Text: HF00677 Text: HF00679 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.60, subsection 1, Code 2003, is 1 2 amended to read as follows: 1 3 1. a. A franchise tax according to and measured by net 1 4 income is imposed on financial institutions, except 1 5 nonqualified credit unions, for the privilege of doing 1 6 business in this state as financial institutions. 1 7 b. A revenue nondistribution tax measured by the increase 1 8 in equity is imposed on nonqualified credit unions for the 1 9 privilege of doing business in this state as financial 1 10 institutions. 1 11 Sec. 2. Section 422.60, subsection 2, Code 2003, is 1 12 amended by adding the following new unnumbered paragraph after 1 13 unnumbered paragraph 1: 1 14 NEW UNNUMBERED PARAGRAPH. A nonqualified credit union 1 15 incorporated or authorized to do business under chapter 533 is 1 16 not subject to the state alternative minimum tax. 1 17 Sec. 3. Section 422.61, Code 2003, is amended by adding 1 18 the following new subsection: 1 19 NEW SUBSECTION. 0A. "Equity" means, in the case of a 1 20 nonqualified credit union, the sum of all items included in 1 21 the equity section of its annual report under section 533.6 1 22 including, but not limited to, the following: 1 23 a. Undivided earnings. 1 24 b. Regular reserves. 1 25 c. Appropriations for nonconforming investments. 1 26 d. Other reserves. 1 27 e. Miscellaneous equity. 1 28 f. Accumulated unrealized net gains (losses) on for sale 1 29 securities and other comprehensive income. 1 30 g. Accumulated unrealized gains (losses) on cash flow 1 31 hedges. 1 32 h. Other comprehensive income unless already included in 1 33 paragraph "f" or "g". 1 34 i. Net income unless already included in paragraph "a". 1 35 In the case of a credit union designated as serving 2 1 predominantly low-income members, "equity" also includes 2 2 uninsured secondary capital. 2 3 Sec. 4. Section 422.61, subsection 1, Code 2003, is 2 4 amended to read as follows: 2 5 1. "Financial institution" means a state bank as defined 2 6 in section 524.103, subsection 33, a state bank chartered 2 7 under the laws of any other state, a national banking 2 8 association, a trust company, a federally chartered savings 2 9 and loan association, an out-of-state state chartered savings 2 10 bank, a financial institution chartered by the federal home 2 11 loan bank board, a non-Iowa chartered savings and loan 2 12 association, a nonqualified credit union incorporated or 2 13 authorized to do business under chapter 533, a nonqualified 2 14 credit union incorporated or authorized to do business under 2 15 the laws of another state, an association incorporated or 2 16 authorized to do business under chapter 534, or a production 2 17 credit association. 2 18 Sec. 5. Section 422.61, Code 2003, is amended by adding 2 19 the following new subsections: 2 20 NEW SUBSECTION. 1A. "Increase in equity", in the case of 2 21 a nonqualified credit union, means the increase in the amount 2 22 of equity of the credit union at the end of the taxable year 2 23 as reflected in its annual report under section 533.6 over the 2 24 amount of equity of the credit union at the end of the 2 25 previous taxable year as reflected in the previous year's 2 26 annual report under section 533.6. 2 27 NEW SUBSECTION. 3A. "Nonqualified credit union" means a 2 28 credit union that does not meet the requirements to be a 2 29 qualified credit union, as specified in section 533.24, 2 30 subsection 3. 2 31 Sec. 6. Section 422.61, subsection 3, unnumbered paragraph 2 32 1, Code 2003, is amended to read as follows: 2 33 "Net income", for a financial institution other than a 2 34 nonqualified credit union, means the net income of the 2 35 financial institution computed in accordance with section 3 1 422.35, with the following adjustments: 3 2 Sec. 7. Section 422.62, Code 2003, is amended to read as 3 3 follows: 3 4 422.62 DUE AND DELINQUENT DATES. 3 5 The franchise tax or revenue nondistribution tax, as 3 6 applicable, is due and payable on the first day following the 3 7 end of the taxable year of each financial institution, and. 3 8 In the case of a financial institution other than a 3 9 nonqualified credit union, the tax is delinquent after the 3 10 last day of the fourth month following the due date or forty- 3 11 five days after the due date of the federal tax return, 3 12 excluding extensions of time to file, whichever is the later. 3 13 In the case of a nonqualified credit union, the tax is 3 14 delinquent after the last day of the fourth month following 3 15 the due date. Every financial institution shall file a return 3 16 as prescribed by the director on or before the delinquency 3 17 date. 3 18 Sec. 8. Section 422.63, Code 2003, is amended to read as 3 19 follows: 3 20 422.63 AMOUNT OF TAX. 3 21 The franchise tax is imposed annually in an amount equal to 3 22 five percent of the net income received or accrued during the 3 23 taxable year. The revenue nondistribution tax is imposed 3 24 annually in an amount equal to five percent of the increase in 3 25 equity for the taxable year. If the net income or increase in 3 26 equity, as applicable, of the financial institution is derived 3 27 from its business carried on entirely within the state, the 3 28 tax shall be imposed on the entire net income or increase in 3 29 equity, as applicable, but if the business is carried on 3 30 partly within and partly without the state, the portion of net 3 31 income or increase in equity, as applicable, reasonably 3 32 attributable to the business within the state shall be 3 33 specifically allocated or equitably apportioned within and 3 34 without the state under rules of the director. 3 35 Sec. 9. Section 422.66, Code 2003, is amended to read as 4 1 follows: 4 2 422.66 DEPARTMENT TO ENFORCE. 4 3 The department shall administer and enforce the provisions 4 4 of this division, and all applicable provisions of sections 4 5 422.24, 422.25, 422.26, 422.28, 422.29, and 422.30, and 4 6 division VI of this chapter, apply to financial institutions 4 7 and to the franchise tax and revenue nondistribution tax 4 8 imposed by this division. 4 9 Sec. 10. Section 533.24, Code 2003, is amended to read as 4 10 follows: 4 11 533.24 TAXATION. 4 12 1. A credit union shall be deemed an institution for 4 13 savings and is subject to taxation only as to its real estate 4 14 and moneys and credits. However, those nonqualified credit 4 15 unions subject to the state revenue nondistribution tax 4 16 imposed in chapter 422, division V shall not be taxed on their 4 17 moneys and credits. The shares shall not be taxed. 4 18 2. a. The moneys and credits tax on credit unions, except 4 19 those nonqualified credit unions subject to the state revenue 4 20 nondistribution tax, is imposed at a rate of five mills on 4 21 each dollar of the legal and special reserves which are 4 22 required to be maintained by the credit union under section 4 23 533.17, and shall be levied by the board of supervisors, and 4 24 placed upon the tax list and collected by the county 4 25 treasurer, except that an exemption shall be given to each 4 26 credit union in the amount of forty thousand dollars. The 4 27 amount collected in each taxing district within a city shall 4 28 be apportioned twenty percent to the county, thirty percent to 4 29 the city general fund, and fifty percent to the general fund 4 30 of the state, and the amount collected in each taxing district 4 31 outside of cities shall be apportioned fifty percent to the 4 32 county and fifty percent to the general fund of the state. 4 33 The moneys and credits tax shall be collected at the location 4 34 of the credit union as shown in its articles of incorporation. 4 35 b. The moneys and credits tax imposed under thissection5 1 subsection shall be reduced by an investment tax credit 5 2 authorized pursuant to section 15E.43. 5 3 c. The moneys and credits tax imposed under thissection5 4 subsection shall be reduced by an investment tax credit 5 5 authorized pursuant to section 15E.51. 5 6 3. a. A credit union that does not meet the requirements 5 7 of a qualified credit union as specified in paragraph "b" is 5 8 subject to the state revenue nondistribution tax imposed in 5 9 chapter 422, division V. 5 10 b. A credit union is a qualified credit union if the 5 11 credit union meets all of the following requirements: 5 12 (1) The credit union has less than one hundred fifty 5 13 million dollars in assets as shown in its latest annual report 5 14 under section 533.6, provided that this requirement shall not 5 15 apply to a credit union with a field of membership limited 5 16 exclusively to an occupational, industry, or employer common 5 17 bond based upon common business, employer, or corporate 5 18 parent. 5 19 (2) The credit union does not make or participate in 5 20 commercial loans or business purpose loans that together at 5 21 any time exceed an aggregate amount equal to the lesser of one 5 22 and three-fourths times the credit union's net worth or twelve 5 23 and one-fourth percent of the credit union's total assets. 5 24 c. For purposes of this subsection: 5 25 (1) "Agricultural purpose" means the same as defined in 5 26 section 535.13. 5 27 (2) "Business purpose" means a for-profit activity by an 5 28 individual or a for-profit entity including, but not limited 5 29 to, a commercial, service, or industrial enterprise carried on 5 30 for profit, or an investment activity. 5 31 (3) "Commercial loan" means a loan to an individual or 5 32 entity for a business purpose or an agricultural purpose. 5 33 "Commercial loan" does not include a loan the proceeds of 5 34 which will be used primarily for the purchase, construction, 5 35 or improvement of real property, including a single-family or 6 1 a two-family dwelling occupied or to be occupied by the 6 2 borrower. 6 3 (4) "Loan" includes the refinancing of a contract of sale, 6 4 and the refinancing of a prior loan, whether or not the 6 5 borrower was also the borrower under the prior loan, and the 6 6 assumption of a prior loan. 6 7 (5) "Net worth" means the credit union's retained earnings 6 8 including undivided earnings, regular reserves, and any other 6 9 appropriations designated by management or regulatory 6 10 authority. 6 11 Sec. 11. APPLICABILITY DATE. This Act applies to taxable 6 12 years beginning on or after the effective date of this Act. 6 13 EXPLANATION 6 14 This bill imposes a revenue nondistribution tax as part of 6 15 the tax on financial institutions doing business in Iowa and 6 16 subject to taxation by the state on chartered credit unions of 6 17 this or another state that do not meet certain requirements. 6 18 A credit union will not be subject to the revenue 6 19 nondistribution tax if it has assets of less than $150 million 6 20 or its members share a common bond such as single employer or 6 21 occupation, and it does not make or participate in commercial 6 22 or business purpose loans of a certain quantity. 6 23 For the purpose of computing the tax, the increase in the 6 24 equity of the credit union determined at the end of the 6 25 taxable year is the taxable event. 6 26 Various credits applicable to the franchise tax apply to 6 27 the revenue nondistribution tax and the tax is subjected to 6 28 prepayment requirements. 6 29 The moneys and credits tax currently imposed on all credit 6 30 unions is made inapplicable for those credit unions that are 6 31 subject to the revenue nondistribution tax. 6 32 The bill applies to taxable years beginning on or after the 6 33 effective date of the bill. 6 34 LSB 3019HV 80 6 35 jj/sh/8
Text: HF00677 Text: HF00679 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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