Differences in federal and state tax laws can cause taxpayer headaches, and often lead to incorrect state tax filings.  While South Carolina’s tax code continues to treat certain items differently than the Internal Revenue Code (IRC), South Carolina Governor Nikki Haley recently signed legislation (L. 2016, H4328) updating South Carolina’s tax code to better conform with the IRC, and revising various filing due dates.

Most importantly, the legislation amends the definition of “Internal Revenue Code” in SC Code Section 12-6-40 (Internal Revenue Code sections specifically not adopted by State) to incorporate into that definition all amendments to the IRC made through December 31, 2015.  The new legislation also provides that if any IRC section has expired (in whole or in part) as of December 31, 2015, and that IRC section (or part) is extended by Congress but not otherwise amended during 2016, then that section is also extended for South Carolina income tax purposes.

While conformity with the Internal Revenue Code is an important amendment, the new law also changed certain South Carolina tax return due dates and made changes to the state motor fuel tax laws.

The following due dates were amended by the new law:

• Quarterly income tax withholdings: Q4 return due date has been changed from the last day of February to the last day of January;
• Corporate Annual Report: changed from the 15^th day of the third month to the 15^th day of the fourth month following the close of the taxpayer’s accounting period.
• Building and Loan Associations: income tax return due date changed from the 15^th day of the third month to the 15^th day of the fourth month following the close of the taxpayer’s accounting period.
• Partnership and S Corporation Filing Date: Returns of Subchapter S corporations and partnerships must be filed on or before the 15^th day of the third month following the taxable year.  Additionally, payment of withholding for partnerships’ nonresident partners is now due on or before the 15^th day of the third month following the close of the partnership’s tax year.

The following new changes relate to motor fuel taxes:

• Definitions:
  • Diesel Gallon Equivalent (DGE) and Gasoline Gallon Equivalent (GGE) have been added to the statute. DGE means the amount of liquefied natural gas containing the same energy content as one gallon of diesel. For purposes of calculating the motor fuel user fee on liquefied natural gas that is used or consumed in producing or generating power for propelling a motor vehicle, each 6.06 lbs. of liquefied natural gas equals one gallon of motor fuel.  GGE means the amount of compressed natural gas or liquefied petroleum gas containing the same energy content as one gallon of gasoline. For purposes of calculating the motor fuel user fee on compressed natural gas or liquefied petroleum gas that is used or consumed in producing or generating power for propelling a motor vehicle, each 126.67 cubic feet of compressed natural gas, or 5.66 lbs. if the compressed natural gas is dispensed via a mass flow meter, equals one gallon of motor fuel and each gallon of liquefied petroleum gas equals 0.73 of a gallon of motor fuel. For any gaseous product for which a conversion factor is not provided, then based on the best information available, the Department of Revenue will establish a temporary conversion factor to determine the gallon equivalent, and then subsequently submit to the General Assembly a recommended legislative change for this conversion factor.
• Exemptions:
  • The following gases are now exempt from sales tax:
    • Natural gas sold to a person with a miscellaneous motor fuel user fee license who will compress it to produce compressed natural gas, or cool it to produce liquefied natural gas for use as a motor fuel;
    • Liquefied petroleum gas sold to a person with a miscellaneous motor fuel user fee license who will use the liquefied petroleum gas as a motor fuel.
  • Licensing Requirements:
    • The new law amended the existing law so that an occasional importer’s license or bonded importer’s license is required to bring motor fuel into the state, regardless of the method of transportation used to deliver the motor fuel.