assessed under S.C. Code Section 12-43-220(a)(1) at the 10.5% manufacturer assessment ratio. It was not limited to machinery directly performing production; qualifying property could include machinery, office equipment, computers, and real property used in the manufacturing business.

Both existing and newly acquired property could qualify. Utilities did not qualify, nor did manufacturing property under a negotiated fee in lieu of taxes, because that property was not assessed under Section 12-43-220(a)(1). Property in a non-negotiated multicounty industrial park generally could qualify when its fee calculation used the assessment and valuation that otherwise applied under that section; property under a negotiated multicounty-park fee did not.

The original exemption phased in over six property-tax years: 2.38095% in 2018, 4.7619% in 2019, 7.14285% in 2020, 9.5238% in 2021, 11.90475% in 2022, and 14.2857% for 2023 and later under this ruling. These figures are not current guidance because RR 22-13 superseded the ruling.

Manufacturers did not separately subtract the exemption on their return. The Department automatically applied it when the manufacturer filed Form PT-300 with the appropriate schedules, usually Schedules A, B, C, D, or L. The manufacturer reported the property's full value, and the Department reflected the exemption on the certification sent to the county.

What this meant under the original exemption

Manufacturers filing PT-300

The classification of each asset controlled. Property used in conducting the manufacturing business and assessed at 10.5% qualified, whether old or newly acquired and whether or not directly on the production line. The taxpayer reported it without first reducing value for the exemption.

Manufacturers with fee agreements

Property under a negotiated fee in lieu of taxes did not qualify under this ruling. A non-negotiated multicounty-park fee could qualify because its calculation generally mirrored the ordinary Section 12-43-220(a)(1) assessment.

Research, office, and warehouse facilities

Qualifying personal property in research-and-development, office, or warehousing operations could receive the exemption when used in the manufacturing business and reported on the appropriate PT-300 schedule. But real property classified at the 6% ratio under Sections 12-43-220(a)(2), (3), or (4) did not qualify because it was outside the 10.5% manufacturer classification.

Common questions

Q: Is RR 18-13 current guidance?
A: No. RR 22-13 expressly superseded it after later law changes.

Q: Did the exemption apply only to new machinery?
A: No. It covered existing and newly acquired qualifying real and personal property.

Q: Did property have to be used directly in production?
A: No. The ruling covered all property used in conducting the manufacturing business and assessed under Section 12-43-220(a)(1), not just production-line assets.

Q: Did utilities qualify?
A: No. The ruling treated utilities as distinct from manufacturers for this exemption.

Q: How did a manufacturer claim the exemption?
A: By filing PT-300 with the appropriate schedules. The Department applied the exemption automatically; the manufacturer did not reduce the reported property value itself.

Q: Did negotiated fee-in-lieu property qualify?
A: No. It was not assessed under the required 10.5% manufacturer provision. Non-negotiated multicounty-park property generally could qualify when calculated under that provision.

Citations and references

• S.C. Code Section 12-37-220(B)(52) (original partial manufacturing-property exemption)
• S.C. Code Section 12-43-220(a)(1) (10.5% assessment ratio for property used in manufacturing)
• S.C. Code Section 12-43-220(a)(2), (3), and (4) (specified real property assessed at 6%)
• S.C. Code Sections 12-4-540 and 12-4-720 (Department responsibility and exemption procedures)
• S.C. Code Section 12-37-930 (manufacturer personal-property valuation)
• S.C. Code Section 4-1-170 and Article VIII, Section 13 of the South Carolina Constitution (multicounty parks)
• Act No. 40 of 2017, Section 19.B (original six-installment phase-in)
• SC Revenue Ruling #22-13 (expressly superseded RR #18-13)

Subject

Manufacturing Property - New Partial Property Tax Exemption

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR18-13.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC REVENUE RULING #18-13

SUBJECT:

Manufacturing Property - New Partial Property Tax Exemption
(Property Tax)

EFFECTIVE DATE:

Property Tax Years Beginning After 2017

REFERENCES:

S.C. Code Section 12-4-720 (2014)
S.C. Code Section 12-37-220(B)(52) (2014; Supp. 2017)
S.C. Code Section 12-43-220 (2014)

AUTHORITY:

S.C. Code Section 12-4-320 (2014)
S.C. Code Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the
public. It is an advisory opinion issued to apply principles of tax
law to a set of facts or general category of taxpayers. It is the
Department’s position until superseded or modified by a change
in statute, regulation, court decision, or another Department
advisory opinion.

Overview of Taxation of Manufacturers
Manufacturers are taxed on both their personal property and real property located in
South Carolina. All property owned by, or leased to, a manufacturer and used in the
conduct of its business is generally subject to tax as follows: 1
1

This method of taxation does not apply to manufacturers that have a negotiated fee in lieu of taxes with
the county pursuant to Code Sections 4-12-30, 4-29-67 or Chapter 44, Title 12. Instead, manufacturers
negotiate through a fee agreement for a lower assessment ratio and a millage rate that is set for the life of
the agreement or which varies every five years. Manufacturers may also have their real property valued at
original cost for the life of the fee agreement.
Manufacturers’ property that is located in a multicounty industrial park under Code Section 4-1-170 and
is not subject to a negotiated fee is generally subject to a fee in lieu of taxes equal to the property taxes
that would otherwise be due on the property, meaning that the fee is generally calculated in the same
manner as ad valorem property taxes.

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• Personal property is valued at original cost from which a statutory depreciation
percentage is deducted each year until a residual value is reached. 2 Code Section
12-37-930.
• Real property is generally appraised.
• An assessment ratio of 10.5% is applied to the property of the manufacturer to
determine the assessed value of the property. Code Section 12-43-220(a)(1).
However, certain real property of manufacturers, such as research and development
facilities, certain office facilities, and certain warehousing and wholesale distribution
facilities, are statutorily considered not to be used in the conduct of the business of the
manufacturer and are subject to an assessment ratio of 6%. Code Section 12-43220(a)(2), (3) and (4).
Other real property owned, or leased by, a manufacturer and not used in the conduct of its
business is assessed at 6%, while personal property is assessed at 10.5%. Code Section
12-43-220(e) and (f). Once the assessment ratio is applied to determine the assessed value
of the property, that value is multiplied by the applicable millage of all taxing entities in
which the manufacturer’s facility is located to determine the amount of tax owed by a
manufacturer.
The Department has the sole responsibility for the appraisal, assessment, and equalization
of real and personal property used in the conduct of the manufacturer’s business. Code
Section 12-4-540. The county where the manufacturer’s facility is located usually applies
the applicable millage and bills the manufacturer for the tax. Manufacturers generally file
with the Department a PT-300 with the appropriate schedules.
Law
Code Section 12-37-220 provides exemptions from property taxes. Item (B)(52) was
added to that section in 2017 to provide a partial exemption from property taxes for the
value of manufacturing property assessed for property tax purposes pursuant to Code
Section 12-43-220(a)(1) (“partial exemption”). 3

2

Generally, personal property can’t be depreciated below 10% of its original cost.
The relief provided is in the form of a partial exemption for the property tax value of manufacturing
property used in the conduct of a manufacturer’s business and assessed pursuant to Code Section 12-43220(a)(1). It is not a reduction in the assessment ratio applicable to the property. For most manufacturing
property not subject to a negotiated fee in lieu of taxes, the assessment ratio applicable to manufacturer’s
property remains at 10.5%.
3

2

The relevant provision of Code Section 12-37-220(B) provides:
In addition to the exemptions provided in subsection (A), the following
classes of property are exempt from ad valorem taxation subject to the
provisions of Section 12-4-720 [relating to the application process for a
property tax exemption]:

(52)(a) 14.2857 percent of the property tax value of manufacturing property
assessed for property tax purposes pursuant to Section 12-43-220(a)(1). For
purposes of this item, if the exemption is applied to real property, then it
must be applied to the property tax value as it may be adjusted downward to
reflect the limit imposed pursuant to Section 6, Article X of the South
Carolina Constitution, 1895 4.
The Act that provides for the exemption also provides that the percentage exemption
amount is phased-in in six equal and cumulative percentage installments, starting with
property tax years beginning after 2017 (Act No. 40 of 2017, Section 19.B.). 5
Code Section 12-43-220 reads in relevant part:
Except as otherwise provided, the ratio of assessment to value of property in
each class shall be equal and uniform throughout the State. All property
presently subject to ad valorem taxation shall be assessed and classified as
follows:
(a)(1) All real and personal property owned by or leased to manufacturers
and utilities 6 and used by the manufacturer or utility in the conduct of the
business must be taxed on an assessment equal to ten and one-half percent of
the fair market value of the property.

4

Code Section 12-37-220(B)(52)(b),(c), and (d) address: 1) how the political subdivisions of the State
will be reimbursed for lost funds as a result of the partial exemption, 2) how the partial exemption will be
applied if the amount of the partial exemption for all qualifying property exceeds $85 million in a single
year and 3) how property subject to the partial exemption will be treated for bonded indebtedness
purposes. These provisions are not discussed in this document.
5
See SC Revenue Ruling #16-12 for information concerning applicable property tax years for taxpayers.
6
Railroads, private carlines, airlines and pipelines are assessed under Code Section 12-43-220(g) as
businesses engaged primarily in transportation for hire of persons or property and are therefore taxed on
an assessment ratio of 9.5%. Since these businesses are assessed under Code Section 12-43-220(g) and
not Code Section 12-43-220(a)(1), their property is not allowed the partial exemption.

3

The purpose of this Revenue Ruling is to address questions concerning the new partial
exemption in Code Section 12-37-220(B)(52).
Questions
Eligible Taxpayers

1. Q. Which taxpayers are eligible for the partial exemption?
   A. Manufacturers are the only taxpayers eligible for the partial exemption.
2. Q. Are utilities eligible for the partial exemption?
   A. No. Code Section 12-43-220(a)(1) makes a clear distinction between a
   manufacturer and a utility. Therefore, utilities and utility property are not eligible
   for the partial exemption since they are not considered a manufacturer under this
   code section.

Qualifying Property

3. Q. What qualifies as manufacturing property assessed for property tax purposes
   pursuant to Section 12-43-220(a)(1)?
   A. Property owned or leased to a manufacturer which is used in the conduct of the
   manufacturing business will qualify as manufacturing property eligible for the
   partial exemption as that property is assessed for property tax purposes under
   Code Section 12-43-220(a)(1). Property which is not used in the conduct of the
   business of a manufacturer is assessed under Code Section 12-43-220(e) or (f).
4. Q. Does the partial exemption apply only to property used directly in the
   manufacturing process itself?
   A. No. The partial exemption will apply to all property used in the conduct of the
   manufacturing business by a manufacturer, not just the property used directly in
   the manufacturing process.
   Any property used in the conduct of the manufacturing business, including items
   such as machinery and equipment, office equipment, computers and real property,
   is eligible for the partial exemption.

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5. Q. Does the partial exemption apply to existing manufacturing property or does it
only apply to manufacturing property acquired in property tax year 2018 and
thereafter?
A. The partial exemption applies to existing real and personal manufacturing property
owned or leased by the manufacturer as well as newly acquired manufacturing
property, if such property is used in the conduct of the manufacturing business.

6. Q. Does the partial exemption apply to manufacturing property of a manufacturer that
   is subject to a negotiated fee in lieu of taxes under Chapter 12, Title 4; Chapter 29,
   Title 4; or Chapter 44, Title 12 (“negotiated fee”)? 7
   A. No. The partial exemption will not apply to manufacturing property subject to a
   negotiated fee in lieu of taxes under Chapter 12, Title 4; Chapter 29, Title 4; or
   Chapter 44, Title 12. The partial exemption only applies to manufacturing
   property assessed for property tax purposes pursuant to Code Section 12-43220(a)(1) (the 10.5% assessment ratio).
   Manufacturing property that is subject to a negotiated fee is not assessed pursuant
   to Code Section 12-37-220(a)(1). Instead, it is subject to a fee in lieu of taxes at an
   assessment ratio as provided for in the relevant negotiated fee code sections that
   allow for an alternative assessment ratio ranging generally from 4% to 10.5%.
7. Q. Does the partial exemption apply to manufacturing property of a manufacturer that
   is subject to a “non-negotiated multicounty park fee”?
   A. Yes. The partial exemption applies to manufacturing property that is subject to a
   non-negotiated multicounty park fee, but not to a negotiated multicounty park fee.
   Section 13, Article VIII of the South Carolina Constitution and Code Section 4-1170 allow two or more counties to jointly develop an industrial or business park
   for purposes of sharing the administration of, and revenue and expenses resulting
   from, property located in the park (“Multicounty Park”).

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The negotiated fee in lieu of tax provisions allow a manufacturer who is making a capital investment of
$2.5 million ($1 million in certain instances) at a project in South Carolina to negotiate a reduced
assessment ratio, a locked millage rate or a millage rate that varies every five years based on the prior five
year average, and a locked fair market value for real property for up to 40 years or more for the project.
Other benefits may also be available.

5

Section 13(D), Article VIII of the South Carolina Constitution provides with
respect to a multicounty park:
… The area comprising the parks and all property having a situs
therein is exempt from all ad valorem taxation. The owners or
lessees of any property situated in the park shall pay an amount
equivalent to the property taxes or other in-lieu-of payments that
would have been due and payable except for the exemption herein
provided. …
There are two types of fee in lieu of tax arrangements associated with a
multicounty park. The first is a fee that has been negotiated between the county
and a company and provides for a reduced assessment ratio for qualifying property
and all the other benefits associated with a negotiated fee under Chapter 44, Title
12, or Code Sections 4-12-30 and 4-29-67, where the qualifying property is
located in a multicounty park (“negotiated multicounty park fee”). The second
includes property that is located in a multicounty park but is not subject to a
negotiated fee. The property which is located in the multicounty park, but which is
not subject to a negotiated fee, is subject to a fee instead of ad valorem property
taxes which is equivalent to the property taxes that would be due on the property if
it were not located in the multicounty park (“non-negotiated multicounty park
fee”).
Unlike the negotiated multicounty park fee, the non-negotiated multicounty park
fee property uses the assessment ratio and the valuation that would otherwise be
applicable to the property if it were not located in a multicounty park. For
manufacturers, the assessment ratio is generally 10.5%. Since the partial
exemption is applicable if the manufacturing property is assessed under Code
Section 12-43-220(a)(1), and non-negotiated multicounty park fee manufacturing
property is generally assessed under that provision, manufacturing property
subject to a non-negotiated multicounty park fee is eligible for the partial
exemption from value for qualifying manufacturing property. 8

8

In a 1990 opinion, the South Carolina Attorney General was asked whether the five year exemption from
county taxes for certain manufacturing property contained in Code Section 12-37-220(a)(7) applied to
property located in a multicounty park. The South Carolina Attorney General opined that the exemption
applied to such property stating that if a manufacturer would ordinarily be entitled to the exemption if the
property were subject to ad valorem property taxes instead of a multicounty park fee, the exemption
should apply, relying on the premise that the fee owed under the multicounty park fee must be the same as
any taxes that would be owed if the property were subject to ad valorem property taxes. See, 1990 Op.
Atty. Gen. No. 90-29.

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Application of the Partial Exemption to Eligible Property

8. Q. How is the partial exemption phased in?
   A. The partial exemption is phased in over six equal and cumulative percentage
   installments. The cumulative exemption amount for each year is as follows:
   Property Tax Year
   Beginning In
   2018
   2019
   2020
   2021
   2022
   2023 and
   thereafter

Exemption
Amount
2.38095%
4.7619%
7.14285%
9.5238%
11.90475%
14.2857%

9. Q. Will a manufacturer need to apply for the partial exemption pursuant to Code
   Section 12-4-720 or will the exemption automatically apply when it files its
   manufacturing return, the PT-300, with appropriate schedules attached?
   A. The partial exemption will automatically be applied when the manufacturer files
   its manufacturing return, the PT-300, in conjunction with appropriate schedules
   (the appropriate schedules are usually the Schedules A, B, C, D or L). 9 All
   property reported on the appropriate schedules will be subject to the partial
   exemption. Since the partial exemption will be applied by the Department, a
   manufacturer should not reduce the value of its property by the amount of the
   partial exemption when reporting property on the PT-300 and applicable
   schedules. The amount of the partial exemption will be reflected on the
   certification that is sent from the Department to the county.
   Personal Property Located on Real Property Owned or Leased by a Manufacturer and
   Assessed at 6%
10. Q. Will personal property owned or leased to a manufacturer and used for research
    and development be considered manufacturing property and therefore qualify for
    the partial exemption?
    A. If the personal property is considered used in the conduct of the business of the
    manufacturer, then it is assessed pursuant to Code Section 12-43-220(a)(1) and
    will receive the partial exemption. Manufacturers who qualify because the
    9

Other schedules may be applicable in certain specific instances.

7

personal property is used in the conduct of their business will file a PT-300 with a
Schedule C – “Manufacturing Research and Development.” The partial exemption
will automatically be applied by the Department to this property if the appropriate
schedule is filed.
Real property owned by, or leased to, a manufacturer and used primarily for
research and development is not considered used by a manufacturer in the conduct
of the business of the manufacturer and is assessed at 6% pursuant to Code Section
12-43-220(a)(2). This real property will not qualify for the partial exemption.

11. Q. Will personal property owned by, or leased to, a manufacturer which is located in
    an office facility that meets the qualifications of Code Section 12-43-220(a)(3)
    qualify for the partial exemption?
    A. If the personal property located at an applicable office facility is considered used
    in the conduct of the business of the manufacturer, then it is assessed pursuant to
    Code Section 12-43-220(a)(1) and will receive the partial exemption.
    Manufacturers who qualify because the personal property is used in the conduct of
    their business will file a PT 300 with a Schedule D – “Manufacturing Corporate
    Headquarters Distribution Facility.” The partial exemption will automatically be
    applied by the Department to this property if the appropriate schedule is filed.
    Real property owned by, or leased to, a manufacturer and used primarily as an
    office building is not considered used in the conduct of the business of the
    manufacturer and is assessed at 6% pursuant to Code Section 12-43-220(a)(3) if
    the office building is not located on the premises of, or contiguous to, the plant site
    of the manufacturer. This real property will not qualify for the partial exemption.
12. Q. Will personal property owned by, or leased to, a manufacturer which is used
    primarily in a warehousing and wholesale distribution area that meets the
    requirements of Code Section 12-43-220(a)(4) qualify for the partial exemption?
    A. If the personal property used for warehousing or wholesale distribution is
    considered used in the conduct of the business of the manufacturer, then it is
    assessed pursuant to Code Section 12-43-220(a)(1) and will receive the partial
    exemption. Manufacturers who qualify because the personal property is used in
    the conduct of their business will file a PT-300 with a Schedule L –
    “Manufacturing Warehouse.” The partial exemption will automatically be applied
    by the Department to this property if the appropriate schedule is filed.

8

Real property owned by, or leased to, a manufacturer and used primarily for
warehousing and wholesale distribution is not considered used in the conduct of
the business of the manufacturer and is assessed at 6% pursuant to Code Section
12-43-220(a)(4) if it is physically separated from the manufacturing plant or the
area is separated from the manufacturing plant by a permanent wall. This real
property will not qualify for the partial exemption.

SOUTH CAROLINA DEPARTMENT OF REVENUE

s/ W. Hartley Powell
W. Hartley Powell, Director
August 30
Columbia, South Carolina

, 2018

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