South Carolina § 12-6-3820 - Short line railroad tax credits.

§ 12-6-3820. Short line railroad tax credits.

Section effective until December 31, 2028.

(A) As used in this section:

(1) "Department" means the South Carolina Department of Commerce.

(2) "Eligible taxpayer" means any railroad owner located in this State that is classified by the United States Surface Transportation Board as a Class II or Class III railroad.

(3) "Qualified railroad reconstruction or replacement expenditures" means gross expenditures for maintenance, reconstruction, or replacement of railroad infrastructure, including track, roadbed, bridges, industrial leads and sidings, and track-related structures owned or leased by a Class II or Class III railroad located in this State.

(B)(1) There is allowed a credit against the tax imposed pursuant to Section 12-6-510, 12-6-530, 12-11-20, or 38-7-20 equal to fifty percent of an eligible taxpayer's qualified railroad reconstruction or replacement expenditures.

(2) For qualified railroad reconstruction or replacement expenditures the amount of the credit may not exceed five thousand dollars multiplied by the number of miles of railroad track owned or leased within this State by the eligible taxpayer as of the close of the taxable year or one million five hundred thousand dollars in any taxable year, whichever is lesser.

(C)(1) Following the completion of qualified railroad reconstruction or replacement expenditures, the eligible taxpayer shall submit to the Department of Commerce a verification of qualified expenditures on a form provided for that purpose by the Department of Commerce. The verification must include a statement certifying:

(a) the status of the owner or lessee of the railroad as an eligible taxpayer;

(b) certification of the miles of railroad track owned or leased in this State;

(c) the qualified railroad reconstruction or replacement work completed; and

(d) a description of the amount of qualified railroad reconstruction or replacement expenditures paid or incurred.

Within thirty days after receipt and approval of the foregoing documentation from the eligible taxpayer, the department shall issue a tax credit certificate in an amount equivalent to the amount of the qualified railroad reconstruction or replacement expenditures incurred by the eligible taxpayer, not to exceed the amount of the tax credits reserved for the project.

(2) At the end of each year, the department shall furnish to the Department of Revenue a list of all eligible taxpayers who have qualified for the credit along with the amount of the credit authorized.

(3) Section 12-54-240 may not apply to any information exchanged between the Department of Commerce and the Department of Revenue relating to the credit allowed pursuant to this section.

(D) The department may adopt rules to implement and administer this section and to enable the certification of the income tax credit amount earned by each eligible taxpayer.

(E) In order to obtain a credit against any state income tax due, an eligible taxpayer shall file the tax credit certificate with the taxpayer's South Carolina state income tax return.

(F) Any tax credit generated pursuant to the provisions of this section, to the extent not used, may be carried forward for each of the five years following the year of qualification.

(G) The department shall report to the Senate Finance Committee and the House Ways and Means Committee by July 1, 2026, and annually thereafter for the duration of the existence of this program, on the use of the credit, including the number of tax credits applied for and the number of tax credits granted from the qualified railroad reconstruction or replacement expenditures for which tax credits have been allowed.

(H) A member of a railroad construction limited liability company must refrain from competing with the company in the conduct of the company's business before the dissolution of the company. This section does not apply when the member becomes a member of another limited liability company, and that company does not have an enforceable noncompete provision in its operating agreement.

HISTORY: 2024 Act No. 169 (S.1021), SECTION 3.A, eff May 20, 2024.

Repeal

2024 Act No. 169, SECTION 3.B, provides that Section 12-6-3820 is repealed on December 31, 2028.

Code Commissioner's Note

At the direction of the Code Commissioner, Section 12-6-3810, as added by 2024 Act No. 169, SECTION 3.A, was redesignated as Section 12-6-3820 to accommodate the addition of Section 12-6-3810, as added by 2024 Act No. 125, SECTION 1.

Editor's Note

2024 Act No. 169, SECTION 3.B, provides as follows:

"[SECTION 3.]B. This SECTION takes effect upon approval by the Governor and first applies to income tax years beginning after December 31, 2023. The provisions of this act are repealed on December 31, 2028, except that if the credit allowed by Section 12-6-3820, as added by this act, is earned before the repeal, then the provisions of Section 12-6-3820 continue to apply until the credits have been fully claimed."