Manufacturing Property Tax Returns due on April 30 for Calendar-year Taxpayers

For manufacturers whose 2015 fiscal year ended on December 31, 2015, the 2016 PT-300 filing is due on April 30, 2016. Click here for the 2016 form. Manufacturers generally list their capitalized investments at cost on Schedule A, although they may be subject to one or more fee in lieu of tax agreements, in which case they file Schedule S instead of Schedule A.

Manufacturers may stand to reduce their property taxes in one of several ways. Many manufacturers qualify for an abatement that reduces the millage rate applicable to their property for five years. The abatement can apply to multiple tax years on an ongoing basis. Generally, the manufacturer must invest $50,000 in capital investment in a tax year in order for the abatement to apply to that year’s investment. Consider a manufacturer making capital investments of $500,000 in 2016, $25,000 in 2017, and $100,000 in 2018.  The abatement would apply to the 2016 investment for tax years 2017-2021. The abatement would not apply to the 2017 investment, which is below $50,000, but the abatement would apply to the 2018 investment for tax years 2019-2023. South Carolina law requires the taxpayer to “apply” for the abatement, but for a manufacturer whose facilities have not been purchased within the current reporting period, filing of the PT-300 is deemed to be the application.

In addition, many manufacturers who own property used for warehousing and wholesale distribution may benefit from a lower assessment ratio with respect to that property.  Generally, manufacturers face an assessment ratio of 10.5% for all real and personal property, as compared to commercial businesses, who face an assessment ratio of 6% for real property and 10.5% for personal property. However, state law was changed in recent years to allow manufacturers to benefit from the 6% assessment ratio on property used primarily for warehousing and wholesale distribution, provided that such property is not physically attached to the manufacturing plant (unless it is separated by a permanent wall).  In order to benefit from this reduction, a manufacturer whose warehouse or distribution property was previously assessed at 10.5% must make an affirmative filing with the South Carolina Department of Revenue.

Finally, manufacturers that are not under a fee in lieu of tax agreement may benefit from the idle equipment exemption with respect to personal property at a facility that has not been operational for one fiscal year, provided that the equipment has not been used in operations for one fiscal year.  In order to take advantage of this exemption, the manufacturer must list the personal property on its PT-300 filing but indicate that the property qualifies for the idle equipment exemption.

If you have any questions about these or other South Carolina property tax issues, please contact Will Johnson (wjohnson@hsblawfirm.com). Mr. Johnson leads the firm’s Manufacturing Industry Group.