Industries that invest at least $45 million in South Carolina can negotiate fees instead of property taxes. This can result in a saving of about 40% on property taxes that are otherwise due for a project. Some large investments may be able to further reduce their liabilities by negotiating the valuation rate from 10.5% to 6%. For large investments, the valuation rate can be reduced to 4%. This program can be used to replace a used property with a new property and subject it to fees and the county`s ability to grant credit for fees. Payments in lieu of taxes for non-profit organizations are voluntary. However, some cities want this to change.   These are the huge amounts of land belonging to universities, hospitals, churches and other non-profit organizations. The tax-exempt status granted to these companies by the IRS means that property taxes that would have been paid to municipalities if those lands had belonged to individuals or businesses will not be collected. Essential features of property tax. www.lincolninst.edu/es/economic-incentive/fee-lieu-property-taxes-south-carolina-2017 Lincoln Institute of Land Policy and George Washington Institute of Public Policy.
(Fees instead of property taxes; Access: 14.01.2022 03:27:54) The industry must make the investment of $45 million over a five-year period to be eligible. Large investment projects have eight years to meet their increased investment needs. During this period, all properties commissioned under the agreement will be subject to fees in lieu of ad valorem property taxes. A single parcel of land may be subject to the fee for up to 40 years with the consent of the county. The entire project may be subject to fees for up to 50 years with the consent of the county. In South Carolina, only local governments are allowed to collect property taxes. A corporation`s property tax is a function of: property value x valuation ratio x mileage. For example, a project with $25,000,000 in personal property in an area with $200 million in ad valorem taxes, of which $50 million is subject to a discount, would pay $393,750 in the first year under the 10.5% valuation ($25,000,000 x 0.105 x 150). A rating rate of 6% lower than a FILOT reduces the payment to $300,000 ($25,000,000 x 0.06 x 0.200). Given the depreciation of personal property, the above calculation (the “standard calculation”) results in a payment schedule that decreases over time until the assets are fully depreciated. The Parties may choose to set the mileage rate for the entire duration of the FILOT or to adjust the millage rate at five-year intervals based on the average mileage of the previous five years.
A more detailed example of a calculation is given in Appendix A. The industry agrees under the lease to pay base rent in an amount sufficient to pay the bonds, if any, and to pay a county fee in lieu of taxes plus any incidental costs, including county attorneys` fees. So far, the deals have included large projects from many well-known companies, as well as a number of projects ranging from $5 million to $10 million. This article describes the basic parameters of the Fee in Instead of Taxes (“FILOT”) and Special Source Revenue Bond programs in South Carolina, each of which has the net effect of reducing the property tax burden on eligible businesses. This document should not be considered legal advice, and companies wishing to conduct such transactions should seek the advice of a lawyer before entering into negotiations with a county. In the United States, instead of taxes, payment can be made in several ways: “payments in lieu of taxes” (PILT) are federal payments to local governments that help offset property tax losses due to the existence of tax-free states within their borders. The original law is Public Law 94-565 of 20 October 1976. This Act was rewritten and amended by Public Law 97-258 on September 13, 1982 and codified in Chapter 69, Title 31 of the United States Code. The law recognizes the financial implications of local governments` inability to levy property taxes on federally owned land. .