• South Carolina: Department of Revenue Issues Several Advisory Rulings to Guide Taxpayers
  • August 5, 2015 | Authors: David H. Godenswager; David M. Kall; Susan Millradt McGlone
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • Expiration of tax liens

    On June 25, 2015, the South Carolina Department of Revenue (SCDOR) issued an advisory Revenue Ruling 15-6 offering taxpayers guidance on when a tax lien expires.

    Under the state law that addresses tax liens and property subject to seizure, a person who neglects or refuses to pay a tax liability, and any interest, penalties, costs, and the like associated with it, is subject to a lien by the SCDOR. The lien authorizes the SCDOR to seize, levy on, or sell the applicable real property, as well as bank deposits and all other property of the taxpayer.

    The ruling provides that a tax lien filed by the SCDOR expires 10 years after it is filed with a clerk of court or register of deeds. After that time, it is no longer enforceable, and “ceases to be an encumbrance upon any property of the affected taxpayer.”

    Abandoned building revitalization credit

    In 2013, lawmakers enacted the Abandoned Building Revitalization Act to encourage the rehabilitation, renovation, and redevelopment of abandoned buildings located in the state. Characterized by the Charleston City Paper as a “magic wand,” the act offers owners of such properties an income tax credit of up to 25 percent of the expenses involved in rehabilitating any income-producing building that has been at least two-thirds vacant for five years or more. The threshold spending requirements depend on the area’s population. In Charleston, for instance, an owner would need to spend $250,000 to receive the tax credit, which is capped at $500,000.

    The Charleston City Paper explained that the act was passed because “the abandonment of buildings has resulted in the disruption of communities and increased the cost to local governments by requiring additional police and fire services due to excessive vacancies. Many abandoned buildings pose safety concerns...and restoring these buildings to productive assets for the communities in which they are located [will] result in increased job opportunities."

    With Revenue Ruling 15-7 issued on July 8, 2015, the SCDOR highlights differences between the credit provisions applicable to building sites placed in service before and after June 9, 2015, which come into play due to this year’s amendments to the Act. In addition, the revenue ruling provides guidance and examples pertaining to the income tax credit, a general overview of the property tax credit, and the special rules for buildings or structures listed on the National Register of Historic Places.

    Textiles communities revitalization credit

    Along these same lines, Revenue Ruling 15-8, also issued on July 8, 2015, helps taxpayers navigate the Textiles Communities Revitalization Act. Originally enacted in 2004, this law encourages private investment in and redevelopment of textile mill sites to “remove and alleviate adverse conditions, including disproportionate expenditure of public funds, unmarketability of property, area crime, and abnormal exodus of families and businesses in these communities.” As with the abandoned building revitalization credit, taxpayers who meet the requirements set forth under the Textiles Communities Revitalization Act are entitled to income tax or real property tax credits. Similarly, Revenue Ruling 15-8 provides information on the following:
    1. Definitions and qualifications
    2. Notice of intent to rehabilitate
    3. Income Tax Credit 
    4. Special provisions and transitional rules 
    5. Transfer of credit and notification to the department 
    6. Property Tax Credit overview
    7. Examples and additional guidance
    Retail Facilities Revitalization Tax Credit

    A third revenue ruling issued on July 8, 2015, Revenue Ruling 15-9, pertains to the South Carolina Retail Facilities Revitalization Act, enacted in 2006 and scheduled to be repealed on July 1, 2016.

    The purpose of the Retail Facilities Revitalization Act is to create an incentive for the improvement, renovation, and redevelopment of abandoned retail facilities located in the Palmetto State. A qualifying taxpayer is eligible for either an income tax credit of 10 percent of the rehabilitation expenses incurred in rehabilitating the eligible site or a property tax credit of 25 percent of the rehabilitation expenses multiplied by the local taxing entity ratio for each local taxing entity that has consented to the property tax credit.

    The income tax credit must be taken in equal installments over eight years beginning with the year the eligible site is placed in service.

    The property tax credit can be taken against up to 75 percent of the real property taxes due on the eligible site each year for up to eight years, with the caveat that the entire property tax credit vests in the year that the property is placed in service.

    Revenue Ruling 15-9, like the others, offers information on definitions and qualifications, the notice of election of the Income Tax Credit or Property Tax Credit, Income Tax Credit, the transfer of Income Tax Credit and notification to the SCDOR, and the Property Tax Credit overview.