One Sentence in the Code
State auditors are barred by law from the records that would show whether South Carolina’s job tax credits bought real jobs.
South Carolina rewards companies for promising new jobs with a tax credit, and the state’s own auditors are forbidden by law from knowing which companies take it. Nobody has to dodge the auditors or slow-walk a records request. One sentence in the state code does the whole job.
The credit works like this. When a company promises new jobs, the state lets it keep part of the income tax withheld from its workers’ paychecks. The program calls these job development credits, JDCs for short. The money never reaches the treasury, so the credit costs the state the same way a check would. Over the decade the auditors reviewed, 2009 through 2019, 415 companies claimed more than $200 million of it. The claims live in the Revenue Department’s tax records. The sentence hands the auditors the records of every state agency, then takes one set back: “with the exception of reports and returns of the South Carolina Department of Revenue.” The auditors’ 2020 report says what that did to their review: it left them “prevented from knowing if a company has claimed any JDCs at all.”
Sit with that. Since the auditors could not know who claimed the credit, they could not pull one company’s claim and test it against the jobs. Everything they learned about the program’s checking, they learned by interviewing the people who run it.
The interviews were not comforting. Commerce officials called the program risk-free because the Revenue Department is required by law to audit every company with a large claim. Revenue’s own staff said many of those audits were not happening, and that in the audits that did happen, something was wrong in up to 95 percent of the claims. So the checking the auditors were locked out of was the checking that kept finding problems. You would not accept this at your own house. You hire an inspector for the whole place, and the law locks the one room where the checkbook is kept.
The auditors asked the General Assembly for exactly one thing in 2020: amend the sentence so they can see the Revenue Department’s tax records when an audit requires it. Six years later, the amendment remains unwritten.
And the General Assembly has been in the room. Since 2019, every session has seen a bill to give the auditors subpoena power, the power to make an agency hand over records and answer questions under oath. The latest version of the bill nearly passed this spring: the House voted for it 112 to 0, the Senate 46 to 0, and the two sides parted in May over a procedural detail. But a subpoena only reaches records the law lets the auditors see, and the sentence is the law that keeps the tax records off that list. Every version of the bill copies the sentence forward word for word. Three unanimous roll calls for subpoena power. Not one vote, ever, to let the auditors see the Revenue Department records necessary to validate the credits.
Amending the sentence is not part of the job I am asking for; it belongs to the General Assembly, and it may be the cheapest fix in this whole series. The credit is paid with state income tax taken out of workers’ paychecks before the workers ever see it. Nobody asked them. The least they are owed back is that somebody independent of the program gets to count whether the jobs those dollars bought are real. Today that count is against the law. The problem is one sentence in the code. The repair is one sentence too, and somebody in the General Assembly gets to be the one who writes it.
Next week: Announced
Last week:
Sources: Legislative Audit Council, Review of Incentive Programs Administered by the S.C. Department of Commerce, June 2020: the confidentiality bar and the auditors’ statement pp. 53-54; DOR audit staffing, frequency, and discrepancy rate pp. 51-52; JDC claims and program scope pp. 51-55; Recommendation 21 p. 55. S.C. Code §2-15-61. H.4337, South Carolina General Assembly, 2025-2026 session, legislative record at scstatehouse.gov.