CREDIT FOR STATE CONTRACTORS SUBCONTRACTING WITH SOCIALLY AND ECONOMICALLY DISADVANTAGED SMALL BUSINESSES (FORMERLY MINORITY BUSINESS CREDIT): For state contractors that subcontract with socially and economically disadvantaged small businesses. (TC-2)
South Carolina Code §12-6-3350 provides a tax credit to taxpayers having a contract with the state who award a subcontract to a certified South Carolina based socially and economically disadvantaged small business. The credit is equal to 4% of the payments to that subcontractor for work pursuant to the contract. The credit is limited to a maximum of $50,000 annually. A taxpayer is eligible to claim the credit for 10 consecutive taxable years beginning with the taxable year in which the first payment is made to the subcontractor that qualifies for the credit. There is no carryforward of unused credits.
The subcontractor must be certified as a socially and economically disadvantaged small business, as defined in South Carolina Code §11-35-5010 and SC Regulation 19-445.2160. A taxpayer claiming the credit must maintain evidence of work performed for the contract by the subcontractor. Any payment made to a the subcontractor prior to the date of certification by the South Carolina Division of Small and Minority Business Contracting and Certification does not qualify for the credit. The credit is claimed on Form TC-2, “Credit for State Contractors Subcontracting with Socially and Economically Disadvantaged Small Business”, formerly the “Minority Business Credit.”