Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update
1. Basis for taxation:
True value in money, defined by statute as the usual selling price property would fetch following reasonable exposure to the market, where both the buyer and seller are willing, not acting under compulsion, and are reasonably well informed as to the uses and purposes for which it is adapted and for which it is capable of being used.
2. Property subject to taxation:
Real property and tangible property are taxable. Intangible personalty, plus nuclear fuel facilities and pollution control property are exempt from property taxation. Utilities are subject to gross receipts taxation, except for railroads.
3. Classification (if applicable):
Assessments are classified. Transportation and pipeline company property, both real and personal, are assessed at 9.5 percent of true value in money; the corresponding rate for all other utilities is 10.5 percent. Tax rates are not classified.
4. Level of government which determines basis for tax liability - ad valorem property tax:
The South Carolina Department of Revenue (SCDOR) determines the value of utilities as units, both in and out of the state. Counties value non-operating properties of utilities.
5. Report filing and valuation method(s) required by statute for ad valorem taxation:
No specific valuation method is required by statute. However, utilities are required to submit annual reports to SCDOR regarding: real and personal property both within and outside the state, stock and debt information, situs-specific property, and rolling stock plus property not specifically part of utility business within South Carolina.
6. Practical application of valuation method(s):
The income and cost (original cost depreciated) approaches are used to value utility property. Nonsystem property tends to be valued by market sales approach, since much of this property is land, which is assessed at the county level.
7. Valuation treatment of large facilities such as power plants, dams, or rail yards:
Power plants are valued by the state according to financial net book cost, regardless of whether such facilities are part of a public service company or are merchant power plants. Rail yards are valued as in #6. Dams are valued locally, unless owned by a utility.
8. Apportionment method(s) required by statute:
Value of mileage property is allocated pro rata, first to the state, and then to each county, city, or town in South Carolina, with rolling stock value apportioned among these lines of rail, wire, and pipeline. Real estate, fixtures, and other situs-specific property, once allocated to South Carolina, are then reallocated to each respective city or town in the state.
9. Practical application or apportionment requirements:
Apportionment to the state is determined by net income, gross income, net book value, and gross investment value. Allocation within the state is accomplished on the basis of gross investment in the state. Adjustments are made for such density factors as rail ton-mileage. Investments by taxing jurisdiction must be provided to the Department of Revenue, which in turn will distribute value to county assessing units, based on gross investment within each of the component taxing jurisdictions.
10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:
As indicated above (#9), rail yard value is distributed by rail ton-mileage. Otherwise, large facility value is distributed by situs.
11. Description of assessment appeals system:
Utility and railroad owners have 30 days to appeal values to the Department of Revenue. If a conference cannot resolve issues, next level of appeal is to the Office of General Counsel, which could actually raise, as well as reduce value. Further appeal can be made to an administrative law judge, and also to circuit court.
12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:
No restructuring/deregulation has occurred in South Carolina. Power plants, both utility and merchant, are still being valued at the state level.
13. State Government Staffing:
Staff consists of one employee (full-time equivalent basis).
Law Source(s): Code of Laws of South Carolina, Title 12, Articles 5 and 15 (Section 12-37)