Act 176, the SC Business License Tax Standardization Act, is an important law for every city and town with a business license tax to understand and follow. The law standardizes requirements for business licensing administration, which provides businesses an easy way to pay their business license taxes to local governments across the state. The law created requirements such as a May 1 – April 30 business license year, use of a standard class schedule, and use of a standard appeals process.
By following the law, cities and towns can help preserve business licensing as a critical revenue source.
During the Municipal Association’s Annual Meeting in July, the Association’s Manager for Local Revenue Services Caitlin Cothran will explain five key questions that city officials should ask their business licensing staff to ensure the city is complying with the law. Here’s a preview of the questions:
1. Are our business license ordinance and practices compliant with Act 176?
Act 176 is a complex law, so following it is a complicated process. The Municipal Association created a new model business license ordinance in 2021 that complies with Act 176. The Association has strongly encouraged cities and towns to repeal any pre-Act 176 business license ordinances and replace them with the model ordinance.
While using the carefully vetted model ordinance is strongly recommended, cities who choose not to do so should at least have their ordinances reviewed by their attorneys and the Association to ensure its compliance with Act 176.
2. What documents does our business license ordinance require from a business at renewal time?
The purpose of Act 176 is to make the business licensing process easy for businesses. Cities should do away with any cumbersome practices, such as requiring more than one proof of income, or setting additional requirements about income or identity verification not required in the law.
3. Is our city accepting payments from the Local Business License Renewal Center?
Act 176 required the establishment and use of an online portal known as the Local Business License Renewal Center, which allows businesses to report, calculate and pay business license taxes in all jurisdictions where they operate. Act 176 requires all jurisdictions to accept business license tax payments made through the Renewal Center, which is hosted by the SC Office of Revenue and Fiscal Affairs and supported by the Municipal Association.
For cities not yet using it, leaders need to ask whether the city will be able to start using it before the 2023 business license renewal process begins. To use the Renewal Center during the 2023 cycle, cities need to have their business license ordinances compliant with Act 176, and they must set up a Renewal Center account with the Municipal Association by January 25, 2023.
4. Are we sending out renewal notices far enough in advance of the April 30 due date?
Because the standard license year now begins on May 1, cities should send business license renewal notices to businesses no later than January 31.
5. Does our business licensing staff attended the SC Business License Officials Association Training Institute?
The BLOA Training Institute is a three-year program that instructs municipal officials in proper business licensing administration and prepares them to take the Accreditation in Business Licensing Exam.
Officials can also attend monthly virtual training sessions, called Business Licensing Essentials, to learn more and ask questions.