Text: HSB00154 Text: HSB00156 Text: HSB00100 - HSB00199 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.60, Code 1995, is amended by 1 2 striking the section and inserting in lieu thereof the 1 3 following: 1 4 422.60 IMPOSITION OF TAX. 1 5 A franchise tax according to and measured by average 1 6 deposits is imposed on financial institutions for the 1 7 privilege of doing business in this state as financial 1 8 institutions. 1 9 Sec. 2. Section 422.61, Code 1995, is amended by striking 1 10 the section and inserting in lieu thereof the following: 1 11 422.61 DEFINITIONS. 1 12 In this division, unless the context otherwise requires: 1 13 1. "Average deposits" means one of the following: 1 14 a. For a financial institution using a calendar year for 1 15 financial reporting purposes, the amount equal to the sum of 1 16 deposits held on the last day of the preceding calendar year 1 17 plus the deposits held on the last day of each calendar 1 18 quarter during the calendar year divided by five. 1 19 b. For a financial institution using a fiscal year other 1 20 than a calendar year for financial reporting purposes, the 1 21 amount equal to the sum of deposits held on the last day of 1 22 the preceding fiscal year plus the deposits held on the last 1 23 day of each calendar quarter during the fiscal year plus, if 1 24 not already added, deposits held on the last day of the fiscal 1 25 year divided by the number of amounts that are added together 1 26 to arrive at the sum. 1 27 c. For a financial institution with a financial reporting 1 28 year of less than twelve full months, the amount equal to the 1 29 sum of deposits held on the last day of the preceding fiscal 1 30 year, if any, plus deposits held on the last day of each 1 31 calendar quarter during the fiscal year, divided by the number 1 32 of amounts that are added together to arrive at the sum, and 1 33 multiplied by the percentage that the number of full months in 1 34 the fiscal period bears to twelve. If the fiscal year does 1 35 not include the last day of a calendar quarter, the last day 2 1 of each calendar month shall be used in determining average 2 2 deposits under this subsection. 2 3 2. "Deposits" means all of the following: 2 4 a. The amount of money placed in the custody of a 2 5 financial institution for safety or convenience purposes that 2 6 may be withdrawn at the will of the depositor or according to 2 7 the terms and conditions of any deposit agreement. 2 8 b. The amount of money placed in the custody of a 2 9 financial institution for which a certificate may be issued 2 10 where the amount is payable on demand, on certain notice, or 2 11 at a fixed future date or time. 2 12 "Deposits" do not include money placed in the custody of 2 13 the trust department of a financial institution having 2 14 authorized trust powers in a fiduciary capacity, if that money 2 15 is not placed in the custody of a financial institution as a 2 16 deposit by the trust department. 2 17 3. "Financial institution" means a state bank as defined 2 18 in section 524.103, a state bank chartered under the laws of 2 19 any other state, a national banking association, a trust 2 20 company, a federally chartered savings and loan association, 2 21 an out-of-state state chartered savings bank, a financial 2 22 institution chartered by the federal home loan bank board, a 2 23 non-Iowa chartered savings and loan association, an 2 24 association incorporated or authorized to do business under 2 25 chapter 534, or a production credit association. 2 26 4. "Net financial income" means the income of a financial 2 27 institution, including the income of any service corporations 2 28 or subsidiaries which pursuant to generally accepted 2 29 accounting principles and regulatory reporting requirements 2 30 are included in the consolidated report of condition of the 2 31 financial institution, after deduction of ordinary and 2 32 necessary expenses, and before the deduction of federal income 2 33 taxes. "Net financial income" includes, but is not limited 2 34 to, income from fiduciary activities, interest, rent, or 2 35 service charges. As used in this subsection, ordinary and 3 1 necessary expenses include, but are not limited to, fees, 3 2 depreciation on furniture and equipment, interest, salaries 3 3 and benefits, and supplies. If the taxable year of a 3 4 financial institution is different from the taxable year of 3 5 any of its includable service corporations or subsidiaries, 3 6 the taxable year of the financial institution shall be used 3 7 for the purpose of determining net financial income. 3 8 For taxable years beginning in 1996 through 2010, net 3 9 financial income shall be reduced by any tax net operating 3 10 loss carry forwards which arose prior to the taxable year 3 11 beginning in 1996 but not more than fifteen taxable years 3 12 preceding the taxable year, to the extent the loss has not 3 13 been offset against the net financial income of a prior 3 14 taxable year. 3 15 5. "Taxable year" means the calendar year or the fiscal 3 16 year ending during a calendar year, for which the tax is 3 17 payable. "Fiscal year" also includes a period of less than 3 18 twelve months if pursuant to generally accepted accounting 3 19 principles or regulatory accounting requirements the financial 3 20 institution reports earnings for a period of less than twelve 3 21 months. 3 22 Sec. 3. Section 422.62, Code 1995, is amended to read as 3 23 follows: 3 24 422.62 DUE AND DELINQUENT DATES. 3 25 The franchise tax is due and payable on the first day 3 26 following the end of the taxable year of each financial 3 27 institution, and is delinquent after the last day of the 3 28 fourth month following the due dateor forty-five days after3 29the due date of the federal tax return, excluding extensions3 30of time to file, whichever is the later. Every financial 3 31 institution shall file a return as prescribed by the director 3 32 on or before the delinquency date. 3 33 Sec. 4. Section 422.63, Code 1995, is amended by striking 3 34 the section and inserting in lieu thereof the following: 3 35 422.63 AMOUNT OF TAX. 4 1 1. The franchise tax is imposed annually in an amount 4 2 equal to one dollar on each one thousand dollars of average 4 3 deposits in the taxable year subject to the limitation in 4 4 subsection 3. 4 5 2. If a financial institution is subject to tax in more 4 6 than one state, the tax shall be imposed on the amount of 4 7 average deposits attributable to its operations in this state. 4 8 Deposits shall be attributable to operations in this state if 4 9 they are accepted at an office of the financial institution 4 10 located in this state notwithstanding the location of the 4 11 office that may ultimately maintain the deposits. For 4 12 financial institutions that are subject to tax in more than 4 13 one state, the limitation in subsection 3 shall be calculated 4 14 on the percentage of net financial income that the average 4 15 deposits in this state bear to total average deposits of the 4 16 financial institution. 4 17 3. The franchise tax shall not exceed five percent of the 4 18 net financial income of the financial institution in the 4 19 taxable year. 4 20 Sec. 5. Section 422.66, Code 1995, is amended by adding 4 21 the following new unnumbered paragraph: 4 22 NEW UNNUMBERED PARAGRAPH. The department may use 4 23 electronic funds transfer to collect the franchise tax or make 4 24 refunds. The use of electronic funds transfer shall not 4 25 affect the rights of any party with regard to the calculation, 4 26 payment, collection, or refund of the franchise tax. 4 27 Sec. 6. This Act takes effect January 1, 1996, for taxable 4 28 years beginning on or after that date. 4 29 EXPLANATION 4 30 The bill restructures the franchise tax on financial 4 31 institutions from a tax measured by net income to a tax based 4 32 on average deposits for the tax year. Average deposits are 4 33 the average of the total amount of funds held by the financial 4 34 institution on the last day of the preceding tax year and at 4 35 the end of each calendar quarter during the tax year and which 5 1 is held for the safety and convenience of the depositor who 5 2 may withdraw the funds at will, upon certain notice, or at a 5 3 fixed date. The bill limits the franchise tax to 5 percent of 5 4 the net income of the financial institution. Net operating 5 5 losses occurring prior to tax years beginning in 1996 may be 5 6 carried forward for up to 15 years until used. 5 7 The bill takes effect January 1, 1996, for tax years 5 8 beginning on or after that date. 5 9 LSB 2125HC 76 5 10 mg/sc/14
Text: HSB00154 Text: HSB00156 Text: HSB00100 - HSB00199 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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