Act 176, the SC Business License Standardization Act, created many specific requirements that municipalities with a business license tax must comply with by January 1, 2022. To fulfill several of these requirements, city and town councils will need to pass the 2022 version of the model business license ordinance.
The 2022 model ordinance is not the first model business license ordinance developed by the Municipal Association of SC. However, this revised version addresses the requirements that are specific to the new law. Municipalities that passed any earlier version of the model ordinance will have outdated ordinances beginning in 2022.
Because of Act 176’s complexities, the Association strongly encourages cities and towns to repeal existing ordinances and replace them with the 2022 model ordinance. They should do this instead of altering their existing ordinances.
What’s in the current model ordinance
The new law requires that all jurisdictions with a business license tax use a standard class schedule. It requires that they update the schedule at the end of every odd-numbered year. The 2022 ordinance provides the current standard class schedule, and subsequent model ordinances will update it as needed in future years. Act 176 also requires jurisdictions to use a standard definition of a business’s gross income, and the model ordinance includes this definition.
Steps to take first
Act 176 requires many other standardized practices as well, including standardized due dates, license years, calculation methods, applications, and use of a statewide online payment center. The Municipal Association has created a seven-step process to help cities and towns comply with all aspects of the law. Each city and town with a business license ordinance has designated Municipal Association staff members to serve as standardization liaisons.
Repealing and replacing the ordinance comes as Step 5 in the compliance process. To help track the transition process for municipalities around the state, and because of the many changes to the ordinance, the Association is releasing a copy of the 2022 model ordinance to each city or town upon request. After a municipality has completed the earlier steps for a standard license year transition and begun the process of rebalancing tax rates as required by the law, it should contact Melissa Harrill, research and legislative liaison, at mharrill@masc.sc for a copy of the current model ordinance.