How does South Carolina's Utility License Fee Credit work — who can claim it, for what, and how much?

Plain-English summary

South Carolina imposes two kinds of corporate license fee under Chapter 20, Title 12. Most corporations pay the general license fee (§ 12-20-50, based on capital stock and paid-in/capital surplus). But utilities and similar regulated companies — "every express company, street railway company, navigation company, waterworks company, power company, electric cooperative, light company, gas company, telegraph company, and telephone company" — instead pay a second fee under § 12-20-100 that everyone calls the "Utility License Fee" (roughly $1 per $1,000 of the fair-market value of property used in South Carolina, plus $3 per $1,000 of receipts from regulated business).

Revenue Ruling #25-4 explains the Utility License Fee Credit under § 12-20-105 — updated to reflect statutory changes and consolidating three older rulings it supersedes (#96-11, #99-6, #18-8). The credit is only available to companies paying the § 12-20-100 Utility License Fee (not the general § 12-20-50 fee), and it can't be applied against any other tax such as corporate income tax or sales tax.

How you earn it: by paying cash to provide qualifying infrastructure for an eligible project.

• Eligible project (three routes): (I) a project that qualifies for certain incentives — jobs tax credits (Chapter 6), job-development/withholding credits (Chapter 10), investment tax credits (Chapter 14), or a fee-in-lieu of property taxes; (II) a project in an office/business/commercial/industrial park used exclusively for economic development and owned or constructed by a county, political subdivision, or state agency; or (III) a county- or municipality-owned multiuse sports and recreation complex in a county that has collected at least $5 million in state accommodations tax in a fiscal year.
• Qualifying infrastructure: improvements for water, wastewater, hydrogen fuel, sewer, gas, steam, electric energy, and communications made to a building or land that are necessary, suitable, or useful to the eligible project — think water/sewer/electric/gas/telecom lines, roads, rail, and (for park projects) shell buildings, incubator buildings, due-diligence and site-prep costs. It generally must be part of a larger system; wiring inside a private building that serves only one taxpayer does not qualify.

How much: the maximum aggregate credit a taxpayer can claim in a year is $600,000 across all eligible projects. For a contribution to a single eligible project in a Tier II, III, or IV county (§ 12-6-3360(B)), the cap increases by $50,000 (Tier II), $100,000 (Tier III), or $150,000 (Tier IV) — but only if the whole year's claim is for that one project.

The limits that trip people up:

• Not refundable — it can reduce the Utility License Fee to zero but no further.
• One-year carryforward only; unused credit beyond that is forfeited (the ruling works through a $600,000/$300,000 example).
• Can't be sold or transferred to a third party.
• No self-dealing — you can't claim it for a building or infrastructure your own company owns, leases, manages, or operates, even if it otherwise qualifies.
• No double-dipping with the separate § 12-6-3420 Infrastructure Credit for the same expenses.
• Cash only — a promise to contribute in a future year doesn't count; only cash actually paid in the tax year.

Process notes: you claim the credit on the applicable return (generally the SC1120U or CL-4; or attach the Utility License Fee Schedule if you file the SC1120/SC1120S). There's no pre-approval, but you can request a non-binding "comfort letter" on your project for a $35 fee. If your infrastructure or project won't meet the statutory requirements by year-end, you can still claim the credit for cash paid, but you must execute a waiver of the statute of limitations under § 12-54-85 and notify the Department when the project qualifies, is completed, or is abandoned; an abandoned project's contribution can be redirected to a substitute eligible project. The ruling also confirms an eligible project can be in any county (not just where the taxpayer sits), and that a county jail/administrative building or a general municipal water-system upgrade does not qualify (not "exclusively for economic development").

What this means for you

Utilities, electric cooperatives, and telecom/gas/power companies

If you pay the § 12-20-100 Utility License Fee, this credit can meaningfully offset it when you fund economic-development infrastructure with cash. Plan around the $600,000 annual cap (plus the Tier II/III/IV bump for a single-project focus), the one-year carryforward, and the cash-in-the-tax-year rule. Two easy mistakes to avoid: don't fund infrastructure you'll own or operate yourself (it's disqualified), and don't claim both this credit and the § 12-6-3420 Infrastructure Credit for the same dollars. Consider the $35 comfort letter before committing, and if your project won't be finished by year-end, be ready to sign the § 12-54-85 waiver.

Corporate tax professionals and advisors

Confirm the client actually pays the Utility License Fee (§ 12-20-100), not just the general § 12-20-50 fee — the credit is limited to the former. Verify the project fits one of the three "eligible project" routes and that the infrastructure is part of a larger system and "necessary, suitable, or useful" (the ruling's rail-spur-vs-$5,000-equipment example shows the reasonableness limit). Track the nonrefundable/one-year-carryforward mechanics, the no-transfer rule, and the waiver-and-notice procedure for projects completing in a later year. Claim on SC1120U/CL-4 per the ruling.

Everyone else

This is a corporate license-fee credit for regulated utility-type companies — it doesn't affect ordinary business or individual income, sales, or use taxes. It's included here for completeness of South Carolina's advisory-opinion library.

Common questions

Q: Who can claim the Utility License Fee Credit?
A: Only companies that pay the Utility License Fee under § 12-20-100 — utilities, electric cooperatives, and similar regulated companies. It can't be used against income or sales tax.

Q: What's the most I can claim in a year?
A: $600,000 across all eligible projects, plus an extra $50,000/$100,000/$150,000 if your entire claim is for a single project in a Tier II/III/IV county.

Q: Is the credit refundable or transferable?
A: Neither. It can reduce your Utility License Fee to zero but isn't refunded, can't be sold or transferred, and carries forward only one year.

Q: Can I claim it for infrastructure my own company will own and operate?
A: No. The credit is not allowed for a building or infrastructure the claiming company owns, leases, manages, or operates.

Q: Do I need approval before claiming it?
A: No pre-approval exists, but you can request a non-binding comfort letter about your project for a $35 fee. If the project won't meet the requirements by year-end, you must sign a statute-of-limitations waiver under § 12-54-85.

Citations and references

Statutes:

• S.C. Code Ann. § 12-20-100 — the Utility License Fee on utility and regulated companies
• S.C. Code Ann. § 12-20-105 — the Utility License Fee Credit (eligible projects, qualifying infrastructure, $600,000 cap, tier increases, carryforward, waiver)
• S.C. Code Ann. § 12-20-50 — the general corporate license fee
• S.C. Code Ann. § 12-6-3360(B) — county tier designations
• S.C. Code Ann. § 12-6-3420 — the Infrastructure Credit (cannot be claimed for the same expenses)
• S.C. Code Ann. § 12-54-85 — waiver of the statute of limitations

Case discussed in prose (not linked): Alltel Communications v. S.C. Dep't of Revenue, 399 S.C. 313, 731 S.E.2d 869 (2012) (telephone companies do not include cell phone companies). The ruling appends the full text of §§ 12-20-10 and 12-20-105 as an exhibit.

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR25-4.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC REVENUE RULING #25-4
SUBJECT:

Credit Against the Corporate License Fee (Utility License Fee Credit)

EFFECTIVE DATE:

Applies to all periods open under statute

SUPERSEDES:

SC Revenue Ruling #96-11, SC Revenue Ruling #99-6, SC Revenue
Ruling #18-8, and all previous advisory opinions and any oral
directives in conflict herewith.

REFERENCES:

S.C. Code Ann. § 12-6-3420 (2014)
S.C. Code Ann. § 12-20-100 (2014)
S.C. Code Ann. § 12-20-105 (2014; Supp. 2023)

AUTHORITY:

S.C. Code Ann. § 12-4-320 (2014)
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 Departmental advisory opinion.

This revenue ruling addresses changes made to section 12-20-105 of the South Carolina Code,
which provides a credit against the license fee imposed by section 12-20-100. This revenue
ruling supersedes Department guidance published in SC Revenue Rulings #96-11, #99-6, and

18-8. It incorporates questions from the previous documents and answers additional questions

concerning the credit that have arisen since those documents were issued.
This revenue ruling is divided into the following sections:
A. Overview of Corporate License Fees and the License Fee Credit Under Section 12-20-105
of the South Carolina Code
B. Eligible Project
C. Qualifying Infrastructure
1

D. General Questions about the Utility License Fee Credit
E. Exhibit A - sections 12-20-10 and 12-20-105
A. Overview of Corporate License Fees and the License Fee Credit Under Section 12-20105 1 of the South Carolina Code
Chapter 20, Title 12 of the South Carolina Code imposes two types of corporation license fees.
The first type is the general corporate license fee imposed on most corporations by section 1220-50 of the South Carolina Code. It is calculated based upon capital stock and paid-in or capital
surplus. In the place of the license fee imposed by section 12-20-50, section 12-20-100 imposes a
second type of license fee on “every express company, street railway company, navigation
company, waterworks company, power company, electric cooperative, light company, gas
company, telegraph company, and telephone company.” 2 This license fee is commonly referred
to as the “Utility License Fee.” 3 The Utility License Fee is calculated based on 1) One dollar for
each thousand dollars (or fraction thereof) of the fair market value of property owned and used
by the taxpayer in this State in the conduct of its business; and 2) Three dollars for each thousand
dollars (or fraction thereof) for services rendered in this State from a regulated business. 4
Section 12-20-105 of the South Carolina Code provides a credit against the Utility License Fee.
This credit is only available for companies paying the Utility License Fee imposed by section 1220-100. 5 This credit has historically been referred to as the “Utility License Fee Credit.” 6
A taxpayer may claim the Utility License Fee Credit for amounts paid in cash to provide
qualifying infrastructure (as defined below) for an eligible project (as defined below), subject to
the limits provided in section 12-20-105. 7
The maximum aggregate Utility License Fee Credit that may be claimed in a single taxable year
by a taxpayer is $600,000 for all contributions to all eligible projects. However, if the taxpayer’s

S.C. Code Ann. § 12-20-105 is attached as Exhibit A to this revenue ruling.
Telephone companies do not include cell phone companies. See Alltel Communications v. South Carolina
Department of Revenue, 399 S.C. 313, 731 S.E. 2d 869 (2012).
2
S.C. Code Ann. § 12-20-100.
3
At one time the corporations subject to this fee were strictly utilities. However, the types of corporations currently
subject to the fee under section 12-20-100 goes beyond utilities. Nevertheless, for purposes of this ruling we will
refer to this fee as the Utility License Fee.
4
The “Utility License Fee” in section 12-20-100 is based upon the value of property used in the business in South
Carolina and the gross receipts from “regulated business” conducted within South Carolina. The types of
corporations listed pay a fee that is at least in part based on the value of the property component, but because the
gross receipts included are only those from regulated business, this component is zero if the corporation conducts no
regulated business in this state.
5
Taxpayers paying the general corporate license fee under section 12-20-50 are not eligible to claim the Utility
License Fee Credit against that fee. In addition, a taxpayer may not claim the Utility License Fee Credit against any
other tax or fee such as corporate income tax or sales and use tax.
6
Similar to the Utility License Fee, this credit applies to more corporations than just utilities. For purposes of this
ruling, we will refer to the credit as the “Utility License Fee Credit.”
7
S.C. Code Ann. § 12-20-105(A).
1
2

2

contribution is to a single eligible project located in a Tier II, III, or IV County pursuant to
section 12-6-3360(B), the taxpayer is entitled to an additional credit in the following amounts: 8
County Designation
Tier II
Tier III
Tier IV

Amount of Additional Credit
$ 50,000
$100,000
$150,000

A special rule applies if the single eligible project extends across a county boundary. In these
instances, the project is considered to be located in the county with the lowest credit amount
unless at least 80% of the total project costs are attributable to the portion of the project located
in the higher credit county. 9
The credit cannot reduce the taxpayer’s Utility License Fee liability below zero. If the credit
originally earned during a taxable year exceeds the taxpayer’s Utility License Fee liability, the
amount of the excess may be carried forward to the next year. 10
Note: A taxpayer may not claim the credit for actual expenses it incurs in the construction or
operation of any building or infrastructure it owns, manages, or operates. 11 Moreover, a taxpayer
claiming the Utility License Fee Credit may not also claim the Infrastructure Credit 12 for the
same expenses. 13
B. Eligible Project
A project qualifies as an “eligible project” in one of three ways.

(I)

It qualifies for one of the following tax incentives:

 Income tax credits under Chapter 6, Title 12 (e.g., jobs tax credits).
 Withholding tax credits under Chapter 10, Title 12 (e.g., job development credits).
 Income tax credits under Chapter 14, Title 12 (e.g., investment tax credits).
 Fee in lieu of property taxes under Chapter 12, Title 4; Chapter 29, Title 4; or Chapter
44, Title 12. 14

S.C. Code Ann. § 12-20-105(E)(1) and (2). County Tiers are defined in S.C. Code Ann. § 12-6-3360(B) and are
listed by the Department each year in an Information Letter.
9
S.C. Code Ann. § 12-20-105(E)(3).
10
S.C. Code Ann. § 12-20-105(F). See Section D., Question 1 for an example of the carryforward.
11
S.C. Code Ann. § 12-20-105(D).
12
Section 12-6-3420 allows a taxpayer a credit against South Carolina corporate income taxes imposed by section
12-6-530 or bank taxes imposed by section 12-11-20 for construction or improvement of an infrastructure project
consisting of water or sewer lines or fixed transportation facilities (“Infrastructure Credit”). This revenue ruling only
addresses questions concerning the Utility License Fee Credit and does not address the Infrastructure Credit.
13
S.C. Code Ann. § 12-20-105(G).
14
S.C. Code Ann. § 12-20-105(B)(1).
8

3

(II) The project is located in an office, business, commercial, or industrial park, or a
combination of these, and:

 It is used exclusively for economic development; and
 It is owned or constructed by a county, political subdivision or agency of this State
when the qualifying improvements are paid for. 15

(III) The project is a county-owned or municipality-owned multiuse sports and recreation
complex located in a county in which at least $5 million in state accommodations tax pursuant to
section 12-36-920 has been collected in at least one fiscal year. 16
C. Qualifying Infrastructure
Section 12-20-105(C)(1) defines the term “infrastructure” as improvements for water,
wastewater, hydrogen fuel, sewer, gas, steam, electric energy, and communications services
made to a building or land that are considered necessary, suitable, or useful to an eligible project.
Infrastructure is a “system of public works” (Merriam-Webster, 2025). While infrastructure is
not limited to systems that are publicly owned or located on public property, it must be necessary
for the functioning of a community or society. 17 For example, communications wiring inside of a
private building serves only a particular taxpayer within the building and is not available to the
broader community. Accordingly, it does not qualify as infrastructure for purposes of section 1220-105, even though the wiring might be necessary, suitable, or useful to the eligible project.
The types of infrastructure improvements that qualify include, but are not limited to:
•

Improvements to public or private water and sewer systems. 18

• Improvements to public or private electric, natural gas, and telecommunications systems

including, but not limited to, ones owned or leased by an electric cooperative, electric utility,
or electric supplier as defined by Chapter 27, Title 58. 19

• Fixed transportation facilities including highway, road, rail, water and air. 20

S.C. Code Ann. § 12-20-105(B)(2).
S.C. Code Ann. § 12-20-105(B)(3).
17
The American Heritage Dictionary of the English Language (2025 ed.) defines “infrastructure” as “the basic
facilities, equipment, and installation needed for the functioning of a community or society, such as transportation
and communication systems, water and power lines, and public institutions.”
18
S.C. Code Ann. § 12-20-105(C)(1).
19
S.C. Code Ann. § 12-20-105(C)(2).
20
S.C. Code Ann. § 12-20-105(C)(3).
15
16

4

• Shell buildings, and the purchase of land for a qualifying park, if the project is an eligible
project under item (II) of the “Eligible Project” requirements above. 21

Note: A county, political subdivision, or agency may sell the shell building or all or a
portion of the park at any time after the taxpayer has paid cash to provide the
infrastructure and this does not invalidate the Utility License Fee Credit.

• Incubator buildings whose ownership is retained by the county, political subdivision, or
agency of the State, if the project is an eligible project under item (II) of the “Eligible
Project” requirements above. 22

• Due diligence expenditures relating to environmental conditions as described in

section 12-20-105(C)(5) if the project is an eligible project under item (II) of the “Eligible
Project” requirements above and the expenditures are incurred after a county or political
subdivision has acquired contractual rights to an industrial park. 23

• Site preparation costs for a project qualifying as an eligible project under item (II) of the
“Eligible Project” requirements above including, but not limited to:

(a) clearing, grubbing, grading, and stormwater retention; and
(b) refurbishment of buildings that are owned or controlled by a county or municipality
used exclusively for economic development purposes. 24

• Cash payments to a county, political subdivision, or agency of this State for purposes of

defraying public debt incurred for allowed infrastructure if the project qualifies under item
(II) of the “Eligible Project” requirements above. 25

• Land acquisition and preparation costs, construction of facilities and venues, improvements

and upgrades to existing facilities and venues, and any other capital costs associated with the
acquisition, construction, and operation of an eligible project qualifying under item (III)
(recreational complex) of the “Eligible Project” requirements above. 26

• Debt payments on any loans or bonds for eligible infrastructure for an eligible project

qualifying under item (III) (recreational complex) of the “Eligible Project” requirements
above. 27

S.C. Code Ann. § 12-20-105(C)(4).
Id.
23
S.C. Code Ann. § 12-20-105(C)(5).
24
S.C. Code Ann. § 12-20-105(C)(6).
25
S.C. Code Ann. § 12-20-105(C)(7).
26
S.C. Code Ann. § 12-20-105(I).
27
Id.
21
22

5

Necessary, Suitable, or Useful to an Eligible Project
As stated above, “infrastructure” consists of improvements made to a building or land for water,
wastewater, hydrogen fuel, sewer, gas, steam, electric energy, and communication services that
are necessary, suitable, or useful to an eligible project. Additionally, the Utility License Fee
Credit statute allows certain other costs, such as shell buildings and due diligence expenditures
associated with a qualifying park, to qualify as infrastructure. 28 However, in all instances, the
scope and cost of the infrastructure must be reasonable when considering the scope and cost of
the eligible project and how the project qualifies for the Utility License Fee Credit. For example,
if an eligible project qualifies for the investment tax credit allowed by Chapter 14, Title 12, and
the qualifying equipment being placed in service to generate the investment tax credit has a cost
of $5,000, a rail spur which costs $200,000 would not be considered necessary, suitable, or
useful to the eligible project given the scope of the project.
The following chart provides information and examples about qualifying and nonqualifying
infrastructure. While the chart does not address every type of infrastructure, it does provide
guidance that taxpayers can consider in determining what types of infrastructure may qualify for
the credit. However, to qualify, the infrastructure generally must be part of a larger system and
be necessary, suitable, and useful for the project as described above.
Infrastructure That May Qualify

1. Water, sewer, electric, gas, or telecommunications lines
2. Land to construct a county-owned industrial park
3. Due diligence expenses for environment studies associated with acquiring land for
   a county-owned or constructed industrial park after contractual rights for the
   park have been acquired by a county
4. Costs associated with a shell building to be located inside a county-owned or
   constructed industrial park
5. Roads and highways
6. Railroad lines and spurs
7. Refurbishment of a county-owned building, which is located inside a countyowned or constructed industrial park, so long as the building is used exclusively
   for economic development purposes
8. Costs associated with site preparation and stormwater retention including clearing,
   grubbing, and grading for a county-owned or constructed industrial park
9. Costs associated with the construction of an incubator building to be located
   inside a county-owned or constructed commercial park so long as the county
   retains ownership of the building
10. Upgrades to existing facilities for a county or municipality-owned multiuse
    sports and recreation complex in a county, which collects at least $5 million in
    state accommodations tax pursuant to section 12-36-920 in a single fiscal year
    28

S.C. Code Ann. § 12-20-105(C).

6

Non-Qualifying Infrastructure

1. Any expenses incurred in the construction and operation of any building or
   infrastructure owned, leased, managed, or operated by the taxpayer claiming the
   credit 29
2. Repairs to a privately owned building
3. Costs associated with certifying a site under the South Carolina Palmetto Sites
   program at the South Carolina Department of Commerce
4. Signage, landscaping, curbs, or parking lots of facilities
5. Facilities at a local technical college that might indirectly support a particular
   industry in the state such as training program geared to the eligible project’s
   business, including buildings and equipment
6. Costs associated with site preparation including clearing, grubbing, grading, and
   stormwater retention for a project which does not qualify under items (II) or
   (III) of the “Eligible Project” requirements above
7. Impact fees for water and sewer
8. Payment for an option to acquire land even if the land may be used to develop a
   qualifying park
   D. General Questions about the Utility License Fee Credit
9. Q. If the entire Utility License Fee Credit cannot be used in the current tax year, is there
   any carryforward of the credit?
   A. Yes. If the applicable credit originally earned during the taxable year exceeds the
   taxpayer’s Utility License Fee liability, the amount of the excess may be carried
   forward to the next taxable year. 30 The carryforward period is only one year for the
   credit and there is no additional carryforward.
   Example: Assume that taxpayer earned a $600,000 credit in 2024 by providing cash
   to eligible projects for qualifying infrastructure. However, taxpayer only has
   $300,000 of Utility License Fee liability for 2024. Taxpayer may carry over $300,000
   of unused credit to offset any Utility License Fee for 2025. In 2025, taxpayer earns an
   additional $400,000 in credit, but only has $200,000 of Utility License Fee liability.
   Taxpayer may use $200,000 of the $300,000 carryforward from 2024 to offset its
   Utility License Fee liability on its 2025 return, but will forfeit the remaining $100,000
   of carryforward. Taxpayer may carry forward the $400,000 of unused credit
   attributable to 2025 into 2026.

29
30

S.C. Code Ann. § 12-20-105(D).
S.C. Code Ann. § 12-20-105(F).

7

2. Q. Is the Utility License Fee Credit refundable?
A. No. The credit may reduce a taxpayer’s tax liability to zero, but it is not refundable. 31

3. Q. May the Utility License Fee Credit be sold or transferred to another party if a
   taxpayer cannot fully use the credit?
   A. No, the credit may not be sold or transferred to a third party even if the taxpayer
   qualifying for the credit does not have sufficient Utility License Fee liability to use
   the credit.
4. Q. How does a taxpayer claim the Utility License Fee Credit?
   A. The taxpayer claims the credit on the proper line of the taxpayer’s applicable tax
   return, generally either the SC1120U (“Public Utility Tax Return”) or CL-4 (“Annual
   Report of Electric Cooperative Property and Gross Receipts”). The taxpayer should
   follow the instructions on the applicable return in determining what information to
   submit when claiming the credit. If a qualifying taxpayer does not file either the
   SC1120U or CL-4, the taxpayer should file the appropriate return (either the SC1120
   or the SC1120S) and attach the Utility License Fee Schedule from the SC1120U.
5. Q. Can a taxpayer be pre-approved for the Utility License Fee Credit?
   A. No, a taxpayer cannot be pre-approved for the credit. However, a taxpayer who plans
   to claim the credit can request an informal, non-binding comfort letter concerning the
   project and the infrastructure. The letter is based solely on the facts presented by the
   taxpayer and is non-binding on the Department. The cost for the letter is $35. A
   taxpayer can request this letter by submitting a written request along with the $35 to
   the Department. The request should contain all applicable information concerning the
   eligible project and qualifying infrastructure and should include the required
   payment. The request can be sent to:
   South Carolina Department of Revenue
   Attn: Tax Credits
   P.O. Box 125
   Columbia, SC 29214-0825
   Alternatively, the request may also be emailed to [email protected].
6. Q. Can the taxpayer make a promise to contribute the cash in a subsequent tax year and
   still claim the Utility License Fee Credit?

31

Id.

8

A. No. A taxpayer may only claim the credit for “amounts paid in cash” during the tax
year in which the taxpayer plans on claiming the credit. Cash includes a money
transfer or a current check, but does not include contractual obligations or other
promises to pay a sum in a future year. See section 12-20-105(A).

7. Q. For a project qualifying under item (II) above, must the project be located in a
   multicounty industrial park as provided for in section 4-1-170?
   A. No. The project must be located in an office, business, commercial, or industrial park,
   or a combination of these and must meet the other requirements listed in item (II)
   above, but there is no requirement that the project be located in a multicounty
   industrial park, though there is no prohibition that would restrict putting a project in
   such a park.
8. Q. May a taxpayer contribute cash to several eligible projects in a single taxable year?
   A. Yes. A taxpayer may contribute cash to any number of eligible projects, subject to the
   other requirements of the statute. Similarly, a single eligible project may receive cash
   from more than one taxpayer who is subject to the Utility License Fee. However, the
   total amount of credit a taxpayer may claim for all eligible projects in a single taxable
   year may not exceed $600,000, unless they qualify for the additional credit associated
   with a single project in a Tier II, Tier III, or Tier IV County. If a taxpayer contributes
   to more than one project, the taxpayer will be ineligible for the additional $50,000,
   $100,000 or $150,000 available for investing in a single project located in a Tier II,
   Tier III, or Tier IV County.
9. Q. Can a taxpayer claim the Utility License Fee Credit for amounts paid in the current
   tax year for a potential eligible project, even though construction of the qualifying
   infrastructure will not be completed until a future year?
   A. Yes. However, the cash contributions must be given for the eligible project in the tax
   year for which the taxpayer plans to claim the credit. A taxpayer may enter into a
   multi-year commitment to provide cash for an eligible project, and if the qualifying
   infrastructure is not constructed by the end of the tax year, the taxpayer can still claim
   the credit for cash amounts provided in the current tax year but not for amounts
   promised in future years. However, the taxpayer must execute a waiver of the statute
   of limitations as provided in Question 11 below.
10. Q. If a project is abandoned, or does not meet the statutory requirements by the end of
    the tax year for which the credit is claimed, may the taxpayer designate another
    project as eligible for the credit and retain the credit?
    A. Yes. When a taxpayer has entered into an agreement to pay cash for infrastructure for
    an eligible project, but the project is abandoned or does not meet the statutory
    requirements by the end of the tax year, the taxpayer who claimed the credit may
    9

retain the credit if the taxpayer identifies another eligible project that would qualify
for the credit and the cash is used for qualifying infrastructure for that project. If the
designation of the substitute project is made in a future year, the redirected cash
contribution will not count towards the $600,000 total credit available for the tax year
in which the substitute project is identified.

11. Q. If the qualifying infrastructure or the eligible project will not meet the requirements
    of the statute by the end of the tax year as discussed in Questions 9 and 10 above,
    what must a taxpayer do to assure that it may claim the credit for the current tax year?
    A. 1. If the qualifying infrastructure or eligible project will not meet the statutory
    requirements by the end of the tax year in which the cash is contributed, the
    taxpayer making the contribution must execute a waiver of the statute of
    limitations pursuant to section 12-54-85. The waiver allows the Department to
    assess the fee in later years since it is possible that the eligible project will never
    meet the qualifications of the statute or the infrastructure will never be
    constructed.
12. The waiver must cover a period beginning with the date the return on which the
    credit is first claimed is filed and ending three years after the taxpayer notifies the
    Department that the eligible project has: a) met the statutory requirements, (b) the
    qualifying infrastructure has been completed, or c) that the project has been
    abandoned or will otherwise not meet the statutory requirements, whichever is
    applicable.
13. The taxpayer must either include the waiver with its return on which the credit is
    claimed if a paper return is filed or send the waiver to the address provided below
    in 4. below if an electronic return is filed.
14. The taxpayer must notify the Department by sending a letter providing the name,
    address and tax identification number of the taxpayer claiming the credit,
    information about the qualifying eligible project and the qualifying infrastructure,
    and the date that the statutory requirements have been met, the qualifying
    infrastructure was completed, or the project has been abandoned or will otherwise
    not meet the statutory requirements. The notice can be sent to:
    South Carolina Department of Revenue
    Attn: Tax Credits
    P.O. Box 125
    Columbia, SC 29214-0825
    Alternatively, the notice may be emailed to [email protected].

10

5. If the taxpayer redirects the contribution in the current year or a future year by
designating a different eligible project pursuant to section 12-20-105(A), the
taxpayer must notify the Department about the substitute project or infrastructure.
The Department will be allowed additional time as provided in the waiver to
assess any taxes due.
Example: In May 2024, taxpayer contributes $200,000 to Y to help construct an
access road to Y’s Project. Y believes its project will qualify for the jobs tax
credit under section 12-6-3360 but has not hired any employees to work at the
project and construction of the infrastructure has not begun. When taxpayer files
its return in 2025, taxpayer may claim the credit for the $200,000 on its 2024
return but must execute a waiver as described above.
In June 2025, Y’s project is abandoned, but X has a project that it believes will
qualify for a fee in lieu of property taxes. In July 2025, taxpayer designates X’s
project as a substitute for Y’s project and contributes $600,000 towards the
project. The $200,000 contributed to Y’s project in 2024 is deemed to be made for
X’s project, so taxpayer does not need to file an amended return eliminating the
credit claimed in 2024. However, since X’s project has not met the qualifications
of the statute yet and the infrastructure has not been constructed, taxpayer must
provide the Department the information listed in 4. above for the substitute
project and the waiver will now apply to the substitute project.
The $200,000 contributed in 2024, will not reduce the total $600,000 of credit
taxpayer may claim for 2025. In 2026, X completes its project and the fee in lieu
becomes active. The infrastructure has also been completed. Taxpayer must notify
the Department in 2026 that the project has qualified as an eligible project and the
qualifying infrastructure has been installed. 32

12. Q. Can an eligible project be located in any county in South Carolina?
    A. Yes. An eligible project may be located in any county or group of counties in South
    Carolina. It does not have to be located in a county in which the taxpayer is located.
13. Q. Can a county-owned jail or administrative building that houses administrative
    functions of the county qualify as an eligible project?
    A. No. A county jail or an administrative building is not a project that is eligible for the
    listed tax incentives of section 12-20-105(B)(1), nor is it used exclusively for
    economic development. Therefore, these projects cannot meet the requirements of an
    eligible project.

32

S.C. Code Ann. §§ 12-20-105(A) and 12-54-85(B)(4).

11

14. Q. Town C would like to make some upgrades to its water system by replacing old pipes
and to expand water capacity for the town. The upgrades will benefit all Town C
residents. Do the upgrades to the water system qualify as an eligible project?
A. No. The water system upgrades improvement project is not a project that is eligible
for the listed tax incentives of section 12-20-105(B)(1), nor is the project used
exclusively for economic development. Therefore, it cannot meet the requirements
of an eligible project.

15. Q. May a taxpayer who qualifies as an electric utility contribute cash to help lay electric
    lines at an eligible project and claim the credit if those electric lines are to be used by
    the taxpayer to provide electricity to the eligible project?
    A. No. The statute provides that a taxpayer may not provide cash in support of any
    building or infrastructure it owns, leases, manages, or operates, even if the
    infrastructure otherwise qualifies. 33
16. Q. If a taxpayer provides cash for a county to construct a shell building for an eligible
    project qualifying under section 12-20-105(B)(2) (eligible projects under Item (II) of
    the “Eligible Project” requirements), may the county sell the shell building after the
    shell building’s construction without invalidating the Utility License Fee Credit for
    the taxpayer?
    A. Yes. The county may sell the shell building at any time after the taxpayer has paid the
    cash for the qualifying project without disqualifying the taxpayer from claiming the
    credit. The county may also sell land that has qualifying infrastructure on it and is
    located in a qualifying park after providing the cash for the qualifying project. 34
    SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
May 28
,2025
Columbia, South Carolina

33
34

S.C. Code Ann. § 12-20-105(D).
S.C. Code Ann. §§ 12-20-105(B)(2) and (C)(4).

12

E. Exhibit A
CHAPTER 20
Corporation License Fees
SECTION 12-20-10. Definitions.
For the purposes of this chapter:
(1) "Department" means the South Carolina Department of Revenue.
(2) "Taxable year" means the calendar year or the fiscal year used in computing taxable income
under Chapter 6 of this title.
(3) "Domestic corporation" means a corporation incorporated under the laws of this State.
(4) "Foreign corporation" means a corporation not incorporated under the laws of this State.
HISTORY: 1995 Act No. 76, Section 3.
SECTION 12-20-105. Tax credits.
(A) Any company subject to a license tax under Section 12-20-100 may claim a credit against
its license tax liability for amounts paid in cash to provide infrastructure for an eligible project. A
company may enter into a multi-year commitment to provide cash for eligible infrastructure.
Where a company has entered into an agreement to pay in cash for infrastructure for an eligible
project, and the eligible project is not constructed by the end of the tax year, the company may
provide cash in that or a future year to another eligible project and retain the credit.
(B)(1) To be considered an eligible project for purposes of this section, the project must qualify
for income tax credits under Chapter 6, Title 12, withholding tax credit under Chapter 10, Title 12,
income tax credits under Chapter 14, Title 12, or fees in lieu of property taxes under either Chapter
12, Title 4, Chapter 29, Title 4, or Chapter 44, Title 12.
(2) If a project is located in an office, business, commercial, or industrial park, or combination
of these, and is used exclusively for economic development and is owned or constructed by a
county, political subdivision, or agency of this State when the qualifying improvements are paid
for, the project does not have to meet the qualifications of item (1) to be considered an eligible
project. As provided in subsection (C)(4), the county or political subdivision may sell all or a
portion of the business or industrial park.
(3) In a county in which at least five million dollars in state accommodations tax imposed
pursuant to Section 12-36-920 has been collected in at least one fiscal year, a county or
municipality-owned multiuse sports and recreational complex is considered an "eligible project"
promoting economic development for all purposes of the credit allowed pursuant to this section.
(C) For the purpose of this section, "infrastructure" means improvements for water, wastewater,
hydrogen fuel, sewer, gas, steam, electric energy, and communication services made to a building
or land that are considered necessary, suitable, or useful to an eligible project. These improvements
include, but are not limited to:
(1) improvements to both public or private water and sewer systems;
(2) improvements to both public or private electric, natural gas, and telecommunications
systems including, but not limited to, ones owned or leased by an electric cooperative, electric
utility, or electric supplier, as defined in Chapter 27, Title 58;
(3) fixed transportation facilities including highway, road, rail, water, and air;

(4) for a qualifying project under subsection (B)(2), infrastructure improvements include shell
buildings, incubator buildings whose ownership is retained by the county, political subdivision, or
agency of the State and the purchase of land for an office, business, commercial, or industrial park,
or combination of these, used exclusively for economic development which is owned or
constructed by a county, political subdivision, or agency of this State. The county, political
subdivision, or agency may sell the shell building or all or a portion of the park at any time after
the company has paid in cash to provide the infrastructure for an eligible project;
(5) for a qualifying project pursuant to subsection (B)(2), infrastructure improvements also
include due diligence expenditures relating to environmental conditions made by a county or
political subdivision after it has acquired contractual rights to an industrial park. Due diligence
expenditures include such items as Phase I and II studies and environmental or archeological
studies required by state or federal statutes or guidelines or similar lender requirements.
Contractual rights include options to purchase real property or other similar contractual rights
acquired before the county or political subdivision files a deed to the property with the Register of
Mesne Conveyances;
(6) for a qualifying project pursuant to subsection (B)(2), site preparation costs include, but
are not limited to:
(a) clearing, grubbing, grading, and stormwater retention; and
(b) refurbishment of buildings that are owned or controlled by a county or municipality and
are used exclusively for economic development purposes; and
(7) for a qualifying project pursuant to subsection (B)(2) cash payments to a county, political
subdivision, or agency of this State for purposes of defraying public debt incurred to pay for
infrastructure on the project are allowed.
(D) A company is not allowed the credit provided by this section for actual expenses it incurs in
the construction and operation of any building or infrastructure it owns, leases, manages, or
operates.
(E)(1) The maximum aggregate credit that may be claimed in any tax year by a single company
is six hundred thousand dollars.
(2) Notwithstanding the annual credit limit provided pursuant to item (1), for a contribution
for a qualifying project located in a county classified as a Tier II, III, or IV county pursuant to
Section 12-6-3360(B), the maximum aggregate credit that may be claimed in a tax year by a
taxpayer is increased by:
County Tier
Tier II County
Tier III County
Tier IV County

Credit Amount Increase
Fifty thousand dollars
One hundred thousand dollars
One hundred fifty thousand dollars.

(3) To be eligible for the increased credit amount provided in item (2), the total of the
taxpayer's credit claim for the taxable year must be for a qualifying project located in a single Tier
II, III, or IV county. If the single qualifying project extends across a county boundary, then for
purposes of determining eligibility and the amount of the applicable increased credit, the
qualifying project is considered to be located in the county with the lowest credit amount unless at
least eighty percent of the total costs associated with the project are attributable to that portion of
the project located in the county with the higher allowable credit amount.

(F) The credits allowed by this section may not reduce the license tax liability of the company
below zero. If the applicable credit originally earned during a taxable year exceeds the liability
and is otherwise allowable under subsection (D), the amount of the excess may be carried forward
to the next taxable year.
(G) For South Carolina income tax and license purposes, a company that claims the credit
allowed by this section is ineligible to claim the credit allowed by Section 12-6-3420.
(H) By March first of each year, the Department of Revenue shall issue a report to the Chairman
of the Senate Finance Committee, the Chairman of the House Ways and Means Committee, and
the Secretary of the Department of Commerce outlining the history of the credit allowed pursuant
to this section. The report shall include the amount of credit allowed pursuant to this section and
the types of infrastructure provided to eligible projects.
(I) For the purposes of this section, for a qualifying project pursuant to subsection (B)(3),
infrastructure includes all applicable provisions of subsection (C) applying to the development and
construction of the sports and recreational complex and further includes costs of land acquisition
and preparation, construction of facilities and venues in the complex, improvements and upgrades
to existing facilities and venues, and any other capital costs incurred in the acquisition,
construction, and operation of the complex, including debt payments on any loans or bonds issued
to pay for such infrastructure.
HISTORY: 1996 Act No. 231, Section 4A; 1997 Act No. 151, Section 9; 1999 Act No. 93, Section
15; 2003 Act No. 69, Section 3.QQ, eff June 18, 2003; 2005 Act No. 145, Section 22.A, eff June
7, 2005; 2007 Act No. 110, Section 59.A, eff June 21, 2007, applicable for tax years beginning
after 2003; 2007 Act No. 116, Section 6, eff June 28, 2007, applicable for tax years beginning after
2003; 2008 Act No. 313, Section 2.I.2, eff June 12, 2008; 2010 Act No. 290, Section 18, eff
January 1, 2011; 2012 Act No. 187, Section 2, eff June 7, 2012; 2014 Act No. 279 (H.3644),
Sections 3.A, 3.B, eff June 10, 2014; 2022 Act No. 184 (H.3340), Section 1, eff May 16, 2022.
Editor's Note
2014 Act No. 279, Section 3.C, provides as follows:
"C. This section takes effect upon approval by the Governor and applies for contributions made
for a multiuse sports and recreational complex placed in service after 2011."
2022 Act No. 184, Section 2, provides as follows:
"SECTION 2. Upon approval of the Governor, this act applies for credits first claimed for taxable
years beginning after 2021."
Effect of Amendment
2014 Act No. 279, Section 3.A, 3.B, inserted subsections (B)(3) and (I), relating to additional
eligible project.
2022 Act No. 184, Section 1, in (A), inserted the second and third sentences; in (C), inserted (7)
and made nonsubstantive changes; rewrote (E); and in (I), inserted ", including debt payments on
any loans or bonds issued to pay for such infrastructure" at the end.