When the SC Business License Tax Standardization Act
, or Act 176
, takes effect on January 1, 2022, and establishes uniform licensing processes across the state, it will bring numerous changes for business license officials. The statewide license period will run from May 1 to the following April 30. Both those dates and other stipulations of Act 176 will change how cities and towns should handle the renewal notice process for business licensing.
Determining business license tax amounts
Under Act 176, taxing jurisdictions will assign categories of businesses to the standardized class schedule, created every odd year by the Municipal Association of SC and approved by the SC Revenue and Fiscal Affairs Office. The class schedule affects the amount that each type of business pays for licenses, and the conversion to the new class schedule will cause some individual businesses to pay more or less than they previously did.
In calculating how much an individual business owes for the license, cities and towns will use Act 176’s definition of gross income. For most businesses, the definition includes “the gross receipts or gross revenue of a business, received or accrued, for one calendar or fiscal year collected or to be collected from business done within a taxing jurisdiction.” The law creates special definitions for real estate agents and brokers, as well as insurance companies, manufacturers and telecommunication companies.
When determining the gross income amount for a particular jurisdiction, businesses will be allowed to deduct the income that they report and pay to other taxing jurisdictions. The business may be asked to provide proof of payment and gross income deduction. Also, Act 176 allows taxing jurisdictions to require tax returns to verify the accuracy of the gross income amount.
Sending out renewal notices
Act 176 created a new statewide standard business license year beginning May 1 and ending the following April 30. For the first year under this new schedule, cities and towns should, as a courtesy, aim to send out renewal notices to businesses in January or February 2022.
The notice should ideally feature some explanations of the new law, including:
Act 176 came about as a solution to the concerns raised by businesses for years about inconsistent and complicated licensing processes across the state. The act streamlines this process for businesses.
Many licensing practices will be standardized, including the due date, license year, class schedule, gross income definition and application. The renewal notices should also state the nonpayment penalty date and penalty amount — items which the taxing jurisdiction can set individually, even though the due date cannot be changed.
Act 176 established the Local Business License Renewal Center
, an online payment portal where businesses can renew all their local business licenses at one time. For those cities and towns that are set up to use the renewal center by the time they send out renewal notices, be sure to include information about it including the web address, www.localblrenewal.com.
Full details on how to communicate with businesses about the changes can be found under Step 7 of the Municipal Association’s recommended standardization process for 2021.