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Subcommittee moves DME sales-tax exemption to full committee after testimony from providers
Summary
House Bill H 3,800, which would broaden a durable medical equipment sales-tax exemption, received a favorable subcommittee report 3-0 after providers described business losses and asked the committee to remove an in-state-headquarters limitation struck down by the courts.
The Ways and Means Subcommittee advanced House Bill H 3,800 by a 3-0 roll call after multiple durable medical equipment (DME) providers urged lawmakers to remove an in-state headquarters requirement from a longstanding sales-tax exemption.
Earl (identified in the hearing as a bill supporter) and representatives of the South Carolina medical equipment services association told the committee the exemption enacted in 2007 unintentionally limited the exemption to businesses headquartered in South Carolina. An out-of-state company challenged that restriction, and an appeals-court decision upheld by the state Supreme Court found the limitation violated the interstate commerce clause, witnesses said. "Back when it was passed in 'seven it said it applied to folks that had a South Carolina, business license but were also headquartered in South Carolina," a presenter said, describing the court challenge.
Ken Wells, identified as president of the trade group S.E. Mesa, described the financial impact on small providers. "Medicare has cut their rates to us by 40%. So not only are we struggling to pay the sales tax now, but we're making 40% less on Medicare sales," Wells said. He added the tax was costing his business about $6,000 a month.
Kim Cannon, who said she operates Hawthorne Medical Equipment and Pharmacy and serves on the SC Mesa board, said the court ruling has cost her business roughly $8,000 a month and that 18 counties in South Carolina currently have no DME providers. "I too am at the point where I'm gonna have to let somebody go if this doesn't get reversed so it is very personal to me," Cannon said.
Witnesses asked the committee to remove the in-state-headquarters language to conform with the Supreme Court’s guidance and to change a reference to "Medicaid and Medicare" in the bill’s initial clause to language such as "federal laws" for clarity. The committee chair said staff would prepare an amendment for full committee consideration to address the technical wording.
The motion to give H 3,800 a favorable report was moved by Representative Hosey and seconded by Representative Taylor. The roll call showed Representatives Newton, Hosey and Taylor voting aye; Representatives Stavronakis and Crawford were excused. The committee clerk recorded a favorable report, 3-0. The bill will proceed to the full committee; the subcommittee did not adopt final wording changes during the hearing.
