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State Credit Union Bill on Account Ownership Passes

Content provide by Peggy Nalls, chief advocacy officer for the Missouri Credit Union Association. 

The final gavel fell at 6 p.m. on Friday, May 17 ending the 2013 Legislative Session. Out of the 1,591 bills that were filed, the credit union account ownership bill (HB 478) was among the 164 that were Truly Agreed and Finally Passed and sent to the Governor for his consideration. Gov. Nixon has until the first week in July to veto bills. Bills that are not vetoed will become law effective Aug. 28, 2013.

Barring the call of a Special Session by the Governor, legislators will return to Jefferson City in mid-September for the Legislature's annual Veto Session where a number of bills could be taken up including the personal and corporate income tax "reform" bill (HB 253) as summarized below. While the bill has not been officially vetoed, the Governor has announced his intention to do so.

Creating a pro-business environment in the State of Missouri was the resonating theme once again this year with additional emphasis on "keeping up" with Kansas' alleged pro-business tax policy. While the House and Senate were able to reach a compromise on such high priority issues including workers' compensation/Second Injury Fund reform and personal/corporate income tax "reform," agreement could not be reached once again this year on a comprehensive tax credit reform bill.

Legislation That Passed

(For more information on any of these issues click here. Go to joint information and click on bill tracking, then insert the bill number.)

CREDIT UNIONS – HB 478

(NOTE:  MCUA’s Regulatory Compliance Department will be holding training sessions for credit unions on this new legislation. Watch for more information.)

This bill changes the laws regarding credit unions. In its main provisions, the bill:

  1. Requires all provisions of Section 370.287, RSMo, to apply to shares issued in joint tenancy in the name of any minor;
  2. Allows a credit union to require a minor's parent, guardian, or other person responsible for the minor to be a joint owner of the minor's account;
  3. Specifies that shares on deposit held in the name of a minor are subject to the credit union’s lien under Section 370.250 and any consensual lien on pledge of shares which might not be avoided due to the minor’s status;
  4. Allows a credit union to pay funds to a conservator appointed under Section 475.045 and thereby discharge its liability to the minor for the shares;
  5. Requires accounts opened under the Missouri Transfer to Minors Law, Sections 404.005 to 404.094, to be governed by that law;
  6. Allows shares to be issued in joint tenancy with the right of survivorship with any persons, minor or adult, designated by the credit union member, whether or not the names are stated conjunctively, disjunctively, or otherwise;
  7. Specifies that records of the credit union describing the issuance, opening, or maintenance of shares in joint tenancy with the right of survivorship in the absence of fraud or undue influence must be conclusive evidence of the intention of all joint tenants to vest title to the account any additions thereto in the surviving joint tenants;
  8. Specifies that the adjudication of disability or incapacity of any one or more of the joint tenants cannot sever or terminate the joint tenancy ownership and the account can be withdrawn or pledged by any one or more of the joint owners in the same manner as though the adjudication of disability or incapacity had not been made, except that any withdrawal or pledge on behalf of the disabled joint owner must be by the person s conservator;
  9. Specifies that shares held in the name of a husband and wife or the survivor thereof must be considered a joint tenancy and not a tenancy by the entirety unless otherwise specified; and
  10. Specifies that a payment of any or all shares or additions under these provisions releases and discharges a credit union from liability with respect to the payment of moneys for shares as allowed prior to the receipt by the credit union of written notification signed by any one of the joint tenants to not pay the shares in accordance with the specified terms.  After receiving notice, a credit union can refuse without liability to honor any check, order to pay, withdrawal receipt, or order to pay out any dividends or interest pending determination of the rights of the parties and no credit union paying any joint tenant in accordance with these provisions will be liable for any estate or succession taxes that may be due in this state.

OTHER ISSUES THAT DID PASS

MORTGAGE FORECLOSURES – HB 446

Abolishes mandatory foreclosure mediation in St. Louis and St. Louis County.

WORKERS’ COMPENSATION – SB 1

Alters the state’s Second Injury Fund and places occupational disease claims under the workers’ compensation system rather than in civil courts.

TAX CUT - HB 253

Cuts tax on business “pass-through” income by 50 percent over five years; reduces personal and corporate income tax rate over 10 years so long as state revenue hits a trigger; moves to tax online sales and provide amnesty from penalties for those who owe back taxes.

CAR TAX - SB 23

Reinstates local sales tax on cars bought out of state or from individuals by taxing the titling of vehicles.  In areas that have not approved a local use tax, the tax must be put to local voters by November 2016.

DRIVERS LICENSES - SB 252

Bars the state Department of Revenue from scanning records that Missourians use to obtain drivers licenses.

ELECTIONS - HB 110

Changes several provisions of state elections laws, including moving the presidential primary to March and requiring lieutenant governor vacancies to be filled through a special election, rather than gubernatorial appointment.

FINANCIAL INSTITUTIONS - SCS for HB 329

This bill changes the laws regarding financial institutions.  In its main provisions, the bill:

  1. Specifies that the value of any funds, up to $9,999, that are placed into an irrevocable personal funeral trust account where the trustee of the account is a state or federally chartered financial institution authorized to exercise trust powers in Missouri must not be taken into account or considered an asset of the person if the funds are restricted to be used only for the burial, funeral, preparation of the body, or other final disposition of the person whose funds were deposited into the trust account.  No person or entity can charge more than 10% of the total amount deposited into a trust in order to create or set up the trust, and any fees charged for the maintenance of the trust cannot exceed 3% of the trust assets annually.  No contract with any cemetery, funeral establishment, or any provider or seller can be required in regard to funds placed into a trust account under these provisions;
  2. Requires the Director of the Division of Finance within the Department of Insurance, Financial Institutions and Professional Registration to visit and examine a private trust company at least once each 36 months.  A private trust company is one that does not engage in trust company business with the general public or otherwise hold itself out as a trustee or fiduciary for hire and instead operates for the primary benefit of a family, relative of the same family, or single family lineage, regardless of whether compensation is received or anticipated;
  3. (This could provide an additional way for credit unions to offer payday loan alternatives.)Increases the maximum fee that a lender can charge on a loan for 30 days or longer that is other than open-end credit as specified in the bill from 5% to 10% of the principal amount of the loan not to exceed $75.  If an open-end credit contract is tied to a transaction account in a depository institution, the maximum credit advance fee that a creditor may charge is increased from the lesser of $25 or 5% of the credit advanced to up to the lesser of $75 or 10% of the credit advanced;
  4. Repeals the provisions requiring the directors of the Division of Finance and the Division of Credit Unions within the department to examine and determine the number and total dollar amount of residential real estate loans originated, purchased, or foreclosed and the number of residential real estate loan applications denied by a financial institution with an office in a county or city with a population over 250,000. The bill requires the division directors to report specified information annually to the Governor and the department director with regard to state financial institutions in each county or city with a population of more than 250,000. The bill requires that the report only include the number and type of violation, a statement of enforcement actions taken, the names of institutions found to be in violation, the number and nature of complaints received, and the action taken on each complaint. The report must be maintained by each division as a public document for five years;
  5. Changes the provisions regarding the required hearing when a person alleges to have been aggrieved as a result of a violation of the specified provisions regarding residential loans.

Currently, the division directors must conduct a hearing when he or she has reason to believe that a violation has occurred or does exist based on an examination, an investigation of a complaint, a report by the financial institution as required under Section 408.592, RSMo, or any public document or information.  The bill requires the division director to conduct the hearing if he or she has reason to believe that a violation has occurred or does exist; and (6) Adds any money or assets payable to a participant or beneficiary from or any interest of any participant or beneficiary in a qualified health savings plan or similar plan, including an inherited account or plan whether the participant's or beneficiary's interest arises by inheritance, designation, appointment, or otherwise, to the list of property that must be exempt from attachment and execution under a qualified domestic relations order.

MOTOR VEHICLE TITLES - SS for SCS for HB 428

This bill allows an insurer that purchases a vehicle or trailer, subject to a lien, through the claims adjustment process to apply for a salvage title or junking certificate without obtaining a lien release. The insurer may request a letter of guarantee indicating the amount of the lien from each lien holder and pay the amount indicated within 10 days of receipt of the letter.

Prior to applying for a salvage title or junking certificate, the insurer must provide to each lien holder a copy of the letter of guarantee and proof of payment from the claim file as proof of satisfaction for the lien or encumbrance.  The insurer may then submit copies of all letters of guarantee, proof of payment and title for the vehicle or trailer to the Department of Revenue in lieu of a lien release for processing of the application.

Currently when you apply for a salvage certificate of title or junking certificate for a vehicle through the claims adjustment process, the insurer must make two written attempts to obtain the certificate of title and provide the Department of Revenue with evidence that the letters were delivered. This bill requires the insurer to provide the department with evidence that the letters were sent rather than delivered. The bill also requires the department director to notify the insurer of any additional owners or lien holders he or she identifies. The insurer must then notify the additional owners or lien holders of its intent to obtain title.

Removes the requirement that for registration purposes a college or public school that motor vehicles to qualify under this section must be acquired from a "new" motor vehicle "franchised" dealer.

SALVAGE VEHICLES - HCS for SB 148

Currently, when you apply for a salvage certificate of title or junking certificate for a vehicle through the claims adjustment process, the insurer must make two written attempts to obtain the certificate of title and provide the Department of Revenue with evidence that the letters were delivered. The bill requires the insurer to provide the department with evidence that the letters were sent rather than delivered and also requires the department director to notify the insurer of any additional owners or lien holders he or she identifies. The insurer must then notify the additional owners or lien holders of its intent to obtain title.

The bill allows an insurer that purchases a vehicle or trailer, subject to a lien, through the claims adjustment process to apply for a salvage title or junking certificate without obtaining a lien release.  The insurer may request a letter of guarantee indicating the amount of the lien from each lien holder and pay the amount indicated within 10 days of receipt of the letter.

Prior to applying for a salvage title or junking certificate, the insurer must provide to each lien holder a copy of the letter of guarantee and proof of payment from the claim file as proof of satisfaction for the lien or encumbrance.  The insurer may then submit copies of all letters of guarantee, proof of payment and title for the vehicle or trailer to the department in lieu of a lien release for processing of the application.

JUDICIAL PROCEDURES – CCR for HCS for SB 100

Among the provisions:

CREDIT AGREEMENTS (Section 432.047, RSMo) The bill specifies that no party may maintain an action upon or a defense in any way related to a credit agreement unless the agreement is in writing, provides for the payment of interest or for other consideration, specifies the terms and conditions, and the agreement is executed by the debtor and the lender.

TAXATION - SS for HB 253

Contains provisions dealing with the following:

STREAMLINED SALES AND USE TAX AGREEMENT - establishes the Streamlined Sales and Use Tax Agreement Act which requires the Director of the Department of Revenue to enter into the multistate Streamlined Sales and Use Tax Agreement to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance for all sellers and types of commerce.

TAX AMNESTY - authorizes an amnesty from the assessment or payment of all penalties, additions to tax, and interest on delinquencies of unpaid taxes administered by the Department of Revenue which occurred on or prior to December 31, 2012.  The emergency clause pertains to this provision.

COMMUNITY DEVELOPMENT DISTRICT TAX- exempts the retail sale of fuels and motor vehicles, planes, boats, and modular homes from a community development district tax.

INCOME TAX - 

  1. Modifies the individual income tax rate table. Beginning with the 2014 tax year, the maximum tax rate on personal income will be reduced by 0.5% over a period of 10 years. However, the reduction can only occur if the tax revenues collected in the current year exceed those collected in the prior year by at least $100 million.  After the rate reduction is fully phased-in, the maximum tax rate will be 5.5%. If the federal government passes the Marketplace Fairness Act of 2013, or similar legislation, the maximum rate of tax on personal income will be reduced an additional 0.5%.
  2. Creates an individual income tax deduction for business income and phases it in over a five-year period. Taxpayers will be allowed to deduct 10% of business income for the 2014 tax year and, once fully phased-in, will be allowed a 50% deduction for all tax years after the 2017 tax year. Shareholders of S-corporations and partners in partnerships will be allowed a proportional deduction based on their share of ownership;
  3. Reduces the tax rate on corporate income by 3% over a period of 10 years, beginning with the 2014 tax year. However, the reduction can only occur if the tax revenues collected in the current year exceed those collected in the prior year by at least $100 million. After the rate reduction is fully phased-in, the tax rate on corporate income will be 3.25%; and
  4. Authorizes, beginning January 1, 2014, an additional personal exemption of $1,000 for every individual with a Missouri adjusted gross income of less than $20,000. Currently, the personal exemption for individual income tax is $2,100.

WITHHOLDING TAX FILING REQUIREMENTS - Currently, an employer is allowed to file an annual withholding tax return instead of four quarterly returns when the aggregate amount withheld is less than $20 in each of the four preceding quarters.  The bill changes the amount to less than $100 in each of the four preceding quarters if the employer is not otherwise required to file a withholding return on a quarterly or monthly basis.

SALES AND USE TAX - 

  1. Authorizes an exemption from state and local sales and use tax for fees paid to places of amusement, entertainment or recreation.  The bill also excludes places of recreation from the tax;
  2. Authorizes a state and local sales and use tax exemption for the purchase of kidney dialysis equipment and enteral feeding systems; and
  3. Specifies that the 2% timely remittance of payment allowance applies to sales transactions with tax exemptions under Sections 144.210 and 144.212.

USE TAX NEXUS - changes the laws regarding the collection of sales and use taxes relating to nexus with Missouri.

Legislation That Did Not Pass

Highways - SJR 16

Would have raised the state sales tax by 1 percent for 10 years to fund transportation needs with voter approval.

Medicaid - HB 267, SB 131, and HB 700

Would have expanded eligibility for more Missourians to participate in the public health care program through the Affordable Care Act.

Campaign contribution limits - SB 470 and SB 92

Would have capped donations to candidates for state elected offices.

Tax credits - HB 698, SB 112

Would have lowered caps on historic preservation and housing development tax credit programs, extends several expiring programs and establishes new programs for air cargo, startup companies and data centers.

Term limits – HJR 4

Would have allowed state legislators to serve 16 years in one chamber instead of limiting them to eight years in the House and eight years in the Senate. Requires voter approval.

Criminal code – HB 210

Would have updated the state’s criminal code and creates a fifth felony class.

Voter ID – HB 48

Would have required voters to show state-issued photo IDs to vote.

For questions about the bills listed above or the legislative session in general, please contact the Missouri Credit Union Association's advocacy team via email.

Vocab Legislation: 
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