Text: HSB00271                          Text: HSB00273
Text: HSB00200 - HSB00299               Text: HSB Index
Bills and Amendments: General Index     Bill History: General Index

House Study Bill 272

Bill Text

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 franchise tax according to and measured by net income
  1  4 is imposed on financial institutions for the privilege of
  1  5 doing business in this state as financial institutions for
  1  6 taxable years beginning before January 1, 2008.
  1  7    Sec. 2.  Section 422.60, subsection 2, unnumbered paragraph
  1  8 1, Code 2003, is amended to read as follows:
  1  9    In addition to all taxes imposed under this division, there
  1 10 is imposed upon each financial institution doing business
  1 11 within the state for taxable years beginning before January 1,
  1 12 2008, the greater of the tax determined in section 422.63 or
  1 13 the state alternative minimum tax equal to sixty percent of
  1 14 the maximum state franchise tax rate, rounded to the nearest
  1 15 one-tenth of one percent, of the state alternative minimum
  1 16 taxable income of the taxpayer computed under this subsection.
  1 17    Sec. 3.  Section 422.63, Code 2003, is amended to read as
  1 18 follows:
  1 19    422.63  AMOUNT OF TAX.
  1 20    The franchise tax is imposed annually in an amount equal to
  1 21 five the applicable percent of the net income received or
  1 22 accrued during the taxable year.  If the net income of the
  1 23 financial institution is derived from its business carried on
  1 24 entirely within the state, the tax shall be imposed on the
  1 25 entire net income, but if the business is carried on partly
  1 26 within and partly without the state, the portion of net income
  1 27 reasonably attributable to the business within the state shall
  1 28 be specifically allocated or equitably apportioned within and
  1 29 without the state under rules of the director.
  1 30    The "applicable percent" is equal to the following:
  1 31    1.  For taxable years beginning before the 2004 calendar
  1 32 year, five percent.
  1 33    2.  For taxable years beginning in the 2004 calendar year,
  1 34 four percent.
  1 35    3.  For taxable years beginning in the 2005 calendar year,
  2  1 three percent.
  2  2    4.  For taxable years beginning in the 2006 calendar year,
  2  3 two percent.
  2  4    5.  For taxable years beginning in the 2007 calendar year,
  2  5 one percent.
  2  6    6.  For taxable years beginning in the 2008 and subsequent
  2  7 calendar years, zero percent.
  2  8    Sec. 4.  NEW SECTION.  422.86A  ESTIMATED FRANCHISE TAX –
  2  9 ALTERNATIVE.
  2 10    1.  A taxpayer subject to the franchise tax imposed under
  2 11 section 422.60 whose franchise tax liability for the preceding
  2 12 taxable year was one thousand dollars or more shall remit on
  2 13 or before the last day of the fifth month of the taxable year
  2 14 an estimated tax equal to one-half of the franchise tax
  2 15 liability for the preceding tax year.
  2 16    2.  In addition to the estimated tax due in subsection 1,
  2 17 the taxpayer shall remit on or before the last day of the
  2 18 sixth month of the taxable year an additional estimated tax
  2 19 equal to the following percent of the franchise tax liability
  2 20 for the preceding taxable year as follows:
  2 21    a.  For the taxable years beginning in the 2003 and 2004
  2 22 calendar years, eleven percent.
  2 23    b.  For the taxable year beginning in the 2005 calendar
  2 24 year, twenty-six percent.
  2 25    c.  For the taxable years beginning in the 2006 and
  2 26 subsequent calendar years, fifty percent.
  2 27    3.  The estimated tax in this section is an alternative
  2 28 estimated tax to that payable pursuant to section 422.86, if
  2 29 at the time the estimated tax under this section is due and
  2 30 payable it exceeds the estimated tax due and payable pursuant
  2 31 to section 422.86.
  2 32    Sec. 5.  Sections 405A.10, 422.60 through 422.66, and
  2 33 422.86A, Code 2003, are repealed.
  2 34    Sec. 6.  EFFECTIVE AND APPLICABILITY DATES.
  2 35    1.  Sections 1 through 4 of this Act, being deemed of
  3  1 immediate importance, take effect upon enactment and apply
  3  2 retroactively to January 1, 2003, for taxable years beginning
  3  3 on or after that date.
  3  4    2.  Section 5 of this Act takes effect January 1, 2008, for
  3  5 taxable years beginning on or after that date.  
  3  6                           EXPLANATION
  3  7    This bill phases out beginning with the 2004 taxable year
  3  8 the 5 percent franchise tax on financial institutions by 1
  3  9 percentage point a year over five years.  The bill also
  3 10 provides an alternative estimated tax to be paid based upon
  3 11 the previous year's franchise tax liability.  This alternative
  3 12 estimated tax is payable if at the time it is due it exceeds
  3 13 the estimated tax which is in current law and is based on the
  3 14 estimated tax for the current taxable year.  These provisions
  3 15 of the bill take effect upon enactment and apply retroactively
  3 16 to tax years beginning on or after January 1, 2003.
  3 17    The bill also repeals the Code provisions related to the
  3 18 franchise tax effective January 1, 2008, for tax years
  3 19 beginning on or after that date.  
  3 20 LSB 3062YC 80
  3 21 mg/pj/5
     

Text: HSB00271                          Text: HSB00273
Text: HSB00200 - HSB00299               Text: HSB Index
Bills and Amendments: General Index     Bill History: General Index

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