Thursday, October 14, 2021

New ‘Gross Income’ Definition for Business Licensing

The SC Business License Tax Standardization Act of 2020, or Act 176, standardizes many aspects of local business license tax administration across the state, including the definition of “gross income.” Taxing jurisdictions use a business’s reported gross income as the base on which they calculate a business’ license tax. Before the new law, exactly what constituted gross income varied by jurisdiction, creating confusion among businesses and local governments. 

As of January 1, 2022, SC Code Section 6-1-400 (e)(1) will specifically define the term “gross income” for any city, town or county that levies a business license tax. For most businesses, gross income “means the gross receipts or gross revenue of a business, received or accrued, for one calendar or fiscal year collected or to be collected from business done within a taxing jurisdiction.” 

Definitions for most businesses
For a business located within a municipality, the license tax will be based on the entirety of its gross income, with the tax paid to the municipality in which it resides. The business may deduct from its gross income any income on which it pays a license tax to another jurisdiction. 

For a business not located within the city where it does business, the license tax will be based upon and paid only on the income it earns from work that takes place within that city. 

The law also allows businesses to deduct other types of funds from their reported gross income. Examples include “taxes collected for a governmental entity, escrow funds, or funds that are the property of a third party.” 

Businesses with unique definitions 
There are several industries in the state for whom longstanding definitions of “gross income” are unique and included within Act 176: 
  • Real estate agents and brokers have a unique definition of gross income. 
  • Insurance companies, manufacturers and telecommunications companies all have their own definition of gross income as well. 
These industries’ gross income definitions were previously found in various sections of state law and local ordinances. Act 176 consolidates them into one section of state law for easy reference. 

Verifying gross income 
Occasionally, a business’s reported gross income must be verified by a taxing jurisdiction. Perhaps the business’s gross income is higher than in previous years, or the business is not claiming all of the deductions allowed under the law. In those cases and others, Act 176 allows the city, town or county to inspect a business’s records to ensure the accuracy of its reported gross income. According to Act 176, taxing jurisdictions may review “returns and reports filed with the Internal Revenue Service, the South Carolina Department of Revenue, the South Carolina Department of Insurance, or other governmental agencies.” 

Learn more  

Thursday, September 23, 2021

New Cooperative Purchasing Program Now Available for South Carolina Cities and Towns

City Connect Market, a new cooperative purchasing partnership between the Municipal Association of SC and HGACBuy, allows South Carolina’s cities and towns to take advantage of volume discounts when purchasing everything from fire trucks to roll carts to professional services. 

The partnership brings to South Carolina a purchasing program first created by the Houston-Galveston Area Council of Texas in 1975. HGACBuy staff receive bids and assist with local government purchasing around the nation. The program improves pricing and can help eliminate the need for each municipality to handle all details of each competitive bid process. 

On October 14, HGACBuy and the Municipal Association will host an online partnership panel event to discuss the benefits of cooperative purchasing and how South Carolina municipalities can take advantage of the program. Registration for that event is available now

HGACBuy helps with purchasing in 41 major categories of products. The category for public works equipment, for example, ranges from garbage and recycling containers to construction and maintenance tools, street maintenance and sweeping equipment, utility meters and traffic control devices, among other items. 

The program also handles the purchase of services, and works with more than 800 contractors. Service categories include community planning to public relations and events, temporary staffing and hiring services, emergency planning and recovery services, sewer cleaning services and others. 

The City Connect Market webpage features links to product listings under all of the contract categories. Users can search the available products or services, or can contact the Municipal Association with a specific request. The Association will work with the product vendor to ensure that the municipality receives a quote using the HGACBuy pricing guidelines. 

After the municipality receives and approves a quote, the Association will work directly with HGACBuy to place the order. The Association serves as a liaison to assist the municipality throughout the purchasing process. Those cities and towns that wish to use this process should review their procurement ordinances to make sure that cooperative purchasing partnerships are an approved purchasing method.

Thursday, September 9, 2021

Economic Development Flexibility Under the SC Business License Tax Standardization Act

Cities and towns throughout South Carolina regularly seek ways to promote economic development projects that can enhance residents’ quality of life, using a variety of state and local tools to attract and retain businesses. For many municipalities, the business license tax can serve as an economic development incentive. 
The passage of the SC Business License Tax Standardization Act, or Act 176, in 2020 protected the use of the business license tax as an incentive. 

While Act 176 created a standard business license rate class schedule that all cities and towns must use, it also contains three subsections that provide cities and towns flexibility to use their business license tax to address a variety of economic development scenarios. 

Creating subclasses 
SC Code Section 6-1-400(g)(2) allows a city, town or county to deviate from the standard rate class schedule and create subclassifications of businesses “based upon the particularized considerations as needed for economic stimulus or the enhanced or disproportionate demands by specific business[es]” on municipal services. 

For example, in a coastal city where tourists create higher service demands than permanent residents, that city could create a standalone classification for tourist-related industries and apply a unique tax rate to the classification. The same holds true if a town wanted to incentivize certain types of industries to locate within its borders. 

Grandfathered agreements 
Though Act 176 standardizes business licensing across the state, it recognizes that cities and towns have made local decisions for years to address local circumstances that might contradict provisions found in the new law. SC Code Section 6-1-400(h)(1) preserves special business license agreements that cities and towns may have in place prior to Act 176’s effective date of January 1, 2022. 

Any ordinance, formal or informal agreement, flat fee or unique calculation of any business’s license tax enacted before January 1, 2022, will be unaffected by the new law. This provision ensures continuity for both the local business and the city as the new law goes into effect. 

Changing the calculation of the tax 
SC Code Section 6-1-400(h)(2) affirms a jurisdiction’s authority to continue to address unique circumstances through their business license tax systems. The law states that a city or town may deviate from the standard rate class schedule in the future with an “ordinance passed for economic stimulus, an annual flat fee, or any formal or informal agreement … regarding the calculation of business license taxes.” 

More information on standardization 
While Act 176 ensured local leaders’ authority to continue to attract business and address unique economic circumstances, the law is primarily aimed at mainge doing business easier in cities and towns by standardizing the licensing process. With Act 176’s compliance deadline of January 1, 2022, approaching, cities and towns now need to be well on the way to achieving standardization. The Municipal Association’s standardization webpage outlines a seven-step process for following the law and standardizing business license practices.

Look out for the October 2021 issue of Uptown coming out next month, which will include a special section on business licensing, with numerous articles explaining specifics of complying with the new law. 

Wednesday, August 4, 2021

Annual Meeting Spotlights Pandemic Recovery, Community Development

The 2021 Annual Meeting of the Municipal Association of South Carolina addressed topics from COVID-19 recovery to the ways that city and town leaders can transform their visions for improved hometowns into reality. Many of the sessions have presentations and recordings now available on the Association’s website

Municipal representatives from around the state elected Rock Hill Councilmember Kathy Pender as the Association’s new president. In her first address in her new role, Pender thanked municipal officials for their dedicated work as the COVID-19 pandemic threatened public health and economic activity. 

“I’m so proud of the leadership you all have shown in your communities during the pandemic, from supporting local businesses and restaurants with flexibility, to supporting your residents with volunteer testing and vaccination sites,” she said. “Our work this year has helped our economy and our people survive in difficult, and ever-changing circumstances. Together, we have helped our state be stronger.” 

Inman Mayor and outgoing Association President Cornelius Huff noted that local elected leaders “led the way” during the pandemic, making the tough decisions required by the emergency to keep residents safe, while city staff worked hard to implement those decisions. 

“It has been said that the government closest to the people is the government who governs best,” Huff said. “And if nothing else positive can be said about this horrific time in our history, it can be said that the cities and towns of this state demonstrated the truthfulness of that statement.” 

Annual Meeting sessions 
Community development and pandemic recovery were two of the primary themes of the 2021 Annual Meeting. The Association’s website has materials available from many of the sessions, including these: 
  • Hope Inspires Action: Leading Positive Community Change (audio and presentation) – Dr. Dave Ivan, a Michigan State University researcher who studies community change, discussed using the concept of hope when developing a vision for positive community change.
  • Building Trust Through Open Communication (audio) – Columbia Police Chief Skip Holbrook, Williamston Police Chief Tony Taylor and Bluffton Public Information Officer Debbie Szpanka spoke in a panel discussion about planning for effective communication before a crisis and other communication considerations for building trust and protecting residents. 
  • Don’t Become a Headline: How to Comply with the State Ethics Act (audio) – Meghan Walker, executive director of the SC State Ethics Commission, explained ethics law compliance for elected officials. 
  • Keynote speaker, Andrew Davis, author, Town, Inc. (presentation) – Davis discussed how successful destination cities have “staked their claim” and leveraged the power of the online world by targeting a niche audience. 
  • Update on Legislative Session and Business Licensing (audio) – Municipal Association Director of Advocacy and Communications Scott Slatton reviewed action and victories during the General Assembly’s 2021 legislative session, while Deputy Executive Director Eric Budds discussed municipalities’ business license standardization efforts in 2021. 
  • Attracting the Remote Workforce Post-Pandemic (audio and presentation) – Jim Stritzinger, broadband coordinator for the SC Office of Regulatory Staff; Irene Dumas Tyson of the Boudreaux Group; and Jen Bonnett of the Savannah Economic Development Authority talked about how communities can draw in remote employees as residents.
  • American Rescue Plan: ARP From A to Z (audio and presentation) – Clarence Anthony, CEO and executive director of the National League of Cities, Todd Glover, executive director of the Municipal Association of SC, and Erica Wright, one of the Municipal Association’s legislative and public policy advocates; outlined the specifics of the American Rescue Plan and allowable uses of its funds for cities and towns. 
  • Broadband Is No Longer a Luxury – It’s a Necessity (audio and presentation) – Jim Stritzinger, broadband coordinator for the SC Office of Regulatory Staff, discussed the state’s plan to expand broadband to underserved areas. In the same session, Newberry Utility Director Tim Baker and Assistant Utility Director David Eldridge talked about the City of Newberry’s work to ensure local availability of affordable high-speed internet. 
  • Between the Lines: Redistricting and Your Budget (audio and presentation) – Frank Rainwater, executive director of the SC Revenue and Fiscal Affairs Office, discussed the effects of the pandemic on the state’s economy and governmental revenue, as well as the redistricting process following the 2020 Census. 
Achievement Awards 
During each Annual Meeting, the Association recognizes superior and innovative efforts in local government with the Achievement Awards. See the videos highlighting this year’s winners, from Lowrys’ new town hall to the rehabilitated storm water pumps on Hilton Head Island.

Thursday, July 15, 2021

Know the Allowable Uses of American Rescue Plan Funding

The Coronavirus Local Fiscal Recovery Fund of the American Rescue Plan provides a large amount of relief money for cities and towns — $65.1 billion nationwide. The funding brings with it plenty of considerations for how local leaders should make plans for using the funds, and they need to be certain their expenditures are allowable under the law. 

Allowable uses 
Guidance from the U.S. Department of the Treasury has explained how the funding may be used, including replacing governmental revenue loss and using funds to help maintain vital public services. Other allowable uses include projects to offset negative economic impacts, such as programs for small business support and public employee rehiring. Governments can also use funds to provide premium pay for essential workers, a category that includes sanitation and transit workers. Some of the allowable expenditures are specific to infrastructure. This could be improvements to water and sewer systems, and projects that improve the availability of broadband internet. 

Full details of allowable funding are available in the Department of the Treasury’s Interim Final Rule

When is funding available? 
The Department of Treasury plans to provide ARP funding allocations through two payments, or tranches. The timing of each payment is determined by how the ARP classifies the municipality. 


The other 254 municipalities are classified as non-entitlement municipalities. Non-entitlement units of local government will receive their allocations from the State of South Carolina. 

Before payments can be distributed from the state to cities and towns, the state must first submit a request to the U.S. Department of Treasury for its allocation from the State Fiscal Recovery Fund. Doing so will prompt Treasury to simultaneously initiate payment to the Local Fiscal Recovery Fund. 

South Carolina has not yet submitted its request for payment to the U.S. Department of Treasury. 

After cities and towns receive their first tranche, the second tranche is expected to be available 12 months later. 

Planning issues to consider 
Each city and town must have its ARP funds obligated by the end of 2024 and spent by the end of 2026. Because of the extended time frame and the need to ensure that certain expenses are allowable, local leaders should consider placing funds into a segregated bank account and take their time researching allowable uses. Beyond the available guidance documents, they can email the Department of Treasury at SLFRP@treasury.gov with specific questions. 

Because municipalities can use their allocations to replace pre-pandemic revenue they have lost, they should also consider calculating whether revenue losses have occurred. The Government Finance Officers Association has created an Excel-based calculator that can help with this. 

To learn more, check out this episode of the City Quick Connect podcast. In it, Legislative and Public Policy Advocate Erica Wright and Field Services Managers Charlie Barrineau and Jeff Shacker discuss ARP funding and items to think about when making plans for a city’s allocation. 

Rules for the funding will also appear as a topic of discussion during the Municipal Association’s 2021 Annual Meeting, taking place July 22 – 24.

Thursday, July 1, 2021

Time Is Running Out for Business License Standardization

The SC Business License Tax Standardization Act, Act 176, sets January 1, 2022, as the date by which every local government across the state that has a business license tax must begin administering that tax the same way. Although that compliance deadline is six months in the future, there are standardization steps that cities and towns need to have taken by now to meet the January 2022 deadline. For those that have not yet taken action, there is not much time left to work toward compliance and avoid problems in 2022. 

Getting in the rebalancing assistance queue 
The Municipal Association of SC has developed a seven-step process to simplify the standardization process. The third step involves rebalancing tax rates to ensure that the process of making changes to business license practices does not result in a revenue windfall for the city or town. Act 176 requires revenue neutrality during the compliance process. Municipal Association staff have been working with business licensing officials in each city or town to adjust tax rates appropriately. Given the significant amount of work involved to rebalance business license tax rates, the cities and towns now requesting rebalancing assistance are going into a queue. Those that are not yet in the rebalancing assistance queue should immediately contact their assigned Municipal Association business license liaison to avoid getting caught in an end-of-year bottleneck. 

Further steps 
To comply with Act 176, cities and towns will also need to adopt the new version of the model business license ordinance that addresses the law’s numerous requirements. Cities and towns should not attempt to update their existing ordinances. They will also need to familiarize themselves with critical information on the changes to the law so they can provide this information to their local business owners.

Municipalities need to work now with the Municipal Association to begin the process of using the online Local Business License Renewal Center. As with rebalancing, setting up each municipality to use the business license renewal portal will be a time-intensive one. With the 2022 compliance deadline approaching quickly, local officials need to contact their business license liaisons as soon as possible. 

Learn more 
Beyond the Association’s landing page for business license standardization, the City Quick Connect podcast has episodes that delve into many of the critical issues of business license standardization: 

Thursday, June 24, 2021

Municipal Association’s Annual Meeting to Tackle Pandemic Recovery

The Annual Meeting of the Municipal Association of SC is returning to an in-person event this year, taking place on Hilton Head Island from July 22 to July 24. Some of the meeting sessions will delve into issues of community development and change as well as business license standardization, and several of the sessions will examine the state's recovery from the COVID-19 pandemic. 

American Rescue Plan: ARP From A to Z 
This session will address ways that cities and towns will be able to use the substantial amounts of funding that will be available through the federal $1.9 trillion relief bill. Some guidance has already come from the U.S. Department of the Treasury on how the funding may be used. Because of the legislation’s size and complexity, it is critical for local leaders to familiarize themselves with allowable uses so that their efforts to apply the funds locally will be successful. Clarence Anthony, CEO and executive director of the National League of Cities, will be on hand to discuss the ARP, as well as Erica Wright, one of the Municipal Association of SC’s legislative and public policy advocates. 

Attracting the Remote Workforce Post-Pandemic 
In many places during the pandemic, employees found themselves working remotely — a massive shift that has opened the potential for ongoing remote work. The session “Attracting the Remote Workforce Post-Pandemic” will take a look at how communities can draw in the type of high-earning workers who have the flexibility to work from anywhere. The session will feature Jim Stritzinger, broadband coordinator for the SC Office of Regulatory Staff; as well as Irene Dumas Tyson, a master planner and community designer with the Boudreaux Group; and Jen Bonnett, vice president of innovation and entrepreneurship for the Savannah Economic Development Authority

Broadband is No Longer a Luxury — It’s a Necessity 
Remote work and virtual education in the past year have demonstrated just how critical broadband internet has become to businesses and residents alike. This session will address South Carolina’s plan to expand broadband to underserved areas, and will include the state Broadband Coordinator Jim Strizinger. It will also highlight the City of Newberry’s work to ensure the availability of affordable high-speed internet services, as explained by Newberry Utility Director Tim Baker and Assistant Utility Director David Eldridge. 

More information 
Find more details and full agenda information about the Annual Meeting here. All registrations must be complete by July 12.

Thursday, June 10, 2021

Business License Standardization and Third-Party Collection Companies

Act 176, the SC Business License Tax Standardization Act, requires every local government with a business license tax across the state to administer the tax the same way beginning January 1, 2022. Compliance with the new law requires cities and towns to make several adjustments to their existing business license ordinances, schedules and practices.

The law also establishes rules and restrictions for third-party collection companies that identify businesses delinquent in paying their business license taxes and that also assist municipalities in collecting those taxes. Here are some basics of the law’s requirements for third-party collection companies:

Identifying businesses that owe a business license tax 
  • Written contract: Before a third-party company can begin work for a city, the city and the company must have a written contract in place. 
  • Initial contact: The company may search for and identify businesses that are operating without a business license. The company may contact those businesses to notify them that they owe the business license tax, and the company may provide the city’s license application relevant contact information to the businesses. 
  • After initial contact: Businesses may notify either the city or the third-party company in writing that the company may not contact that business again. When this occurs, Act 176 specifies that only the city may contact the business about the unpaid tax — not the third-party company. 
A third-party company may not be paid on a contingency fee or success basis for simply identifying and contacting businesses that owe a business license tax. 

Collection of delinquent business license taxes
The new law allows a third-party company to help a city collect business license taxes under these circumstances: 
  • the city has assessed on the delinquent business the license tax amount that is due, and
  • the business has not appealed the assessment. 
After the city has assessed a business for a delinquent business license tax, third-party companies may be paid by the city based on a percentage of delinquent taxes that they help the city collect. 

More resources 
The Municipal Association’s standardization webpage outlines a seven-step process for standardizing business license practices. Cities and towns can seek information on specific business license standardization questions by contacting their business license standardization liaison at the Association.

The City Quick Connect podcast has episodes that delve into many of the critical issues of business license standardization: 

Thursday, May 27, 2021

Standardizing Business License Due Dates and Applications

B
eginning January 1, 2022, Act 176, the SC Business License Tax Standardization Act, will require municipal and county governments with a business license tax to all use the same payment due date and accept a standard business license application. 

Standard due dates 
  • April 30: The new law requires each taxing jurisdiction to use the standard business license tax payment due date of April 30.
  • May 1: Beginning each May 1, jurisdictions may assess penalties for those businesses that missed the April 30 deadline. The law allows each city, town or county to set the amount of a late penalty, if the local government has one. 
The standard due date in Act 176 aims to create an easier process for businesses, as it allows them to pay their license taxes to all of the jurisdictions where they work within the state at the same time. Previously, businesses had to keep track of various business license due dates set by taxing jurisdictions that fell throughout the year. This led to confusion and missed payments. 

Standard application 
Act 176 requires that all taxing jurisdictions accept a standard business license application beginning January 1, 2022.

Originally developed by the SC Business Licensing Officials Association in 2014, the standard business license application allows businesses to use the same form anywhere they do business in the state. Having been developed by business licensing officials, the standard application contains all of the information any city or town needs to help a business start operating in its jurisdiction. 

The standard application saves businesses time when they start to operate in a city, town or county. Rather than complete a unique business license application for every city or town, business owners may fill in their business’s information on the standard application, duplicate the application and then fill in the job-specific information for the cities or towns as they work across the state. 

More resources 

Thursday, May 13, 2021

Historic Preservation Saves Assets and Saves Character

by Jenny Boulware, Main Street SC Manager 

Resiliency — the ability to overcome challenges and bounce back stronger, wiser and more capable. How has your city or town shown its resilience, during the pandemic and through other challenges? One key resiliency indicator is whether a community recognizes and maintains its historic places. The preservation investments and initiatives taking place in our cities and towns are inspiring. 

Each year, the National Trust for Historic Preservation designates May as National Preservation Month. What initially began as National Preservation Week in 1973 became a month-long celebration in 2005 to celebrate the nation’s diverse and unique heritage. 

Awareness of historic preservation has proven to be integral to community and economic development efforts across South Carolina. From restoring historic buildings to a place where they can be used again to hosting preservation education series, Main Street South Carolina’s communities actively celebrate powerful preservation work at a local level. 

Main Street Walhalla is facilitating one such preservation awareness event. 

“We have reached out to the local paper to highlight preservation efforts in town. We have a series of social media posts that will encourage the community to share their memories of some of our buildings on the ‘wish list’ for renovations,” said Libby Imbody, Main Street Walhalla director. 

The Verner Building in downtown Walhalla dates to 1925. 

In Main Street Laurens, Executive Director Jonathan Irick has been documenting the numerous physical renovations taking place downtown. 

“Our old buildings are getting a second, and sometimes, a fourth chance at a new life. In the past six months, six substantial renovations have been completed or are underway, including the county courthouse,” he said. 

Irick said he sees the value of historic preservation because it celebrates the history of Laurens and helps connect its present to its past. 

“Our buildings are architecturally significant and should be preserved for that reason alone,” he said.
Jonathan Irick, left, meets with Wade Meetze, the owner of Palmetto Brothers Dispensary owner, during the recent renovation of the building that now houses the bar. 

In Downtown Florence, Development Manager Hannah Davis is coordinating social media posts related to Historic Preservation Month. They are also actively working on restoring the downtown’s historic Carolina Theatre. Originally constructed in 1919, the theater fell into disrepair decades later as focus shifted to multiplexes located outside of the downtown that offered modern amenities and movies.

“What started as a plan to gut the building and create essentially a black-box performance space for mid-level music shows has evolved into a historic preservation project as selective demolition began to uncover the theatre’s treasured and storied past,” Davis said. “At present, the project’s goal is to retain as many historic elements as possible in the expansive building, restore those that can be restored, and bring the jewel of Downtown Florence back with the Carolina’s neon marquee. The facility will be used as a music venue and restaurant space with the adjoining Florence Pharmacy. The project is expected to be complete over the next 18 months.” 
The Carolina Theatre operated for decades in downtown Florence before its closure.
Photo: City of Florence.
One of the theater’s historic sconces awaits restoration

Downtown Florence is also developing a “mini brief” series, to be published in print and online, for property owners, detailing the importance of ongoing maintenance to the long-term health of historic buildings. 

Preservation is for everyone. Start by learning more about your community’s story — the buildings, the people and the significant historic events. Spend time walking the historic districts. Be sure to look up and take in the architectural details not readily seen when driving by in a car. Appreciate and celebrate your community’s unique historic attributes, and unique architectural treasures.