SC SCH TC 11A: New Jobs and Capital Investment Credits for Plastics and Rubber Manufacturers (Revision 2019-10)

Who files this form

Qualifying plastics and rubber manufacturers use SC SCH TC-11A to claim capital investment credits and apply new jobs and capital investment credits against South Carolina Income Tax. Related quarterly forms apply unused credits against Withholding Tax.

The capital investment credit is for taxpayers who:

• Place qualified manufacturing and productive equipment in service.
• Conduct an activity in South Carolina listed under NAICS Section 326.
• Commit to employing 1,200 full-time workers in South Carolina by January 1, 2022.
• Commit to investing $400 million in South Carolina between September 1, 2011 and January 1, 2022.

Before claiming any credit, you must have invested at least $200 million of the required $400 million and filed the required commitment and repayment statement with SCDOR. File that statement and proof of qualification with a notice of intent to claim the credit.

What you'll need

Have these forms, records, and details available:

• Your name, SSN or FEIN, South Carolina Withholding file number, and the South Carolina counties where qualifying property is located.
• The basis and recovery period of qualifying investment property.
• Your Income Tax liability, current-year new jobs credit from SC SCH TC-4, and unused credit carryovers.
• SC SCH TC-11AW to reconcile carryovers. Attach it to each return involving credit carryovers.
• The applicable SC SCH TC-11A-WH quarterly form when claiming credits against Withholding Tax.

Each return claiming a credit must include a statement that you continue to meet the jobs and investment requirements, a reconciliation of credits claimed against Income Tax and Withholding Tax, and the required investment commitment and repayment statement.

Include the Affidavit of Compliance and Waiver of Limitations Period with each return claiming or using the credit. It includes spaces for the date, printed name, signature, and relationship to the taxpayer.

How to file

• Paper Income Tax return: Include SC SCH TC-11A with your return.
• Electronic Income Tax return: Keep a copy of SC SCH TC-11A with your tax records.
• Quarterly Withholding Tax return: Attach the applicable SC SCH TC-11A-WH form and SC SCH TC-11AW to your quarterly return. Use WH1, WH2, WH3, or WH4 for the corresponding quarter.

You must notify SCDOR before taking any credits. First use the credits against Income Tax. Remaining credits may be used against Withholding Tax in the following tax year, before applying other credits. Amounts left after use against Withholding Tax may be claimed against that year's Income Tax liability.

The supplied text does not give a mailing address or electronic filing destination.

Common mistakes

• Claiming too early: You cannot claim any credit until you have invested $200 million and filed the required statement with SCDOR.
• Including ineligible property: No credit is available for property placed in service before September 1, 2011.
• Exceeding Income Tax limits: New jobs credits are limited to 50% of Income Tax liability. Capital investment carryovers held for 10 years or less cannot exceed 50% of line 12; those held longer than 10 years cannot exceed 25% of line 12.
• Using ineligible carryovers against Withholding Tax: Capital investment carryforwards must have been created after June 18, 2012 to reduce Withholding Tax. Credits taken cannot exceed 50% of the Withholding Tax due.
• Missing required attachments: Include the affidavit with each return claiming or using the credit, and attach SC SCH TC-11AW to each return involving carryovers.

Questions people ask

How is the current-year capital investment credit calculated?

Multiply the basis of qualified property by its credit percentage: 0.5% for 3-year property, 1% for 5-year property, 1.5% for 7-year property, 2% for 10-year property, and 2.5% for property with a recovery period of 15 years or more. Add the results.

How long can unused credits be carried forward?

New jobs credits may be carried forward for 15 years from the tax year earned. Capital investment credits may be carried forward indefinitely.

Does claiming the credit affect my property's basis?

Reduce the qualifying property's basis by the credit claimed. Add the resulting decrease in depreciation to federal taxable income when calculating South Carolina taxable income. A lessee instead includes the credit earned during the year in South Carolina taxable income.

What happens if I sell or remove qualifying equipment from South Carolina?

If you dispose of or remove the equipment before the end of its applicable recovery period, you must increase current-year Income Tax by the proportionally recaptured unearned portion of the credit. This applies whether the credit was used against Income Tax or Withholding Tax.

Official sources

• https://dor.sc.gov/sites/dor/files/forms/TC11A.pdf