South Carolina amends law to revive sick textile units
America's South Carolina state has amended a law on revitalizing or reviving sick textile units by enhancing financial incentives available in the South Carolina Textiles Communities Revitalization Act.
The “taxpayer-friendly” amendment, cleared on May 23, seeks to remove a 50 percent cap applicable to the income tax credit provided by the Act. The amendment enhances the value of the credit by accelerating the time period for claiming the credit and applies to credits claimed for income tax year 2016, regardless of when the credit was earned.
The South Carolina Textiles Communities Revitalization Act provides financial incentives for rehabilitation, renovation, and redevelopment of abandoned textile mill sites in South Carolina. A textile mill site means a textile mill together with the land and other improvements on it which were used directly for textile manufacturing operations or ancillary uses. A textile mill site is considered to be abandoned when at least 80 per cent of the mill has been closed or is non-operational for at least one year.
The act provides two credit options: a 25 per cent credit against real property taxes, or a 25 per cent state income tax or corporate license fee credit. The credit is determined based on the rehabilitation expenses incurred to redevelop the textile mill site. Rehabilitation expenses generally include the costs incurred for demolition, environmental remediation, site improvements, and the construction of new buildings, it said.
In order to receive the credit, a taxpayer (business entity) must file a notice of intent to rehabilitate. Expenses incurred before submission of the notice (with the local government in the case of the property tax credit and the Department of Revenue in the case of the income tax credit) are not eligible to avail the tax credit. If a taxpayer seeks to receive the income tax credit, the notice of intent to rehabilitate should be filed before building permits are received.
A notice of intent to rehabilitate must include, among other information, an estimate of the rehabilitation expenses. The credit a taxpayer may ultimately receive may be limited or eliminated based on the estimated expenses included in a notice of intent to rehabilitate. Actual expenses which exceed 125 per cent of the estimate are disregarded when determining the amount of the credit. If actual expenses are less than 80 per cent, then no credit is allowed.
A taxpayer who seeks to receive a credit against property taxes receives a credit equal to 25 per cent of the rehabilitation expenses incurred. However, expenses exceeding 125 per cent of the estimate included with the notice of intent to rehabilitate are disregarded and a taxpayer must incur expenses that are at least 80 per cent of the estimate in order to receive any credit.
The credit for property taxes requires approval of local taxing entities, a public hearing, and specific ordinance approval by a municipality or county. The approval ordinance must provide for the credit to be taken as a credit against no more than 75 per cent of the property taxes otherwise due for up to 8 years. There is no otherwise applicable cap on the property tax credit. (SH)
Fibre2Fashion News Desk – India