Senate Bill 122 eliminates California’s sales tax exemption for many digital software products and services (SaaS), a change with real implications for state-chartered credit unions.
California’s Credit Unions is pursuing a dual-track strategy to advocate for a level playing field and ensure this policy doesn’t create unintended competitive or operational disadvantages for California’s credit unions.
The California league submitted a letter to Governor Gavin Newsom this week outlining the unintended consequences of SB 122 — including insight from state-chartered credit unions currently weighing a conversion to a federal charter — as a way to manage the new tax liabilities. These institutions represent over half the assets under management supervised by the Department of Financial Protection and Innovation (DFPI), a signal of just how significant this issue is for the health of the dual-chartering system in California.
The goal of the letter is to make sure Governor Gavin Newsom, the DFPI, and the California State Legislature have a complete picture of how this budget trailer bill plays out in practice.
California’s Credit Unions has also been meeting with legislative offices and other agencies to ensure they are aware of impact.
The California league also submitted a comment letter to the California Department of Tax and Fee Administration (CDTFA) this week, calling for clear and consistent guidance on implementing Senate Bill 122.
The goal is to protect the strength of California’s dual-charter system by resolving the operational and tax ambiguities SB 122 creates — before they become a burden on credit unions and their members. The league is urging regulators to issue formal guidance ahead of implementation on:
California’s Credit Unions remains fully engaged with all interested parties on this issue and will continue pressing forward on both the regulatory and legislative fronts, advocating for a solution that keeps credit unions and the dual-charter system strong.
