Quick Q&A about H5109

Listen to the podcast interview with Scott Slatton and Melissa Carter answering questions about H5109.

Rep. Kenny Bingham (R-Lexington) introduced H5109, the Business License Tax Standardization Act, last week to streamline the processes for businesses to pay their business license tax. Read more about the background on H5109.

Here are a few quick Q&As on some of the details of the bill: 

What is the standard business license class schedule?

The standard business license class schedule has been in existence since the 1970s in South Carolina. The schedule groups business sectors into classifications using the North American Industry Classification System based on IRS profitability statistics.

The schedule doesn’t address tax rates. Each individual city council assigns a tax rate to each classification.

At the request of the business community, H5109 requires every city to update its class schedule every even year based on the Association’s published schedule. This ensures that businesses are assigned to the same class regardless of the city in which they operate.

The Municipal Association has been updating this class schedule based on the IRS statistics annually for many years as a service to its member cities. H5109 requires the Association to continue doing what it has voluntarily long been doing. 

What is the North American Industry Classification System?

NAICS (pronounced Nakes) was developed as the standard for use by Federal agencies classifying business sectors for the collection, analysis and publication of statistical data related to the business climate of the country. 

How does a standard application work?

A standard application has been available to cities to use voluntarily since 2014. It was established at the request of businesses to make the process of renewing a license more streamlined. Currently 90+ cities already accept the application. H5109 requires all cities and towns to accept the application so businesses don't have to complete multiple forms if they do work in multiple cities.

Listen to the City Quick Connect podcast interview with the Association's advocacy team answering questions about H5109. Keep up with action on this and other bills in the weekly legislative report.