State

The General Assembly returns on January 14, 2020 for the second year of the two-year session and is set to adjourn on May 7th.   Below are bills and issues of importance to banking in South Carolina that are still pending before the legislature in 2020.

For a more detailed discussion of bills, visit the General Assembly’s website at www.scstatehouse.gov.

Tax Reform

Two tax reform bills were introduced in 2019 – one concerning individual income tax and one on sales tax.  Both bills take the same tact of eliminating almost all credits, deductions and exemptions to obtain a lower, flat tax rate. Neither bill has been considered yet.

Individual Income Tax (H4334) – H4334 eliminates all deductions and credits in order to obtain a lower, flat rate of 4.85%, to gradually lower to 4.5% in five years. The bill negatively affects banks organized as S Corporations as it eliminates the tax credit that S Corporation shareholders receive as a credit against the franchise tax that the bank paid.  This credit is necessary to avoid double-taxation of the bank’s income.  SCBA opposes the elimination of this credit.

Sales Tax (H4532) – The bill eliminates many sales tax exemptions and then applies the sales tax to many services in order to achieve a new state sales tax rate of approximately 3%. For banks, the changes could be significant.  They are: (1) elimination of the sales tax exemption banks have for fees charged for ATM transactions; and (2) taxation of most financial services provided by banks.  SCBA opposes the elimination of the ATM tax exemption as well as imposing a sales tax on financial services – a tax only a few states impose.

Tax Credits

Workforce Housing Tax Credit (H3998) – H3998 creates a state income tax credit for workforce housing investments similar to the existing federal tax credit program administered by the State Housing Finance and Development Authority. H3998 has passed the House and is in the Senate for debate.  SCBA supports H3998.

Community Development Corporation Tax Credits (S879) – Last year the General Assembly passed H4133, a bill that renewed the CDC tax credit program and allowed another $1 million in tax credits. Those credits were immediately taken when offered so there will possibly be new bill in 2020 to authorize more credits.  In response to this, S879 was prefiled on 12/11/19 and would reauthorize $2 million in tax credits for 2020 and $3 million in 2021.  SCBA supports S879.

Elder Financial Abuse

Bank Allowed to Decline Transactions (H4806) – This bill would allow a bank to decline any transaction request requiring the disbursal of monies if the bank reasonably believes that the financial exploitation of a vulnerable adult has occurred or may occur. SCBA supports H4806.

Financial Literacy

Personal Finance Course Requirement for High School Graduation – Various bills proposed requiring personal finance as a requirement to graduate high school. At the time only economics was required; however the SC Department of Education has adopted new curriculum standards that require a greater emphasis on personal finance. SCBA testified in both the Senate and House in favor of a greater emphasis on personal finance as a graduation requirement.  The Senate Education committee has now amended the Education Reform bill (S419) to include the following language: “Each high school shall offer a one-half credit course in personal finance as an elective that students may use to complete graduation requirements.”  SCBA supports these legislative efforts to increase personal finance education.

Fintech

Fin Tech Sandbox/Blockchain Technology (S738, H4351) – These bills are modeled after recent enactments in Utah, Wyoming and Arizona and seek to establish SC as an incubator for financial technology industries using blockchain technology. They create a Financial Technology Sandbox for the testing of financial products and services in South Carolina and permit a “light” regulatory framework for these industries. SCBA submitted a comment letter to the Senate Banking committee addressing its concerns with “light” regulation for consumer finance products as well as other problems with the bill such as the concept of a Special Purpose Depository Institution – a financial institution designed to hold virtual currency that would not be insured by the FDIC.  Neither bill has been considered yet.

Notaries

Electronic and Remote Online Notaries (S486 and H3917) – These identical bills are based on the model acts proposed by Mortgage Bankers Association and the American Land Title Association that have been enacted in other states. SCBA supports both bills.  S486 has passed the Senate and is the House for debate.  SCBA supports S486 and H3917.

Property Assessed Clean Energy (PACE) Loans

Commercial PACE Loans (H4810) – This bill is similar to legislation considered but not passed in 2017 that would allow Property-Assessed Clean Energy Loans for commercial properties to incentivize investment in clean energy solutions for those properties. H4810 contains SCBA’s language from the previous bill that does not allow a commercial property owner to get a PACE loan unless the mortgagee gives written consent to the loan and the senior lien position for the PACE loan lien.  Prefiled 12/11/19.  SCBA is neutral on this bill but opposes any effort to amend the bill to include residential PACE loans.

For a more detailed discussion of bills handled during the 2019-20 session, click here to view the latest SCBA State Legislative Update.  The General Assembly’s website can be found at www.scstatehouse.gov.

The SCBA Government Relations team actively monitors and lobbies on all bank-related state legislation throughout the year.  Please contact Neil Rashley at (803) 779-0850 or nrashley@scbankers.org if you have any questions on state legislation, regulations or related matters.