Thursday, November 11, 2021

Business License Processes Changing for Municipal Councils and Staff in 2022

The compliance deadline for most of the provisions of the South Carolina Business License Tax Standardization Act, or Act 176, begins on January 1, 2022. The law requires a standard business license year among all taxing jurisdictions around the state, standard deadlines for payment due dates and refunds, acceptance of a standardized license application, a standard class schedule, appeals process, and a requirement that cities and towns accept renewal payments through the new Local Business License Renewal Center. 

As result of all the changes, the business licensing process will look different both for local policymakers and for municipal staff. In a recent episode of the City Quick Connect podcast, the Municipal Association’s Scott Slatton and Caitlin Cothran discuss the new normal for business licensing. 

What does Act 176 mean for city or town council decisions? 
After Act 176’s January 1, 2022, effective date, elected councils will maintain the authority to 
The law preserves existing agreements and provides for future agreements that cities create with a certain business for the calculation of business license tax. 

Cities and towns may also continue to contract with third-party companies to identify businesses that do not comply with business license tax ordinances. But Act 176 restricts third parties’ contact with businesses that do not comply with license requirements. 

What does Act 176 mean for business license staff in 2022 and afterward? 
Because Act 176 likely changes many jurisdictions’ business license deadlines, municipal staff should adjust their internal administrative practices. 
  • Applications – All taxing jurisdictions must now accept the statewide standard business license application. Municipalities may still use their own application, but must also accept the standard application.
  • Class schedules – When first setting up a business license, cities and towns must assign the business a six-digit North American Industry Classification System code, or NAICS code. Act 176 establishes a standard class schedule, where businesses are placed into classes using the latest edition of NAICS based on profitability. 
  • Rates – Cities and towns must calculate the business license tax using the business’s gross income for the previous calendar year or its previous fiscal year. 
  • Renewals – Business license staff must now make the Local Business License Renewal Center available as a payment option for businesses. The renewal center allows businesses to renew their licenses with every jurisdiction in the state. The standard license year of May 1 to April 30 means that licensing officials should issue renewal notices in January or February — earlier than in the past. This can help ensure that cities and towns have their business’s information to load into the renewal center software. 
  • Appeals – Act 176 outlines a standard appeals process including deadlines for appeals and responses. The appeals hearing must take place within 30 days of the city receiving the appeal form. 

Learn more about Act 176 and the seven-step compliance process that cities and towns should complete before the end of 2021.