Posted on July 20, 2018
On July 2, 2018, South Carolina enacted a sales and use tax exemption for the construction or improvement of motorsports entertainment complexes by qualifying companies.
The exemption applies to building materials, supplies, fixtures, and equipment used for the construction, repair, or improvement of a motorsports entertainment complex. To claim the exemption, a qualifying company must first apply to the Department of Revenue. Applications will be approved if they include a plan to make a capital investment of at least $10,000,000 on a motorsports entertainment complex in South Carolina within five years. Upon approval, applicants will get an exemption certificate.
After five years, a qualifying company must prove that it has met the capital investment requirement of $10,000,000. Companies that fail to meet the capital investment requirement must pay tax on purchases for which it claimed the exemption.
A company must apply to the South Carolina Department of Revenue with a plan that meets the capital investment threshold within five years. Upon receipt of a written certification from the Department of Revenue, the approved company may utilize the exemption.
The exemption is effective upon receipt and shall remain effective until December 31 of the fifth full calendar year after its issuance. Once the exemption certificate becomes ineffective, the company must return the exemption certificate and submit a report to the Department of Revenue of the actual expenditures made in South Carolina connected with the investment. The company must designate a member or representative of the company to work with the department on reporting of the investment.
A company that is approved by the department and is issued an exemption certificate but fails to meet the capital investment requirements within the five-year period is liable for sales and use tax that would have been paid without the exemption certificate. The company must be given a sixty-day period to pay the sales and use taxes without interest and penalties.
History of South Carolina Motorsports
Since 1950, South Carolina has assisted in the development of stock car racing, one of the fastest growing and most popular spectator sports in the country. Many legends of NASCAR racing including Rex White, David Pearson, Bud Moore, James Hylton, Tiny Lund, and Cale Yarborough are from South Carolina. The state is rich in historical references to the sport of stock car racing, as shown by the Darlington Raceway Stock Car Museum and the National Motorsports Press Association Hall of Fame, in addition to dirt raceways that served as home to the new sport of NASCAR racing in the 1950’s. NASCAR racing has had a great economic impact on South Carolina as fans from across the country and around the world visit the state each year to attend racing events.
Tips for the Taxpayer
If you are investing in a motorsports complex, review all state and local complex development tax credit options. If South Carolina is your best matching opportunity, write out a practical plan and submit it through the South Carolina Department of Revenue. Ensure that procedures are put in place to ensure all exemptions under the plan are being utilized, and that all criteria are continually met.
Contributor: Dustin Kato
How Can We Help?
Allyn International offers tax services for companies throughout the US and Canada, with extensive experience negotiating with taxing authorities. We can complete a nationwide tax credits and incentives review for your project to ensure not only that you qualify for the South Carolina opportunity, but that the South Carolina option is the tax credit/exemption opportunity that most fits your project, all other state and local options considered. We can assist in managing the appropriate use tax accrual processes under the credit and producing follow up reports to the state.
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