On July 2, 2024, the South Carolina governor signed Act 222, amending the Enterprise Zone Act of 1995 to allow remote employees to be included in certain job creation requirements, as it pertains to the Job Development Credit (JDC).
What Is the JDC?
- The JDC is a discretionary (i.e., negotiated) program that offers a quarterly cash reimbursement of a portion of the personal withholding taxes paid on behalf of new employees to the company.
- The reimbursement (i.e., incentive) is driven by a company’s spend or financing of qualified business expenditures, which include:
- Cost of facilities
- Training costs
- Acquiring, improving, or in certain cases leasing real estate
- Improvements to public and private infrastructure
- Fixed transportation facilities
- Construction or improvement projects for the purpose of complying with environmental laws and regulations
- The reimbursement amount will also depend on several factors, including the tier level of the county (i.e., least developed to most developed) and the gross wages of new employees.
- To apply and be considered for the program, a business must meet industry requirements, create at least 10 full-time jobs with wages at or above the average county wage, make a capital investment, and pay a minimum of 50% of the employee’s healthcare premiums.
- Considerations:
- Capital commitments will be set by the state’s Coordinating Council after reviewing the project parameters.
- The state’s Coordinating Council determines if a company is eligible to enter and take advantage of the JDC; the program is not as of right.
- The application to be considered for the program requires a $4,000 non-refundable fee.
- Considerations:
What Changed?
For all tax years beginning after 2020, a company may now claim the JDC on new full-time remote employees provided the employee meets all the following requirements:
- Is a resident of South Carolina, North Carolina, or Georgia.
- Is subject to withholding taxes in South Carolina.
- Is hired to fill a job for the project (i.e., the project described on the JDC application).
- Works either completely or partially from a home office or other residence within or outside South Carolina.
Other Items to Consider
- A business which pays withholdings on a remote employee in South Carolina, North Carolina, or Georgia can only claim the JDC to the extent of the South Carolina withholdings.
- This rule change has no impact on South Carolina’s Jobs Tax Credit.
If you have questions about how this legislation or other tax matters will impact your business, reach out to the Ryan contacts listed below.
TECHNICAL INFORMATION CONTACTS:
Allea Newbold
Principal
Ryan
813.371.0566
allea.newbold@ryan.com
Matt Lowell
Principal
Ryan
321.251.2924
matt.lowell@ryan.com
Savannah Jermance
Director
Ryan
505.312.4411
savannah.jermance@ryan.com
Jay Patel
Senior Manager
Ryan
210.429.8271
jay.patel@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.